OBELA Analysis

The closure of the Strait of Hormuz on 26 February 2026, following the US attack on Iran, led to a rise in hydrocarbon prices, which in turn increased global inflation. In April 2026, the IMF revised its inflation forecasts upwards. In the most favourable scenario, inflation is expected to reach4.4 per cent, compared with 4.1 per cent in 2025. Although on 14 June the Pakistani government (which is mediating between the US and Iran) announced the possible signing of a memorandum of understanding and a 60-day ceasefire, the effects on hydrocarbon prices will persist at least for the remainder of 2026.

According to Copernicus data (the EU’s Earth observation programme), 2025 ranked as the third hottest year on record. Temperatures were just 0.01°C lower than in 2023 and 0.13°C lower than in 2024. From 2023 to 2025, global average temperatures exceeded pre-industrial levels (1850–1900) by over 1.5°C. This marked the first three-year period above this threshold, which the Paris Agreement set as a limit to avoid.

The closure of the Strait of Hormuz has changed the global geopolitical landscape and international trade. With oil prices rising and a risk of global recession, countries are urgently seeking alternatives. This article examines how the Israel-US war against Iran has changed energy trade.