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| Meta Title | Economists Gauge Hit From Mideast War as China Seen Among Losers |
| Meta Description | The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as gold, while stocks slump. The main transmission mechanism to the world economy is via oil. Iran supplies about 5% of global oil, and a complete outage would lift the price by âabout 20%, âBloomberg Economicsâs Ziad Daoud and Dina Esfandiary wrote in a report before oil started trading in Asia. |
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| Boilerpipe Text | (Bloomberg) --
For the past year, economists have modeled the impact of US President Donald Trumpâs trade wars. Now, itâs a real war theyâre assessing.
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The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as gold, while stocks slump. That leaves smaller economies â especially those with scant foreign exchange reserves â vulnerable.
The main transmission mechanism to the world economy is via oil. Brent rallied as much as 13% to above $82 a barrel â the highest since January 2025 â before paring some gains in Asian trading on Monday.
Iran supplies about 5% of global oil, and a complete outage would lift the price by âabout 20%, âBloomberg Economicsâs Ziad Daoud and Dina Esfandiary wrote in a report before oil started trading in Asia. Furthermore, about 20% of global oil supply transits through the Strait of Hormuz, and if thatâs shut prices could spike to as much as $108 per barrel, they warned.â
If sustained, those higher oil prices would hurt major importers including China, Europe and India, while beneficiaries would include exporters such as Russia, Canada and Norway, the BE analysts wrote in a note. As for the US, consumers would lose out as higher fuel costs squeeze incomes, but the economy overall faces less of a drag as shale has made it an oil exporter.
Of course, much will depend on what happens in coming days, weeks and months. In a separate note, BE analysts said they expect Iranâs response will continue to escalate.
âWhile it canât match the USâs military superiority, Iran can impose significant costs and seek to bog the US down in the region,â Daoud and Esfandiary along with Becca Wasser and Jennifer Welch wrote.
For a global economy thatâs been muddling through Trumpâs tariff rollout and growing uncertainty over the impact of Artificial Intelligence on labor markets, the latest spike in Middle East tensions adds yet more uncertainty. Travel chaos extended through the region and beyond, while the worldâs largest container carriers had to reroute ships to avoid the Persian Gulf.
Shane Oliver, chief economist at AMP Ltd., ascribes a 60% probability to a limited war, where Trump declares victory in the next week or so. The other scenario would involve a longer confrontation and a potential doubling in oil prices to around $150 a barrel.
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# Economists Gauge Hit From Mideast War as China Seen Among Losers
Malcolm Scott
Mon, March 2, 2026 at 4:50 AM GMT+1
4 min read
In this article:
(Bloomberg) -- For the past year, economists have modeled the impact of US President Donald Trumpâs trade wars. Now, itâs a real war theyâre assessing.
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The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as gold, while stocks slump. That leaves smaller economies â especially those with scant foreign exchange reserves â vulnerable.

The main transmission mechanism to the world economy is via oil. Brent rallied as much as 13% to above \$82 a barrel â the highest since January 2025 â before paring some gains in Asian trading on Monday.
Iran supplies about 5% of global oil, and a complete outage would lift the price by âabout 20%, âBloomberg Economicsâs Ziad Daoud and Dina Esfandiary wrote in a report before oil started trading in Asia. Furthermore, about 20% of global oil supply transits through the Strait of Hormuz, and if thatâs shut prices could spike to as much as \$108 per barrel, they warned.â
If sustained, those higher oil prices would hurt major importers including China, Europe and India, while beneficiaries would include exporters such as Russia, Canada and Norway, the BE analysts wrote in a note. As for the US, consumers would lose out as higher fuel costs squeeze incomes, but the economy overall faces less of a drag as shale has made it an oil exporter.
Of course, much will depend on what happens in coming days, weeks and months. In a separate note, BE analysts said they expect Iranâs response will continue to escalate.
âWhile it canât match the USâs military superiority, Iran can impose significant costs and seek to bog the US down in the region,â Daoud and Esfandiary along with Becca Wasser and Jennifer Welch wrote.
For a global economy thatâs been muddling through Trumpâs tariff rollout and growing uncertainty over the impact of Artificial Intelligence on labor markets, the latest spike in Middle East tensions adds yet more uncertainty. Travel chaos extended through the region and beyond, while the worldâs largest container carriers had to reroute ships to avoid the Persian Gulf.
Shane Oliver, chief economist at AMP Ltd., ascribes a 60% probability to a limited war, where Trump declares victory in the next week or so. The other scenario would involve a longer confrontation and a potential doubling in oil prices to around \$150 a barrel.
Story Continues
âThere are few examples of successful regime change from US interventions in recent decades,â Oliver wrote in a note to clients.
China Impact
Chinese refiners would be impacted if Iranian barrels are disrupted, given they import an estimated 99% of Iranian exports, equivalent to about 13% of Chinese seaborne crude imports in 2025, according to analysts at TD Securities including Rich Kelly.
âThe Middle Kingdom would lose another source of cheap barrels,â they wrote. âRussia stands to benefit with Indian and Chinese demand likely shifting toward heavily discounted Urals, which would ease some pressure on the Kremlin from decreased crude pricing.â
After US and Israeli military strikes on Iran killed the Islamic Republicâs Supreme Leader Ayatollah Ali Khamenei, Chinese Foreign Minister Wang Yi on Sunday called it âunacceptable to openly kill the leader of a sovereign country and institute regime change.â
Coming about a month before President Xi Jinping is set to host Trump in Beijing, any deterioration in US-Chinese ties risks disrupting a trade truce that has calmed investors on both sides of the Pacific Ocean.
If broader market upheaval is sustained, those with fewer buffers may prove vulnerable. Analysts at Citigroup say countries with low FX reserves, such as Argentina, Sri Lanka, Pakistan, and Turkey, âface heightened risks of sudden capital outflows and currency depreciation.â
In a bid to shield the currency, the Turkish central bank announced suspension of its one-week repo auctions due to developments in financial markets, according to a statement by the monetary authority.
Turkey is also vulnerable to swings in market sentiment due to its trade links with Iran, according to Robin Brooks, who publishes the Shadow Price Macro Substack. âIran is a tiny economy, but â at the margin â markets will see this as another reason to be negative on Turkey,â he wrote.
As for central banks, theyâre likely to take a measured approach for now.
âWhat complicates the near-term further is that there will be a broad-based increase in global uncertainty, which may feed through into the demand side of the economy while inflation expectations pick up,â the TD Securities analysts wrote. âThis argues for patience initially, but a willingness to react if and when the situation stabilizes in the Middle East.â
\--With assistance from Swati Pandey.
(Updates markets throughout, adds economist comment in ninth paragraph.)
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| Readable Markdown | (Bloomberg) -- For the past year, economists have modeled the impact of US President Donald Trumpâs trade wars. Now, itâs a real war theyâre assessing.
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The most immediate impact from the escalating Middle East conflict is through market reaction as investors take flight to safe havens such as gold, while stocks slump. That leaves smaller economies â especially those with scant foreign exchange reserves â vulnerable.

The main transmission mechanism to the world economy is via oil. Brent rallied as much as 13% to above \$82 a barrel â the highest since January 2025 â before paring some gains in Asian trading on Monday.
Iran supplies about 5% of global oil, and a complete outage would lift the price by âabout 20%, âBloomberg Economicsâs Ziad Daoud and Dina Esfandiary wrote in a report before oil started trading in Asia. Furthermore, about 20% of global oil supply transits through the Strait of Hormuz, and if thatâs shut prices could spike to as much as \$108 per barrel, they warned.â
If sustained, those higher oil prices would hurt major importers including China, Europe and India, while beneficiaries would include exporters such as Russia, Canada and Norway, the BE analysts wrote in a note. As for the US, consumers would lose out as higher fuel costs squeeze incomes, but the economy overall faces less of a drag as shale has made it an oil exporter.
Of course, much will depend on what happens in coming days, weeks and months. In a separate note, BE analysts said they expect Iranâs response will continue to escalate.
âWhile it canât match the USâs military superiority, Iran can impose significant costs and seek to bog the US down in the region,â Daoud and Esfandiary along with Becca Wasser and Jennifer Welch wrote.
For a global economy thatâs been muddling through Trumpâs tariff rollout and growing uncertainty over the impact of Artificial Intelligence on labor markets, the latest spike in Middle East tensions adds yet more uncertainty. Travel chaos extended through the region and beyond, while the worldâs largest container carriers had to reroute ships to avoid the Persian Gulf.
Shane Oliver, chief economist at AMP Ltd., ascribes a 60% probability to a limited war, where Trump declares victory in the next week or so. The other scenario would involve a longer confrontation and a potential doubling in oil prices to around \$150 a barrel. |
| Shard | 192 (laksa) |
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