It's not just oil! The entire supply chain of natural gas, fertilizers, and helium is in crisis, and a stagflation storm and debt crisis are quietly approaching. Why is the market still misjudging the situation?
2026-03-16 18:12:24
Economists point out that if the Iranian conflict lasts longer than the market expects, the current global market may be seriously underestimating its destructive impact on the economy. This cognitive bias has become a key potential risk affecting raw material prices and supply chain stability, and is gradually reshaping the operating logic of the global economy and commodity markets. Coincidentally, the VIP article had repeatedly warned about this before the US and Israel launched military strikes against Iran, and the chart also continuously highlighted many industries.
The market is significantly underestimating the tail risks of a prolonged conflict. If the fighting continues for another month and energy prices surge, the global economy may face severe consequences, and the sharp fluctuations in the raw materials market will first spread to the entire industrial chain, and may even trigger systemic risks.
The worst-case scenario is that an economic recession coincides with an anti-inflationary interest rate hike cycle.
This dual pressure could trigger an asset bubble and there is a high probability of a repeat of the 2008 debt crisis. The sharp rise and fall of raw material prices will be a major driver of the crisis, potentially causing a double fatal impact on global financial markets and the real economy.
The core risks in the economy and raw material markets focus on the Strait of Hormuz, the "lifeline" connecting the Gulf region to the global energy market.
About one-fifth of the world's crude oil supply and a large amount of liquefied natural gas (LNG) transportation pass through this strait. LNG is not only the energy security pillar of the two largest economies in Asia and Europe, but also the basic energy guarantee for many raw material production industries such as chemical and metallurgy.
The Strait of Hormuz is a vital choke point for global oil, gas, and fertilizer transportation, and a key transshipment hub for Asia-Europe trade. Even a partial disruption to the strait would quickly trigger dramatic fluctuations in global energy prices. As energy is a core cost item in the production of most raw materials, its price fluctuations would directly rewrite the pricing logic of commodities, leading to a chain reaction of fluctuations in the prices of upstream and downstream raw materials.
The impact is not limited to the crude oil market. Natural gas supplies in the Gulf region remain strategically important to East Asian countries and parts of Europe, which have not yet fully absorbed the effects of the Russian gas supply disruption following the Russia-Ukraine conflict.
The instability of natural gas prices will directly impact the production stability of basic chemical raw materials such as methanol and ethylene, further amplifying market volatility.
The rise in fuel costs will be passed on to the entire industry chain, as the mining, processing and logistics of most raw materials are highly dependent on energy supply.
The primary channel through which geopolitical conflicts transmit to the global economy is inevitably the oil and gas market—not only crude oil, but also natural gas. Fluctuations in the energy market have become a core variable in raw material prices, inflation expectations, and industrial policy pricing, profoundly affecting the cost structure and profit margins of the global industrial chain.
Some of the impact will also extend to the industrial raw materials sector, which is not directly affected by natural gas extraction, such as causing a rise in the price of helium, a byproduct of natural gas extraction.
Qatar supplies about one-third of the world's helium, a core raw material for semiconductor manufacturing and medical imaging equipment production. Its supply stability is directly related to the raw material security of high-tech industries.
Therefore, disruptions to helium production or transportation will have a ripple effect on the global technology and medical industries outside the Middle East, not only driving up the prices of related end products, but also affecting the demand and pricing of upstream and downstream raw materials through the supply chain, further amplifying fluctuations in market risk appetite.
Other industrial raw materials will also face significant supply pressure. Sulfur, as another by-product of oil and gas production, is widely used in industrial scenarios such as copper processing and rubber vulcanization, and is an indispensable auxiliary raw material for the production of many industrial products.
If the energy supply chain is disrupted, the availability of sulfur will decrease significantly, directly pushing up the production costs of related industries, which will then be passed on to the prices of end products, creating inflationary pressure.
If conflict disrupts fertilizer production and trade, the supply of raw materials in the agricultural sector will face significant pressure, which will in turn affect global food security and agricultural product prices. Currently, many regions around the world are in a critical period of planting, and the timing of the outbreak of war is extremely sensitive.
Even if the conflict ends in the short term, the fertilizer supply bottleneck may still have long-term effects. Insufficient fertilizer supply during the spring planting season will directly lead to reduced grain production at the end of the year. As the most basic agricultural raw material, the decline in grain production will push up global grain prices and affect the raw material costs of downstream industries such as feed and food processing, forming a complete transmission chain of "fertilizer shortage → reduced grain production → rising prices of agricultural raw materials → increased inflation".
Even if the conflict itself is short-lived, the economic and raw material market damage it causes may be long-lasting.
The repair of damaged infrastructure and the restart of shut-down energy production capacity will take several months, which will lead to persistent supply bottlenecks in several key raw material production industries such as energy, fertilizers, and chemicals, prolonging the adjustment cycle of the global economy and industrial chain, and making it difficult for the raw material market to quickly return to stability.
The conflict will also reshape global capital’s risk assessment of the Middle East. Global shipping companies may re-examine the operational risks of the Persian Gulf routes, increasing the logistics and time costs of transporting raw materials. Meanwhile, the willingness to invest, travel, and attract international talent to the region has cooled significantly, which will further delay the recovery of local energy and raw material production facilities and exacerbate the structural imbalance in global raw material supply.
Rising energy prices and increasing raw material costs will put central banks in a dilemma in their policy adjustments—for the past two years, these central banks have been committed to curbing inflation and stabilizing prices.
The continued rise in oil and gas prices may lead to a second wave of inflation, while the overall increase in raw material prices will further solidify inflation stickiness, forcing policymakers to postpone interest rate cuts or even restart tight monetary policies.
This policy shift will directly alter global funding costs and market liquidity, thereby impacting speculative behavior and industrial investment in raw material markets, creating a cycle of "cost-driven inflation → policy tightening → market liquidity contraction → increased volatility in raw material prices."
If the war continues for weeks instead of ending quickly, the economic and raw material market consequences will far exceed current market expectations.
Prolonged conflict coupled with high energy prices will create perfect conditions for stagflation—a rare economic state where high inflation and weak growth coexist, leaving policymakers with virtually no effective means to deal with it.
Continued volatility in the raw materials market will further exacerbate the uncertainty of corporate production decisions, inhibit industrial investment and innovation, and slow down the pace of global economic recovery.
In this scenario, the Gulf region, Europe, East Asia, and many developing economies will bear the brunt of the pressure. Even the United States, which has been continuously improving its energy self-sufficiency rate, will find it difficult to remain unaffected. Its domestic raw material production, industrial chain layout, and exchange rate trends will still be significantly impacted, and the global economy and raw material market will enter a long-term adjustment period.
The market is significantly underestimating the tail risks of a prolonged conflict. If the fighting continues for another month and energy prices surge, the global economy may face severe consequences, and the sharp fluctuations in the raw materials market will first spread to the entire industrial chain, and may even trigger systemic risks.
The worst-case scenario is that an economic recession coincides with an anti-inflationary interest rate hike cycle.
This dual pressure could trigger an asset bubble and there is a high probability of a repeat of the 2008 debt crisis. The sharp rise and fall of raw material prices will be a major driver of the crisis, potentially causing a double fatal impact on global financial markets and the real economy.
Core risk transmission: Energy market becomes the "anchor" for raw material price fluctuations.
The core risks in the economy and raw material markets focus on the Strait of Hormuz, the "lifeline" connecting the Gulf region to the global energy market.
About one-fifth of the world's crude oil supply and a large amount of liquefied natural gas (LNG) transportation pass through this strait. LNG is not only the energy security pillar of the two largest economies in Asia and Europe, but also the basic energy guarantee for many raw material production industries such as chemical and metallurgy.
The Strait of Hormuz is a vital choke point for global oil, gas, and fertilizer transportation, and a key transshipment hub for Asia-Europe trade. Even a partial disruption to the strait would quickly trigger dramatic fluctuations in global energy prices. As energy is a core cost item in the production of most raw materials, its price fluctuations would directly rewrite the pricing logic of commodities, leading to a chain reaction of fluctuations in the prices of upstream and downstream raw materials.
The impact is not limited to the crude oil market. Natural gas supplies in the Gulf region remain strategically important to East Asian countries and parts of Europe, which have not yet fully absorbed the effects of the Russian gas supply disruption following the Russia-Ukraine conflict.
The instability of natural gas prices will directly impact the production stability of basic chemical raw materials such as methanol and ethylene, further amplifying market volatility.
The rise in fuel costs will be passed on to the entire industry chain, as the mining, processing and logistics of most raw materials are highly dependent on energy supply.
The primary channel through which geopolitical conflicts transmit to the global economy is inevitably the oil and gas market—not only crude oil, but also natural gas. Fluctuations in the energy market have become a core variable in raw material prices, inflation expectations, and industrial policy pricing, profoundly affecting the cost structure and profit margins of the global industrial chain.
Hidden risks become explicit: Industrial raw materials face supply disruptions and price increases.
Some of the impact will also extend to the industrial raw materials sector, which is not directly affected by natural gas extraction, such as causing a rise in the price of helium, a byproduct of natural gas extraction.
Qatar supplies about one-third of the world's helium, a core raw material for semiconductor manufacturing and medical imaging equipment production. Its supply stability is directly related to the raw material security of high-tech industries.
Therefore, disruptions to helium production or transportation will have a ripple effect on the global technology and medical industries outside the Middle East, not only driving up the prices of related end products, but also affecting the demand and pricing of upstream and downstream raw materials through the supply chain, further amplifying fluctuations in market risk appetite.
Other industrial raw materials will also face significant supply pressure. Sulfur, as another by-product of oil and gas production, is widely used in industrial scenarios such as copper processing and rubber vulcanization, and is an indispensable auxiliary raw material for the production of many industrial products.
If the energy supply chain is disrupted, the availability of sulfur will decrease significantly, directly pushing up the production costs of related industries, which will then be passed on to the prices of end products, creating inflationary pressure.
Agricultural supply chain: Fertilizer shortage triggers agricultural raw material security crisis
If conflict disrupts fertilizer production and trade, the supply of raw materials in the agricultural sector will face significant pressure, which will in turn affect global food security and agricultural product prices. Currently, many regions around the world are in a critical period of planting, and the timing of the outbreak of war is extremely sensitive.
Even if the conflict ends in the short term, the fertilizer supply bottleneck may still have long-term effects. Insufficient fertilizer supply during the spring planting season will directly lead to reduced grain production at the end of the year. As the most basic agricultural raw material, the decline in grain production will push up global grain prices and affect the raw material costs of downstream industries such as feed and food processing, forming a complete transmission chain of "fertilizer shortage → reduced grain production → rising prices of agricultural raw materials → increased inflation".
Even if the conflict itself is short-lived, the economic and raw material market damage it causes may be long-lasting.
The repair of damaged infrastructure and the restart of shut-down energy production capacity will take several months, which will lead to persistent supply bottlenecks in several key raw material production industries such as energy, fertilizers, and chemicals, prolonging the adjustment cycle of the global economy and industrial chain, and making it difficult for the raw material market to quickly return to stability.
The conflict will also reshape global capital’s risk assessment of the Middle East. Global shipping companies may re-examine the operational risks of the Persian Gulf routes, increasing the logistics and time costs of transporting raw materials. Meanwhile, the willingness to invest, travel, and attract international talent to the region has cooled significantly, which will further delay the recovery of local energy and raw material production facilities and exacerbate the structural imbalance in global raw material supply.
Policy and Market Interplay: Long-Term Fluctuations in Raw Materials Amid Stagflation Risks
Rising energy prices and increasing raw material costs will put central banks in a dilemma in their policy adjustments—for the past two years, these central banks have been committed to curbing inflation and stabilizing prices.
The continued rise in oil and gas prices may lead to a second wave of inflation, while the overall increase in raw material prices will further solidify inflation stickiness, forcing policymakers to postpone interest rate cuts or even restart tight monetary policies.
This policy shift will directly alter global funding costs and market liquidity, thereby impacting speculative behavior and industrial investment in raw material markets, creating a cycle of "cost-driven inflation → policy tightening → market liquidity contraction → increased volatility in raw material prices."
If the war continues for weeks instead of ending quickly, the economic and raw material market consequences will far exceed current market expectations.
Prolonged conflict coupled with high energy prices will create perfect conditions for stagflation—a rare economic state where high inflation and weak growth coexist, leaving policymakers with virtually no effective means to deal with it.
Continued volatility in the raw materials market will further exacerbate the uncertainty of corporate production decisions, inhibit industrial investment and innovation, and slow down the pace of global economic recovery.
In this scenario, the Gulf region, Europe, East Asia, and many developing economies will bear the brunt of the pressure. Even the United States, which has been continuously improving its energy self-sufficiency rate, will find it difficult to remain unaffected. Its domestic raw material production, industrial chain layout, and exchange rate trends will still be significantly impacted, and the global economy and raw material market will enter a long-term adjustment period.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
