Selling gold and hedging exchange rates have caused fatal bleeding to the global economy.
2026-05-26 20:26:31
The ongoing conflict in Iran is starting in the energy market and spreading multiple shocks to the global economic system.
This geopolitical crisis not only disrupts regional order, but also puts countries' economies under far greater pressure through the disruption of oil supply chains, cost transmission, and financial market volatility. Ultimately, it has led to a renewed rise in global inflation and the risk of it spiraling out of control.
The dramatic fluctuations in the energy market are the core transmission hub of this crisis. After the outbreak of the conflict, the volume of energy freight in the Persian Gulf plummeted. As of May 13, the cumulative oil supply gap in the region had reached 1 billion barrels.
Although the rise in international oil prices has narrowed due to the buffer of large-scale releases of global oil reserves—the benchmark Brent crude price fell below $100 per barrel at the end of last week, but this level is still significantly higher than the $60 per barrel at the beginning of January this year.
Data from the International Energy Agency (IEA) shows that the current gap has a significant impact on both supply and demand: rising oil prices are suppressing consumer demand, non-Gulf oil-producing countries are increasing production to supplement supply, and global oil inventories are shrinking by about 250 million barrels.
However, IEA Executive Director Fatih Birol issued a stern warning that inventory depletion is nearing its limit, and with the approaching summer travel season in the Northern Hemisphere, oil demand will further increase, potentially pushing the global oil market into a "danger zone" in July and August.
The impact of this energy shock on the economies of different regions is transmitted in different ways, but all point to slower growth and high costs.
Asia and Africa: The Dual Challenges to Livelihoods and Growth Under Direct Impact
Asia, as a major consumer of Persian Gulf oil (accounting for approximately 60% of its imports), has been the most directly impacted.
Soaring liquefied petroleum gas (LPG) prices in India have led to the shutdown of numerous small and micro-sized factories, unemployment among rural migrant workers, and concerns about a "return-to-hometown" trend due to skyrocketing black market gas prices.
Southeast Asian countries are facing a shortage of gas and oil, with the economic growth forecast for the six ASEAN countries being lowered to 4.5%, while the inflation forecast has risen to 2.7%.
The livelihood crisis on the African continent is particularly severe, with the cost of transporting aid to refugee camps in Somalia doubling, protests in Kenya over rising fuel prices resulting in four deaths, and political and financial pressures continuing to accumulate.
Europe, America, and Latin America: Hidden Risks Behind Resilience
Although Europe's dependence on Persian Gulf oil is only 7%, it still cannot escape the risk of stagflation. Inflationary pressures have risen significantly in the UK, France, and Germany. France's economic growth forecast has been lowered to 0.9%, while German companies are facing a chain reaction of "huge cost increases."
Even the United States, which claims to be "energy self-sufficient," has failed to achieve comprehensive risk avoidance.
The conflict did indeed bring benefits to U.S. energy exporters, with an additional 145 million barrels of crude oil exports generating approximately $50 billion in new revenue. However, U.S. consumers paid an extra $40 billion for gasoline, and low-income families were forced to adjust their travel methods to control costs.
The agricultural sector has been hit by a double blow from soaring fertilizer and diesel prices, with 70% of farmers unable to afford sufficient fertilizer purchases, potentially leading to reduced crop yields and rising grain prices.
More alarmingly, the U.S. Consumer Price Index (CPI) rose 3.3% year-on-year in March, reaching a new high since June 2024. The yield on 30-year Treasury bonds hit a 30-year high, and mortgage rates rose in tandem, further suppressing domestic demand.
Although Latin America has shown some resilience thanks to its net energy exports, rising fertilizer prices and inflation are still forcing central banks in many countries to consider raising interest rates, and economic growth forecasts have been lowered to 2.1%.
The "economic bleeding" faced by developing countries is particularly devastating. Soaring oil prices have pushed up trade deficits, coupled with multiple pressures such as currency depreciation and shrinking foreign exchange reserves. The foreign exchange reserves of the Philippines, India, and Indonesia have shrunk by 8.1%, 5.1%, and 3.8%, respectively. Malawi has even been forced to sell semi-finished gold ingots to stabilize its exchange rate.
These countries have been forced to start an interest rate hike cycle to suppress inflation, which has further dragged down their already weak real economies.
The World Food Programme warned as early as two weeks after the outbreak of the conflict that if the fighting continued, 45 million more people worldwide would face severe food shortages, and even if the conflict ended immediately, it would take at least two months for global shipping to return to normal.
All these shocks ultimately converge to accelerate the upward momentum of global inflation.
Rising energy prices are transmitted to various sectors through the industrial chain: rising fuel prices increase transportation costs, rising petrochemical raw material prices affect manufacturing, and rising fertilizer prices threaten agricultural production, forming an inflation transmission chain of "energy-industry-agriculture".
The International Energy Agency has clearly stated that the combined effect of rising energy and food prices will further exacerbate inflationary pressures, and the current rise in inflation data in many places is "just the beginning."
The minutes of the Federal Reserve's monetary policy meeting indicate that if inflation continues to rise above the 2% target level, further tightening measures may be taken. Meanwhile, the interest rate hikes by most central banks around the world will not only curb inflation but also increase the risk of economic recession.
The conflict between the US and Iran affected the passage through the Strait of Hormuz, thereby impacting the global supply of energy products. This ultimately affected global industrial and agricultural production costs, global trade, and the balance of payments of various countries. Smaller countries were forced to sell gold and US Treasury bonds to maintain their foreign exchange reserves. In the end, the US was not spared either, with rising US Treasury yields, oil prices, and imported inflation leading to higher prices.
This global wave of "inflation and reflation" has also significantly suppressed economic growth.
The fragility of energy supply chains, the debt burden of developing countries, and the tightening cycle of global monetary policy are intertwined, making the already sluggish global economy face greater uncertainty.
This crisis has proven that, in a globalized system, there are no bystanders when it comes to the economic costs of geopolitical conflicts, and the ever-rising global inflation is the ultimate cost that all countries must bear together.
This geopolitical crisis not only disrupts regional order, but also puts countries' economies under far greater pressure through the disruption of oil supply chains, cost transmission, and financial market volatility. Ultimately, it has led to a renewed rise in global inflation and the risk of it spiraling out of control.
Core Hub: Dramatic Volatility and Supply Gap in the Energy Market
The dramatic fluctuations in the energy market are the core transmission hub of this crisis. After the outbreak of the conflict, the volume of energy freight in the Persian Gulf plummeted. As of May 13, the cumulative oil supply gap in the region had reached 1 billion barrels.
Although the rise in international oil prices has narrowed due to the buffer of large-scale releases of global oil reserves—the benchmark Brent crude price fell below $100 per barrel at the end of last week, but this level is still significantly higher than the $60 per barrel at the beginning of January this year.
Data from the International Energy Agency (IEA) shows that the current gap has a significant impact on both supply and demand: rising oil prices are suppressing consumer demand, non-Gulf oil-producing countries are increasing production to supplement supply, and global oil inventories are shrinking by about 250 million barrels.
However, IEA Executive Director Fatih Birol issued a stern warning that inventory depletion is nearing its limit, and with the approaching summer travel season in the Northern Hemisphere, oil demand will further increase, potentially pushing the global oil market into a "danger zone" in July and August.
Regional Differentiation: Differential Shocks and Dilemmas in Different Economies
The impact of this energy shock on the economies of different regions is transmitted in different ways, but all point to slower growth and high costs.
Asia and Africa: The Dual Challenges to Livelihoods and Growth Under Direct Impact
Asia, as a major consumer of Persian Gulf oil (accounting for approximately 60% of its imports), has been the most directly impacted.
Soaring liquefied petroleum gas (LPG) prices in India have led to the shutdown of numerous small and micro-sized factories, unemployment among rural migrant workers, and concerns about a "return-to-hometown" trend due to skyrocketing black market gas prices.
Southeast Asian countries are facing a shortage of gas and oil, with the economic growth forecast for the six ASEAN countries being lowered to 4.5%, while the inflation forecast has risen to 2.7%.
The livelihood crisis on the African continent is particularly severe, with the cost of transporting aid to refugee camps in Somalia doubling, protests in Kenya over rising fuel prices resulting in four deaths, and political and financial pressures continuing to accumulate.
Europe, America, and Latin America: Hidden Risks Behind Resilience
Although Europe's dependence on Persian Gulf oil is only 7%, it still cannot escape the risk of stagflation. Inflationary pressures have risen significantly in the UK, France, and Germany. France's economic growth forecast has been lowered to 0.9%, while German companies are facing a chain reaction of "huge cost increases."
Even the United States, which claims to be "energy self-sufficient," has failed to achieve comprehensive risk avoidance.
The conflict did indeed bring benefits to U.S. energy exporters, with an additional 145 million barrels of crude oil exports generating approximately $50 billion in new revenue. However, U.S. consumers paid an extra $40 billion for gasoline, and low-income families were forced to adjust their travel methods to control costs.
The agricultural sector has been hit by a double blow from soaring fertilizer and diesel prices, with 70% of farmers unable to afford sufficient fertilizer purchases, potentially leading to reduced crop yields and rising grain prices.
More alarmingly, the U.S. Consumer Price Index (CPI) rose 3.3% year-on-year in March, reaching a new high since June 2024. The yield on 30-year Treasury bonds hit a 30-year high, and mortgage rates rose in tandem, further suppressing domestic demand.
Although Latin America has shown some resilience thanks to its net energy exports, rising fertilizer prices and inflation are still forcing central banks in many countries to consider raising interest rates, and economic growth forecasts have been lowered to 2.1%.
Fatal Bleeding: Economic Pressures and Policy Dilemmas in Developing Countries
The "economic bleeding" faced by developing countries is particularly devastating. Soaring oil prices have pushed up trade deficits, coupled with multiple pressures such as currency depreciation and shrinking foreign exchange reserves. The foreign exchange reserves of the Philippines, India, and Indonesia have shrunk by 8.1%, 5.1%, and 3.8%, respectively. Malawi has even been forced to sell semi-finished gold ingots to stabilize its exchange rate.
These countries have been forced to start an interest rate hike cycle to suppress inflation, which has further dragged down their already weak real economies.
The World Food Programme warned as early as two weeks after the outbreak of the conflict that if the fighting continued, 45 million more people worldwide would face severe food shortages, and even if the conflict ended immediately, it would take at least two months for global shipping to return to normal.
Final focus: The risk of accelerating global inflation and spiraling out of control.
All these shocks ultimately converge to accelerate the upward momentum of global inflation.
Rising energy prices are transmitted to various sectors through the industrial chain: rising fuel prices increase transportation costs, rising petrochemical raw material prices affect manufacturing, and rising fertilizer prices threaten agricultural production, forming an inflation transmission chain of "energy-industry-agriculture".
The International Energy Agency has clearly stated that the combined effect of rising energy and food prices will further exacerbate inflationary pressures, and the current rise in inflation data in many places is "just the beginning."
The minutes of the Federal Reserve's monetary policy meeting indicate that if inflation continues to rise above the 2% target level, further tightening measures may be taken. Meanwhile, the interest rate hikes by most central banks around the world will not only curb inflation but also increase the risk of economic recession.
Summarize:
The conflict between the US and Iran affected the passage through the Strait of Hormuz, thereby impacting the global supply of energy products. This ultimately affected global industrial and agricultural production costs, global trade, and the balance of payments of various countries. Smaller countries were forced to sell gold and US Treasury bonds to maintain their foreign exchange reserves. In the end, the US was not spared either, with rising US Treasury yields, oil prices, and imported inflation leading to higher prices.
This global wave of "inflation and reflation" has also significantly suppressed economic growth.
The fragility of energy supply chains, the debt burden of developing countries, and the tightening cycle of global monetary policy are intertwined, making the already sluggish global economy face greater uncertainty.
This crisis has proven that, in a globalized system, there are no bystanders when it comes to the economic costs of geopolitical conflicts, and the ever-rising global inflation is the ultimate cost that all countries must bear together.
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