Energy markets may be focused on daily price swings, but the real economic consequences of this crisis will likely last far longer than the fighting itself. Once supply chains are disrupted, restoring them is rarely quick or straightforward.
The immediate impact will come through higher inflation and weaker growth. Energy costs feed into every sector of the global economy, from transportation and manufacturing to agriculture. Fertilizer prices have already jumped sharply, just as the Northern Hemisphere enters its growing season. The Gulf region supplies a significant share of global nitrogen fertilizers, so disruptions there could have serious implications for food production. Asia may be particularly exposed. The region sits at the center of global supply chains, meaning any prolonged disruption to energy flows could quickly translate into broader economic headwinds.
For policymakers, this creates a complicated dilemma. Central banks were already trying to balance slowing growth against lingering inflation pressures. This crisis risks intensifying both simultaneously, making policy decisions far more difficult. Financial markets also carry underlying vulnerabilities, from concerns around technology valuations to growing risks in private credit.