Our world is facing several ongoing wars; these wars are taking a toll on the global economy. For example, the recent war in Iran spurred retaliation on energy infrastructure in the region, wreaking havoc on a world economy already battered by the COVID-19 pandemic and the war in Ukraine.
Furthermore, attacks on ships in the Strait of Hormuz have rocked oil prices. During the war, shipping traffic through the Strait of Hormuz was obstructed for months, sending energy prices higher and pushing up consumer prices.
The International Monetary Fund (IMF) expects global inflation to rise to 4.7 per cent up in 2026, up from 4.1 per cent in 2025. High gas prices have been a concern, not only in the United States and Canada, but also globally.
For many business owners, the war in Iran is spelling out a new reality, one that reinforces the fact that many businesses are now operating in a riskier and more unpredictable world. Many economists agree that even if the war in Iran ends, the increased cost of doing business would linger; that’s because everything has gotten more expensive.
To offset rising costs, many business owners are using alternative manufacturers in other locales, stockpiling goods in case of unexpected events, and developing new supply chains. The IMF predicted that global inflation will rise due to the high costs of basic goods such as food, energy, metals, and fertilizers.
Whenever the US signals that a peace agreement is in the works, oil prices slightly go down, then an unexpected bout of hostility between the United States and Iran sends them spiking up again. In the wake of the Iran war, President Trump agreed to remove the 20 per cent fee on all cargo that ships through the Strait of Hormuz, after being convinced by allies that this isn’t a wise move. After all, the Strait of Hormuz is a global international waterway.
With all that’s going on in the Strait, many international shipping companies, like Maersk, for example, have found alternative routes to ship goods. As of June 2026, Maersk and other well-known international shipping companies have delivered 44,000 containers of goods, such as furniture, electronics, and food, to the Persian Gulf region by rail and truck. Although this is a cumbersome and costly way to deliver goods, it’s the only effective way to do so, bearing in mind that the Strait is closed. Undoubtedly, this also causes prices of goods to rise. Vincent Clerc, the chief executive of Maersk, said that the alternative route costs the company about $1,000 extra per container.
If the disruptions continue, the higher costs will be passed on to consumers; otherwise, retailers will experience eroded profits. The ripple effect has extended beyond the Gulf; the cost of shipping a container to Asia has risen sharply. According to Maersk, freight rates remain 84 per cent higher than a year ago. Southeast Asia has been hit particularly hard by rising costs. That means that higher supply chain costs are interfering with manufacturing planning and schedules.
When energy prices spike, some shipping lines engage in what is known as slow steaming or reducing their speed to save money on fuel, which leads to longer delivery times. Longer delivery times, higher freight costs, and elevated energy prices all add pressure to consumer prices.
In the wake of the crisis, many neighbouring countries are seeking alternative shipping routes. Companies like Maersk have already said they can no longer depend on a single pathway and must look at alternatives.
The IMF concluded its report by stating that the global economy has so far weathered the shock of the war better than feared. Although oil-producing countries in the Middle East have been hit hardest by the war, they are expected to experience sharp contractions this year. Other countries, like India, are also facing an output crunch because of high oil prices. Growth in India is expected to decline to 6.4 per cent from 7.7 per cent in 2025. While output in China is projected to decline to 4.6 per cent in 2026 from 5 per cent last year.
High gas prices are a concern to many Canadians and Americans and will play a pivotal role in the increase in prices. The IMF urged policymakers to remain focused on price stability as they assess the effect of volatile commodity pricing.
David Messiha | Staff Writer
