The US-Israel-Iran Conflict Impact On Global Economy - Africa
Kudus Research and Advocacy Center (KRAC) is a Ghanaian-based organization that conducts research and advocacy on a range of socio-economic and political issues. Its work often appears as opinion pieces and research findings published in the media outlets.The center conducts research and offers recommendations on diverse topics, including: Electoral Systems and Politics,Consumer Protection,Social and Economic Issues. Our published work often presents findings from surveys and in-depth analysis to provide insights and advocate for specific policy changes or public awareness campaigns.The center appears to be an active voice in public discourse within Ghana, using local news platforms to disseminate its research and recommendations.
We would be looking into the impact of the US Israel - Iran conflict impact on the global economy from the highly industrial countries like G7 to Middle East to that of Africa.
On February 28, 2026, Israel and the United States launched a coordinated military campaign targeting Iranian military and strategic infrastructure.This operation reportedly resulted in the death of Iran’s Supreme Leader, Ali Khamenei, and involved widespread airstrikes across several locations in Iran.Iran has since been retaliating with drones and missiles, striking targets and US bases in Gulf states, including Saudi Arabia, Bahrain, and the UAE.The conflict has caused significant disruptions, including heightened security concerns and disruptions affecting maritime traffic through the Strait of Hormuz, rising oil prices, and damage to Iranian oil facilities.
The conflict has echoed the 1970s energy crisis through acute supply shortages, currency volatility, inflation and heightened risks of stagflation and recession. Interest rates reductions were expected to be postponed or conversely increased in light of higher inflation caused by supply shortages and speculation. The Israel-Iran conflict poses risks to global energy supply disruptions and has led to a modest jump in oil prices thus far. If the situation escalates, such as blockades around the Strait of Hormuz, the risk premium in oil prices could rise further. For reference, oil prices rose to above USD 100 per barrel during the Russia-Ukraine conflict.These events are sending shock-waves well beyond the Middle East. For Africa, a continent with growing economic, diplomatic, and security ties to the Gulf region, the ripple effects are already being felt and may intensify in the weeks and months ahead.
Impact on oil prices
Energy prices remain the most direct channel of this conflict to impact the global economy. Risks come from two aspects: Disruption of energy production: Iran produces around 3.6 million barrels of oil per day, accounting for approximately 3.5% of global production. Destruction of Iran’s energy infrastructure would negate years of efforts to rebuild oil production after U.S.-Iran deals to ease sanctions, causing significant long-term impact. A worst-case scenario involves the conflict broadening to other major oil producers in the region, potentially impacting a third of the global oil output.
Supply chain disruptions: If Iran-backed Houthis in Yemen attack ships passing through the Strait of Hormuz, a critical shipping route for 30% of the global seaborne oil trade and 20% of the global LNG supply, it could cause significant disruptions. A worst-case scenario would be Iran disrupting shipping lanes along the Strait. However, Iran is heavily dependent on the Strait, and this act could impact neighboring oil producers and global consumers.
So far, markets have not priced in these extreme scenarios. In recent months, oil prices have faced downward pressure due to concerns of upcoming oversupply. Prices have been volatile since the Israeli attack, with Brent crude jumping 9% on Friday to touch USD 77 before easing slightly. Prices also rose 5.5% on Monday early trading but pared gains, showing investors’ continued wait-and-see approach as they assess the risks from the conflict.
Brent crude was at USD 73.5 at the time of writing, with an estimated USD 7.5 geopolitical risk premium (compared to J.P. Morgan Economic Research’s estimate of a USD 66 fair value). If the situation remains contained and OPEC+ chooses to increase supply in August to offset any disruptions, oil prices could stabilize. However, if the aforementioned escalations occur, the risk premium could widen rapidly, pushing oil prices over USD 100. For reference, oil prices hit USD 130 during the Russia-Ukraine conflict given Europe’s dependence on Russian energy back then.
Impact on the global economy
The situation remains fluid, and the magnitude of potential economic impact is uncertain. However, the impact is likely to be uneven globally. Asia will be disproportionately impacted, as most oil traffic from the Gulf is destined for Asian markets. For example, nearly 90% of Iran’s oil exports go to China. China has relatively diversified oil import sources and large reserves. However, markets such as India and Indonesia, which rely heavily on Middle Eastern oil, will be more vulnerable. Europe’s demand for LNG has increased since the Russia-Ukraine Conflict, although reliance on the Middle East has fallen as Europe imported more from U.S.. However, they remain highly sensitive to energy prices.
Conversely, the U.S., as a net energy exporter, could be less impacted compared to previous oil crises when it relied more on oil imports. However, the U.S. is entering this period from a vulnerable state of increasing risks of inflation and an economic slowdown. It’s estimated that a USD 10 increase in oil prices could add 0.3-0.4% to inflation, exacerbating current stagflationary risks given the surge in tariffs. This also complicates the Federal Reserve's (Fed) decision-making. We still expect the Fed to be slow to cut rates, as inflation risks remain larger than unemployment concerns for now.
Investment implications
On June 13th, gold rose 1.4% but retreated on the next trading day. Since the attacks, the U.S. dollar remained stable, while 10-year U.S. Treasury yields actually rose 10 basis points (bps). Equities have been volatile on news headlines, but there has not been a broad-based risk-off reaction in global markets yet.Within equities, energy and materials sectors, which have under performed in recent months, could rebound on higher energy prices. Pressure on consumer discretionary is likely to continue due to tariffs and further erosion of disposable income if high energy prices persist. Technology, financial, and healthcare are arguably less impacted by energy prices directly.
The G7 Big Economies
In Europe a fresh energy shock rekindles painful memories in the region of the Russian invasion of Ukraine four years ago. That brought its import dependence into stark focus and sent inflation surging into double digits.
Germany - Its industry-heavy economy has more to lose from costlier energy. Activity in its manufacturing sector has only stopped contracting for the first time since 2022. And as an exporter, Germany is exposed to any global downturn. A massive stimulus programme Germany announced last year will help cushion some of the impact, but room to provide more support is limited given budget shortfalls in the coming years.
Italy - Also home to a big manufacturing sector. Moreover, oil and gas have one of the highest shares in its primary energy consumption in Europe.
Britain - Its electricity production is more reliant on gas-fired power than other major European economies. Gas prices almost always set its electricity prices - and they are rising faster than oil since the start of the war.An energy price cap will dampen the initial inflation impact. The risk is it leads to interest rate hikes so Britain may be left with the highest borrowing costs in the G7 for longer at a time of rising unemployment. Budget strains and bond market pressure limit its options for helping businesses and households.UK 10-year gilt yield rises to highest since July 2008
Japan - Also firmly in the firing line, sourcing around 95% of its oil from the Middle East and nearly 90% of it travelling through the Hormuz Strait.That comes on top of inflationary pressures it already faces from a weak yen, which feed into food and daily necessities given Japan's heavy reliance on imported raw materials.
Emerging Economy Heavyweights
The Gulf region itself is inevitably taking a direct economic hit, with some forecasters already predicting its economy will now shrink this year, reversing pre-war expectations for solid growth.
The sharp jump in oil and gas prices is no help if the effective closure of the Strait of Hormuz means countries - especially Kuwait, Qatar and Bahrain - can't get their hydrocarbons onto the international markets.The conflict could also affect remittances - the money expat workers send back home to their families and which each year pumps tens of billions of dollars into the local economies.
India is another exposed heavyweight. It imports about 90% of its crude oil and nearly half of its liquefied petroleum gas, and roughly half of that oil and an even larger share of its LPG also has to come through the Strait of Hormuz. Economists are already trimming the country's growth forecasts and the rupee has swooned to a record low. In restaurants and kitchens across India, hot food and drinks - even samosas, dosa and chai tea - are disappearing from the menu as the surge in gas prices leads to informal rationing.
Turkey - Sharing a border with Iran, it is bracing for a potential influx of refugees and more geopolitical uncertainty. The main economic impact meanwhile has been on the central bank.It is already having deja vu of inflation crises past. It has been forced to halt its interest rate-cutting cycle for the second time in a year and sold as much as $23 billion in precious reserves to bolster its currency.
The Fragile Few
There are also a handful of countries that look particularly vulnerable having all recently been through - or had very close shaves with - full-blown economic crises.
Sri Lanka has just made every Wednesday a public holiday for state-sector workers in a bid to cap energy costs.Schools, universities and public institutions are being shut, non-essential public transport suspended and drivers must now register for a National Fuel Pass restricting fuel purchases.
Pakistan was teetering on the brink of crisis two years ago and has ramped up its petrol prices and closed its schools for two weeks too. Government departments are having their fuel allowances halved, are now banned from buying new air conditioners and furniture, and have been ordered to take a chunk of their vehicles off the road.
Egypt, on top of the surging cost of fuel and food staples, faces the prospect of a sharp drop in Suez Canal and tourism revenues, the latter of which brought almost $20 billion into the economy last year. The cost of paying back its debt, much of which is in U.S. dollars, has been made more arduous too by a near 9% slump in its own currency since the war began.
For Africa, a continent with growing economic, diplomatic, and security ties to the Gulf region, the ripple effects are already being felt and may intensify in the weeks and months ahead.
Potential political, economic, and practical implications of this unfolding conflict, and map out potential effects in the short and mid-term would be looked into.
Kudus Research And Advocacy Center looked into Political reactions/implications of Individual Africa countries.African governments have responded to the conflict in different ways, reflecting the continent’s diverse diplomatic relationships and foreign policy priorities.
Ghana the president John Mahama have categorically made it clear that the country is in a good position to withstand the war shocks which is supported by the assertion that according to the Bank of Ghana assessment in March 2026 of the war says the global environment has since changes drastically, largely due to the Middle East conflict, rising geopolitical tensions in the Middle East have deepened uncertainty in the external sector . Favourable domestic macroeconomic conditions and high prevailing real interest rates provide scope to ease the policy rate further. The committee decided to reduce the monetary policy rate by 150 basis point to 14.0%. the country inflation current stood at 3.3% far below country target of plus or minus 2 of 8%, Import Cover (Months) is 5.8,Debt to GDP ratio 45.3% and Ghana currency the Cedis currently depreciating at 3.9 according the Bank Of Ghana assessments in March but KRAC asked whether the president assertion is right looking at just within two weeks Petrol from GOIL have risen from 10.99 cedis to 12.28 cedis and diesel from 12.88 to 14.98 cedis as of March 2, another important fact to note is that of the top exports of Ghana Gold Cocoa and oil, and according to Bank of Ghana 2026 export data for January and February Gold exports yielded about $4.2billion in revenue to Ghana consisting of about 68% of all export revenue within this period, followed by Cocoa of about $956million and Oil $451million meaning with Gold as the highest revenue generator for the country and its price from February of $5,600 per ton to $4,490 per ton in March a worrying developments that suggest that they would be reduction in export revenue which obvious rejects the assertion of the president except other cushioning measures to be taken by the government yet to be unveiled .
Morocco was swift in publicly condemning the reported attacks targeting Gulf states. King Mohammed VI reached out directly to the heads of state of the UAE, Qatar, Bahrain, and Saudi Arabia, expressing his country’s support for regional stability and solidarity with what Rabat referred to as “brotherly Arab states.”
In Algeria some observers were caught off guard by Algeria’s reaction, given the country’s longstanding and relatively warm ties with Tehran. According to Africa M.E., Algerian officials emphasized concerns regarding violations of Arab states’ sovereignty, while stressing the importance of maintaining peace and stability across the region.
South Africa took a more neutral approach.President Cyril Ramaphosa urged all sides to exercise restraint and abide by international law. He cautioned that an extended conflict risked disrupting global supply chains and energy markets. Pretoria also signaled its readiness to facilitate mediation, should diplomatic engagement be sought by the parties.
Senegal’s Prime Minister Ousmane Sonko warned about the potentially severe economic fallout for Africa. As reported by Trends in Africa, he cautioned that the conflict could trigger a sharp rise in energy prices and a broader spike in living costs, noting that the Strait of Hormuz serves as a passageway for approximately 20% of the world’s oil traffic.
The African Union’s position. At the continental level, the African Union (AU) is occupying balanced diplomatic position.The AU condemned attacks against the sovereignty of Gulf states while simultaneously urging all parties to de-escalate tensions. The AU stressed the importance of dialogue and international cooperation to prevent escalation.
Economic implications:The economic consequences of the conflict are already being felt, and analysts warn that the situation remains fluid and subject to change depending on the duration and escalation of the conflict. Energy prices,The most immediate effect has been on oil markets. Trends in Africa reports that in early Asian trade, Brent Crude rose sharply to just over USD 80 per barrel, compared to the closing price of USD 72.87 on the Friday before the strikes, before easing slightly to below USD 79 per barrel. Lebanon has the largest dependence on energy imports in the region
For African countries that are net importers of oil, this represents an immediate and rather sharp increase in the cost of fuel, transport, and electricity generation.
Africa-based oil producers such as Nigeria, Angola, and Libya may see a short-term rise in revenue. All the same, these benefits are likely to be partially offset by broader inflationary pressures affecting the wider economy.
Investments and investment pledges : Beyond energy, the conflict threatens to disrupt the flow of Gulf investment into Africa.The UAE, Saudi Arabia, and Qatar have all been major sources of foreign direct investment across the continent in recent years. They have been funding the following industries across the continent: Infrastructure , Agriculture, Technology, Financial services. With the Gulf states now preoccupied with the conflict and military confrontations, many of these investment commitments could potentially face delays as geopolitical uncertainty increases.A prolonged conflict risks potentially slow the pace of Gulf investment flows into African economies for an extended period, while a de-escalation could see a relatively swift resumption of normal economic activity.
Trade routes and shipping : As reported by Trends in Africa, global shipping has been significantly disrupted.The Red Sea and Gulf routes now effectively suspended due to heightened security concerns, which is of particular concern for East African economies whose export and import flows rely on access to the Suez Canal corridor.With vessels rerouting around the Cape of Good Hope, freight times and costs are increasing sharply. This brings knock-on effects for food prices, manufacturing, and consumer goods across the continent.
In the short term, the most immediate consequences for African businesses and employers are likely to be higher energy costs, increased freight and logistics expenses, currency pressures in import-dependent economies, and potential security considerations affecting maritime routes near the Red Sea and Horn of Africa region.
In the medium term, if the conflict continues, more uncertainty and higher prices are to be expected. Much depends on how long the conflict continues, whether it escalates further, and how the Gulf states react once the conflict is over.
Kudus Research And Advocacy Center in conclusion attest to the fact that indeed the ongoing conflict involving the U.S., Israel, and Iran(escalated as of late February 2026) has triggered a severe macroeconomic crisis across Africa, primarily driven by energy and fertilizer shocks. While some oil exporters may see short-term revenue gains, the overall impact is overwhelmingly negative due to surging inflation, food insecurity, and disrupted trade routes.
Energy Price Surge & Inflation :Brent crude prices spiked past $100–$110 per barrel following strikes on Iran and the de facto closure of the Strait of Hormuz. Roughly 40 African nations are net hydrocarbon importers; rising fuel costs are directly increasing transport fares and manufacturing expenses.The IMF warns that a sustained 10% oil price hike could raise global inflation by 40 basis points, with amplified effects on import-dependent African states.
The Key Economic Impacts on Africa
Food Security Crisis:The World Food Programme (WFP) warns that 45 million additional people could face acute hunger if oil remains above $100/barrel through mid-2026.Fertilizer Shortages: About 30% of global fertilizer exports normally pass through the Strait of Hormuz; urea prices have jumped nearly 20% since the conflict began.Sub-Saharan African farmers face reduced yields in the 2026–27 cycle if they cannot afford or access fertilizers.
Trade and Shipping Disruptions:Rerouting Costs: Shipping companies are avoiding the Red Sea/Suez Canal, rerouting around the Cape of Good Hope. This adds 10–14 days to transit and sharply increases freight costs. Hub Shifts: While East African ports are losing transit volume, South African, Mozambican, and Namibian ports could see increased activity as strategic maritime hubs.
Fiscal & Monetary Pressure: African central banks (e.g., in Ghana and Angola) may be forced to reverse recent interest rate cuts to combat rising inflation.
Investment Slowdown: Major Gulf investors (UAE, Saudi Arabia, Qatar) may redirect funds from African infrastructure and agriculture projects toward their own regional security and Kudus Research And Advocacy Center also noted that not only negative impact does the conflict has on Africa but positive as Africa-based oil producers such as Nigeria, Angola, and Libya may see a short-term rise in revenue.reconstruction due to rise in oil prices.
Kudus Research And Advocacy Center recommends that various governments should team up with IEA to look into taping its energy reserves to deal with the recent shortage
Kudus Research And Advocacy Center recommends that various governments should begun to reduce tax or tariffs on energy products or better still absorb the extra recent cost and price hikes due to the war
Kudus Research And Advocacy Center recommends that since many African countries are net importers of oil, this represents an immediate and rather sharp increase in the cost of fuel, transport, and electricity generation hence inflation is expected to be significantly impacted meaning goods and services prices are expected to go up hence the is the need government take care of it by absorbing these shocks with special established funds dedicated towards dealing with
Kudus Research And Advocacy Center recommends that the Economic indicators of countries should be re looked into and reverse especially that of GDP economic growth and expansions Inflation Interest rates among others for those already projections would effected negatively with this conflict
Kudus Research And Advocacy Center recommends that food security of various countries and regional bodies should be looked into with the urgent attention it deserves as as the war have negative impact food hence poverty and ending hunger programs should initiated and already existing one intensifies by allocating more resources towards them
We as an organization fully acknowledge use of extracts from Reuters,HORN International Institute for Strategic Studies,Africa HR Solutions JoyNews Research among other official sources
Sign by:
Yussif Abdul Kudus
Founder & Executive Director
+233(0)245535151