The escalating conflict in the Middle East is no longer a localised crisis; it has become a critical force reshaping the structure of the global economy. Unlike past energy shocks, its impact goes beyond supply disruptions or price volatility.
At its core is the politicisation of energy, finance and supply chain mechanisms. As the Strait of Hormuz – one of the world’s most vital energy chokepoints – becomes embedded in a geopolitical contest, energy prices are no longer determined purely by market forces, but increasingly anchored by security risks.
The global economy is thus entering a new phase dominated by geopolitics. This transformation carries three profound implications.
The logic of global supply chains is shifting from efficiency-first to security-first. Key resources, shipping routes and technological nodes are being redefined as strategic assets, while regionalisation and diversification become dominant trends.
Next, the weaponisation of energy is eroding the foundations of the dollar-based system, accelerating the emergence of more diversified currency settlement arrangements and signalling a gradual shift from a unipolar to a multipolar financial structure.
Finally, policy tensions between inflation control and growth have intensified, forcing central banks into more complex trade-offs, with global capital flows and growth expectations likely to face sustained constraints.
In essence, the global economy is moving from one driven by the gains of globalisation to one shaped by the pricing of security risks.
For further reading, please visit The Business Times here, where this article was first published in on 7 April 2026.