Oil prices surged on Monday, triggering a sharp sell-off across global stock markets amid escalating conflict in the Middle East. Economists have warned that the US-Israel war on Iran risks knocking economic growth worldwide while boosting prices, stoking fears of stagflation.
Although prices fell back on Tuesday after Donald Trump suggested the conflict could end 'very soon', oil continues to trade at elevated levels. The energy supply crisis has raised concerns that inflation and interest rates could rise further, even as economic activity stagnates.
The prospect of stagflation—a combination of stagnant growth and rising inflation—looms large. Analysts caution that persistent supply disruptions could crush economies already grappling with high borrowing costs and weak demand.
