The Iran war has unleashed sweeping supply shocks across global energy markets, with the Strait of Hormuz—which handles nearly 27% of the world's maritime oil trade—disrupted. Repairs to damaged LNG facilities in Qatar could take up to five years, according to estimates cited by Oil Price. Even as de-escalation efforts continue, operational strain on Gulf energy infrastructure is compounding shortages.
Supply constraints are driving prices higher. Pakistan's inflation accelerated to 11.7% in May from a year earlier, up from 10.9% in April, as energy import costs ballooned, data from the Pakistan Bureau of Statistics showed. Core inflation, excluding food and energy, jumped 9% year over year and 8% month over month in urban areas.
In India, wealth and asset manager 360 ONE Capital projected that if oil averages $90 per barrel through March next year, inflation could rise to 4.8% in fiscal year 2027, with GDP growth moderating to 6.3% from 6.7%. The firm's revised base case assumes de-escalation by mid-June, as carried by Indian media.
Disruption to the Strait of Hormuz—a chokepoint for nearly a third of global oil shipments—is creating ripple effects across petrochemicals, agriculture, and shipping industries. The conflict has also raised concerns about energy security for import-dependent economies across Asia.
A counterargument points to the possibility of de-escalation easing supply fears. If a ceasefire holds, oil prices could retreat, potentially lowering inflation forecasts and reviving GDP growth in both Pakistan and India. However, the timeline for repairing Qatar's LNG facilities suggests long-term structural risks remain.