Iran war sparks stagflation fears as oil tops $115
Mar 9th 2026
A sharp rise in oil and gas prices after the US-Israel conflict with Iran is driving markets down, pushing inflation expectations up and raising the risk of weak growth alongside higher prices worldwide.
- WTI crude climbed above $115 a barrel, nearly double its January level of about $60.
- Closure threats at the Strait of Hormuz and recent Middle East production cuts have tightened supply for roughly a fifth of seaborne oil and gas.
- Global stock markets fell sharply, with Japan's Nikkei down over 6% and South Korea's Kospi down over 7% on the first trading day after the escalation.
- Higher fuel and energy costs are expected to lift consumer prices worldwide, with RBC projecting US inflation could reach 3.7% if oil stays at $100 a barrel.
- Economists warn the shock could slow growth while raising inflation, creating stagflation risks for the UK, eurozone and parts of Asia.
- Central banks are likely to delay rate cuts or raise rates, with the Fed's cuts pushed into September and the ECB and Bank of Canada now expected to hike.
- If the disruption persists, scenarios from Goldman Sachs and Westpac put oil at record highs between $145 and $185 a barrel, increasing the risk of a global recession.