Global Economy Faces Volatility Amid West Asia Conflict and Energy Supply Concerns

Kathmandu. The ongoing conflict and temporary ceasefire in West Asia have significantly impacted the global economy. While investors are hopeful for peace talks, leading to a recovery in stock markets, the oil market remains volatile.

Major international stock indices have risen, but crude oil prices continue to climb, with Brent crude nearing $100 per barrel. Concerns over an energy crisis persist due to disruptions in key oil supply routes.

Japan has announced it will release additional oil from its national reserves to stabilize supply. The government is preparing to release approximately 20 days' worth of oil into the market. Japan had previously utilized its reserves to curb price hikes, and this move is expected to alleviate some supply pressure in the global market.

Meanwhile, leaders from the U.S. and the U.K. have discussed practical plans to restore operations in critical waterways. They emphasized that immediate steps are necessary to facilitate oil shipments, regardless of the peace status. The European Union has stated that free movement in waterways must be ensured without any fees or taxes.

U.S. President Donald Trump has warned of a strong response if Iran attempts to impose fees on ships using the Strait of Hormuz. He also claimed that oil flows would soon normalize, highlighting that political tensions remain high.

Meanwhile, the International Monetary Fund has warned that the war could lower global economic growth. Disruptions in supply chains are expected to drive up energy and food prices, potentially pushing millions into food insecurity. The World Bank and other institutions are preparing to provide financial assistance to affected countries.

The risk of an energy crisis in Europe has also increased. With low gas storage levels, warnings have been issued to replenish reserves in time. If supply does not improve, energy shortages could become severe by the coming winter.

In a move toward relief, the European Bank for Reconstruction and Development has announced a major financial package for affected economies. Additionally, airlines have suspended flights to certain Middle Eastern destinations due to security risks.