Why has the Iran war sparked fears of stagflation for the global economy?

Conflict in the Middle East risks knocking growth worldwide and boosting prices, economists warn, amid global market turbulence Oil prices surged on Monday, triggering a stark sell-off across some of the world’s leading stock markets amid growing concern that the US-Israel war on Iran could set the stage for a global economic shock. While they fell back on Tuesday after Donald Trump suggested the Middle East conflict could end “very soon”, oil continues to trade at high levels. The war has caused an energy supply crisis that could risk driving up inflation and interest rates, according to economists, who believe growth is set to weaken while prices rise. Fears of stagflation – where economic activity stagnates, but inflation increases – loom large. The price of key oil benchmarks had already posted their highest weekly gains in six years by the time markets opened on Monday – when they soared to more than US$115 a barrel , surpassing $100 for the first time since Russia’s 2022 invasion of Ukraine. The West Texas Intermediate (WTI) benchmark price for US crude is now nearly double its January level of about $60 a barrel. Oil prices climbed significantly in the first week of the US-I