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Iran War Sends Shockwaves Through Global Economy, Raising Energy and Food Security Concerns

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The ongoing conflict involving Iran is sending economic shockwaves across global markets, pushing up energy and fertiliser prices and raising fears of food shortages in vulnerable countries. Economists warn that the disruption is also complicating efforts by central banks to control inflation.

At the center of the crisis is the Strait of Hormuz, a strategic shipping corridor through which roughly one-fifth of the world’s oil supply normally passes. The route has effectively been shut since military strikes by the United States and Israel against Iran began 11 days ago, triggering widespread concern in global energy markets.

Oil prices have surged sharply since the conflict escalated. Crude traded below $70 per barrel in February but climbed to nearly $120 earlier this week before easing to around $90. The rise in crude prices has pushed gasoline costs higher as well. According to the American Automobile Association, the average price of gasoline in the United States jumped to $3.48 per gallon from just under $3 only a week earlier.

Economists say the impact could be even greater in regions that rely heavily on Middle Eastern energy supplies. Countries in Europe and Asia depend more on imported oil and gas from the Gulf than the United States, making them particularly vulnerable to supply disruptions.

Kristalina Georgieva, managing director of the International Monetary Fund, warned that sustained increases in oil prices could have broader economic consequences. She said every 10 percent rise in oil prices that lasts most of the year could push global inflation up by 0.4 percent while reducing worldwide economic output by up to 0.2 percent.

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Economists stress that reopening the Strait of Hormuz is essential to restoring stability. Simon Johnson of the Massachusetts Institute of Technology said about 20 million barrels of oil pass through the waterway each day. He noted that global producers have little spare capacity to replace that volume if shipments remain blocked.

Despite the shock, some analysts believe the global economy may still manage to absorb the disruption if the conflict proves short-lived. Eswar Prasad, a trade policy professor at Cornell University, said the world economy has previously shown resilience after major shocks such as the Russian invasion of Ukraine and sweeping tariff measures introduced in 2025.

The war is already creating uneven economic effects across countries. Major energy importers including Japan, India, China and several European economies face higher costs as oil prices climb. Oil producers outside the conflict zone such as Norway, Russia and Canada could benefit from higher export revenues.

Some nations face particularly severe challenges. Pakistan imports about 40 percent of its energy and relies heavily on liquefied natural gas shipments from Qatar, supplies that have been disrupted by the conflict.

The crisis is also affecting global agriculture. Researchers at the International Food Policy Research Institute estimate that up to 30 percent of the world’s fertiliser exports pass through the Strait of Hormuz. Disruptions to shipments of products such as urea, ammonia and phosphates are already pushing costs higher for farmers.

Experts warn that higher fertiliser prices may eventually translate into rising food costs worldwide. Low-income countries with fragile agricultural systems are expected to face the greatest risk of shortages if the disruption continues. Central banks are now confronting a difficult choice between raising interest rates to curb inflation or easing policy to support economic growth as the crisis unfolds.

See also  Oil Surge and Market Jitters Follow Strait of Hormuz Tensions

Business

Ryanair First-Half Profit Falls 15% as Higher Fuel Costs and Lower Fares Hit Earnings

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Ryanair reported a 15% decline in first-half net profit as rising jet fuel costs and lower ticket prices outweighed an increase in passenger numbers, highlighting the pressure facing European airlines ahead of another potentially expensive year.

The Irish airline recorded a net profit of €2.15 billion for the six months from April to September 2026, compared with the same period a year earlier. Diluted earnings per share fell 14% to €2.05.

Revenue increased by 3% to €10.08 billion, while passenger numbers rose 6% to 125.8 million. However, average fares declined by 4%, limiting the benefit of higher traffic. Operating costs climbed 10% to €7.69 billion.

Ryanair said the conflict in the Middle East had made consumers more cautious and encouraged them to book flights closer to departure dates. The airline also faced higher fuel expenses as unhedged jet fuel prices doubled.

The results reflect only part of the increase in fuel prices because Ryanair has secured contracts covering 80% of its fuel requirements for the financial year ending March 2027. These arrangements have helped protect the company from market volatility, but the remaining 20% of its requirements has been exposed to higher prices.

Fuel costs expected to rise sharply

Ryanair estimates that its fuel bill could increase by around €2 billion in the financial year ending March 2028, based on current forward prices.

“Unless there is a swift resolution of the Middle East conflict, we expect jet-fuel prices to remain elevated well into 2027,” chief executive Michael O’Leary said.

O’Leary also warned that the airline’s existing lower-cost fuel hedges would expire ahead of summer 2027, potentially leaving European carriers facing significantly higher expenses.

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He previously forecast that European airfares could increase by as much as 20% next year. However, Ryanair expects higher ticket prices and capacity reductions by competing airlines to be insufficient to offset the full increase in fuel costs.

The company is reviewing measures to control spending, including temporary pay freezes, lower crew-to-passenger ratios and wider use of artificial intelligence across operational and support functions.

Ryanair also announced an €800 million share buyback programme, due to begin in February 2027 and run for approximately 10 months, subject to market conditions.

Demand for October to December remains strong, with fares modestly above last year’s levels. However, the growing trend towards late bookings makes future revenue harder to assess.

The airline declined to provide a full-year profit forecast, citing uncertainty surrounding geopolitical conflicts, fuel prices, economic conditions and disruption to European air traffic control.

In September, Ryanair announced cuts to its winter schedule to reduce exposure to unhedged fuel costs. It also lowered its full-year passenger target from 216 million to 214 million.

Ryanair shares rose 2% in Dublin during early trading on Monday.

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Fitch Cuts France’s Debt Outlook to Negative Amid Budget Deadlock and Weak Growth

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Credit rating agency Fitch has revised France’s sovereign debt outlook from stable to negative while maintaining its rating at A+, citing weaker economic growth, rising borrowing costs and concerns over the country’s ability to reduce its public deficit.

The decision increases pressure on the French government to secure approval for its 2027 budget by the end of the year, as political divisions and an approaching presidential election complicate efforts to restore public finances.

Fitch’s announcement on Friday followed figures from the national statistics institute Insee showing that France’s gross domestic product contracted by 0.1% in the third quarter of 2026. The economy had stagnated in the second quarter after shrinking by 0.2% in the first three months of the year.

The agency pointed to persistent political fragmentation and a difficult social climate, including mass protests, as factors weakening confidence in the government’s ability to deliver lasting fiscal improvements.

Economy and Finance Minister Roland Lescure said he took note of Fitch’s decision, describing the adoption of a responsible budget before the end of the year as an absolute necessity.

The government aims to reduce the budget deficit to 5% of gross domestic product, while maintaining a path towards fiscal consolidation. Lescure said a clear budget was needed to give businesses and investors greater certainty in an uncertain international environment.

Earlier on Friday, he described the French economy as being at a standstill and warned that the country could face serious difficulties if the proposed recovery budget was not adopted. He repeated that the deficit needed to be brought down to 5% or less.

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However, securing parliamentary approval remains uncertain because President Emmanuel Macron’s government lacks a majority in the National Assembly. The approaching 2027 presidential election is also adding to political tensions.

Fitch expects the budget to be adopted despite the parliamentary deadlock, pointing to constitutional procedures available to the government. The agency said political debates ahead of the election had done little to strengthen its confidence in France’s ability to achieve a lasting reduction in the deficit and stabilise public debt.

One option available to the government is Article 49.3 of the French Constitution, which allows legislation to pass without a parliamentary vote unless lawmakers approve a motion of no confidence.

The government could also consider adopting the budget through ordinances, although this procedure has never been used to pass a national budget since the Fifth Republic was established in 1958.

Jérôme Mathis, an economics professor at Paris-Dauphine University, told Euronews that using ordinances could reduce uncertainty in the short term. However, he warned that such a move would not necessarily restore France’s long-term fiscal credibility.

The negative outlook signals increased concern over France’s financial position, although its A+ rating remains unchanged. The government’s ability to pass the 2027 budget and demonstrate credible deficit-reduction measures will be central to restoring confidence.

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Uzbekistan Launches Apple Pay and Google Pay Following Financial Sector Reforms

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Uzbekistan has introduced Apple Pay and Google Pay, opening access to two major international digital payment platforms as the country moves to modernise its financial services sector.

The rollout follows regulatory changes to personal data laws and discussions between Uzbek officials and technology companies. The Central Bank of Uzbekistan has also confirmed that work is underway to extend the services to cards issued through domestic payment networks Uzcard and HUMO, although no launch date has been announced.

Saida Mirziyoyeva, head of the Presidential Administration, announced the availability of the services for locally issued cards on October 27. She had met Google Vice President Karan Bhatia in New York a month earlier to discuss technological cooperation and the conditions needed for international payment providers to operate in the country.

Banks included in the rollout

Before the launch, customers in Uzbekistan could use domestic mobile and contactless payment services, including HUMO Pay and UZCARD PAY, as well as QR code systems.

The introduction of Apple Pay and Google Pay gives eligible cardholders access to international platforms for mobile payments.

Apple Pay initially supports Visa and Mastercard cards issued by eight local banks and financial institutions: Uzum Bank, Orient Finans Bank, the National Bank of Uzbekistan, Kapitalbank, Hamkorbank, Ipak Yuli Bank, TBC Bank and Octobank. Uzum Bank and Hamkorbank currently support Visa cards only.

Google Pay is available for eligible cards from nine banks: AVO Bank, Octobank, Uzum Bank, TBC Bank, Aloqabank, Kapitalbank, Ipak Yuli Bank, the National Bank of Uzbekistan and Orient Finans Bank.

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Customers have been advised to contact their banks to confirm which cards can be added to the services.

The Central Bank told Euronews that both platforms protect customers’ card information during transactions. Cashback offers and other benefits will depend on the conditions set by individual banks.

Changes to data protection rules

The launch follows amendments to Uzbekistan’s personal data legislation in March 2026, which eased restrictions on the processing and storage of certain types of personal information outside the country.

During her September meeting with Google’s Bhatia, Mirziyoyeva linked the regulatory changes to the arrival of international payment systems, saying they were creating wider opportunities for their use in Uzbekistan.

The discussions also covered cooperation in artificial intelligence, cybersecurity training and support for the country’s technology industry.

The development forms part of Uzbekistan’s broader efforts to strengthen its financial technology sector. In September, the Central Bank approved a National Fintech Strategy covering the 2026-2030 period.

The strategy aims to attract investment, expand cross-border payments, introduce Open Banking and improve connections between financial systems.

The planned inclusion of Uzcard and HUMO would extend access to the international payment platforms beyond customers using Visa and Mastercard, bringing more locally issued cards into the expanding digital payments market.

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