Economists assess that the impact of the US-Iran conflict causes oil prices to surge by 13%, making China the biggest loser?

The Middle East conflict rapidly escalated over the weekend, with financial markets reacting first. Economists point out that the biggest impact of the war on the global economy is oil prices. If Iran’s supply is interrupted or the Strait of Hormuz is blocked, energy costs will rise across the board, affecting import-dependent countries and fragile economies. In this context, China, Europe, and India, which are highly dependent on Iranian oil, are seen as among the biggest victims.

Middle East conflict heats up markets: risks increase for small economies

Bloomberg reports that as the geopolitical conflict escalates, investors quickly shift to safe-haven assets like the US dollar and gold, causing global stock markets to decline. In response, Citigroup warns that the first wave of market volatility often hits emerging markets with insufficient foreign exchange reserves.

The bank notes that countries such as Argentina, Sri Lanka, Pakistan, and Turkey may face capital outflows and currency depreciation pressures. Turkey’s central bank has even suspended its 7-day repurchase operations to stabilize market confidence through tighter monetary policy.

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Oil prices surge by up to 13%, raising concerns over Iran supply risks

Bloomberg economists Ziad Daoud and Dina Esfandiary believe that the core impact of this conflict on the global economy is oil prices. US crude futures (WTI) surged over 7% on the evening of the 1st, reaching $72 per barrel. Brent crude oil temporarily rose 13%, breaking through $82 per barrel, hitting a new high since January 2025.

They state that Iran accounts for about 5% of global oil supply. If supply is completely halted, prices could rise by another 20%. There is also concern that about 20% of the world’s oil passes through the Strait of Hormuz; if blocked, prices could soar to $108 per barrel. This would put pressure on global inflation and economic growth.

Who are the losers? China, Europe, and India are hit hardest

Daoud and Esfandiary point out that if oil prices continue to rise, major importers like China, Europe, and India will face the greatest pressure; while exporters such as Russia, Canada, and Norway could benefit.

TD Securities analyst Rich Kelly revealed that China imports about 99% of Iran’s oil exports, accounting for roughly 13% of its maritime crude oil imports in 2025. If Iran’s supply is disrupted, China will lose a key source of low-cost oil, and rising energy costs could increase production and inflation pressures.

From Venezuela to Iran: a prelude to the Xi-Trump meeting

On the political front, the US and Israel’s military actions against Iran have sparked strong rebukes from China. Chinese Foreign Minister Wang Yi stated on Sunday, “Openly killing the leaders of sovereign countries and implementing regime change is unacceptable.”

Liberty Times analysis points out that recent military actions launched before the Xi-Trump summit symbolize the US’s attempt to deal a series of blows to Beijing’s “diplomatic chips” strategy with allies. It also reflects Trump’s desire to address multiple strategic core issues simultaneously regarding Taiwan and the Indo-Pacific situation.

In this context, central bank decisions are becoming more complex. Rising oil prices boost inflation expectations, but war uncertainties may suppress demand. Kelly believes that global economic uncertainty is accumulating again, and central banks worldwide are likely to adopt a wait-and-see approach in the short term, adjusting policies only after the situation clarifies.

This article, “Economists assess US-Iran conflict impact: oil prices surge 13%, making China the biggest loser,” first appeared on Lian News ABMedia.