Reduced shipments through the Strait of Hormuz are driving up oil, gas, and commodity prices
The US and Israel’s conflict with Iran would push up global inflation this year, as disruptions in the Strait of Hormuz drive up oil, gas, and commodity prices, according to the Organisation for Economic Co-operation and Development (OECD).
The group now expects US inflation to average 4.2%, over 1 percentage point higher than earlier forecasts. Across G20 economies, inflation could reach 4%, with the UK hit hardest.
The spike follows reduced shipments through the world’s most important oil chokepoint, the Strait of Hormuz, located between Iran and Oman. Attacks on energy infrastructure have also reduced supplies, pushing up the costs of fuel, food, and fertilizer.
Global growth is still projected at 2.9%, supported by strong investment in AI.
The OECD warned that prolonged instability could worsen inflation and weaken demand. Higher energy prices may also limit interest rate cuts.