The war with Iran is sending shockwaves through the global economy after Iran shut down the Strait of Hormuz, a vital shipping route that carries about one fifth of the world’s oil. The closure followed missile strikes by the United States and Israel that killed Iran’s leader, Ayatollah Ali Khamenei. Oil prices briefly surged to nearly 120 dollars a barrel before easing, pushing gasoline prices sharply higher and raising costs for businesses and consumers worldwide.

Economists warn that sustained increases in energy prices will fuel inflation and slow global growth. Higher oil costs are also disrupting fertilizer shipments, threatening agricultural production and raising the risk of food shortages, particularly in low income countries. Nations heavily dependent on energy imports, including many in Europe and Asia, face mounting economic strain, while some oil producing countries outside the conflict zone stand to benefit.

The crisis is complicating decisions for central banks already struggling with stubborn inflation and uneven growth. Policymakers must weigh whether to raise interest rates to control rising prices or lower them to support weakening economies. Analysts say the duration of the conflict and the reopening of the Strait of Hormuz will be critical in determining how severe and lasting the economic fallout becomes.