Weekly Global Economic Update: March 24, 2026
Deloitte Insights Economic Analysis
Each week, Deloitte’s team of economists provides a deep dive into the latest global economic developments, offering insights that help organizations navigate a complex and rapidly evolving environment. This week’s update, led by Ira Kalish, Deloitte’s Chief Global Economist, highlights critical issues shaping the world economy, with a special focus on the repercussions of the ongoing conflict in the Middle East, central bank reactions, bond market fluctuations, and China’s economic recovery.
Rising Concerns Over Middle East Conflict and Energy Markets
The conflict in the Middle East remains a dominant concern for global economic stability, particularly due to its impact on oil and energy markets. Saudi Arabian officials are currently assessing potential trajectories for oil prices amid escalating tensions. Their baseline projection suggests Brent crude oil could reach a staggering $180 per barrel if the conflict persists into late April.
Interestingly, while Saudi Arabia stands to gain from higher oil prices as a major exporter, its preference remains for price stability over volatile spikes. This caution stems from historical precedent: dramatic price increases risk dampening global economic activity and reducing long-term demand for oil. Particularly alarming is the potential for a permanent shift in consumer and business energy consumption patterns, akin to shifts witnessed during the 1970s energy crisis.
U.S. LNG Producers Respond to Supply Gaps
In response to supply disruptions at the Strait of Hormuz, U.S.-based liquefied natural gas (LNG) producers are preparing to boost exports. Market conditions currently favor exporters, with higher prices enhancing profitability. Notably, some U.S. companies have additional LNG capacity but expanding output significantly would require long-term investments, delaying any immediate large-scale increase.
Concerns have arisen, particularly among European economists, about whether the U.S. might restrict LNG exports to shield domestic consumers from rising prices. But current indications suggest no such restrictions are planned, signaling continued transatlantic support for Europe amid shortages in gas supplies from Qatar.
Aviation Sector Faces Jet Fuel Shortages and Rising Costs
The Middle East conflict is also exerting pressure on jet fuel supplies, impacting global airlines. European carriers operating routes to Asia currently secure fuel for outbound flights but face uncertainty over refueling options for return journeys. Since Middle Eastern oil constitutes a significant portion of jet fuel supply—Kuwait alone accounts for 15% of seaborne jet fuel passing through the Strait of Hormuz—any disruption risks supply shortages.
Rising jet fuel prices, which have doubled recently, threaten airline profitability, particularly as many airlines do not hedge fuel costs extensively. Some carriers are already exploring reductions in flight frequency to manage costs. Compounding the issue, while jet-fuel refining has increased in China and the Middle East, China’s recent export halt on refined fuels exacerbates the scramble for alternative supply sources.
Should the conflict remain unresolved, these supply constraints could drive up airline fares substantially, with consequential drops in passenger demand.
Perspectives from the International Energy Agency
Fatih Birol, head of the International Energy Agency (IEA), underscores the severity of the energy market disruption as the “greatest global energy security threat in history.” He points out that restoring oil and gas production will be a prolonged process, with some fields requiring six months or more to resume operation—and others facing even longer timelines due to damage and shutdowns.
Birol stresses that the most critical step to stabilizing global oil prices is reopening the Strait of Hormuz, the vital transit chokepoint currently affected by the conflict. Meanwhile, energy consumers worldwide may need to modify their behaviors, such as embracing remote work, minimizing air travel, and reducing driving speeds—efforts reminiscent of energy-saving adjustments during the 1970s oil crises.
Broader Economic Implications: Beyond Energy Consumption
The IEA director also highlighted that the crisis’s impact extends beyond direct energy use. Many essential commodities, including key components for fertilizers and manufactured goods, are byproducts of hydrocarbon production. Thus, shortages in oil and gas availability have a ripple effect, potentially constraining supply chains and commodities vital to agriculture and industry.
Additional Highlights
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Major Central Banks’ Responses: Central banks globally are monitoring the conflict’s fallout, balancing cautious monetary policies against inflationary pressures linked to rising energy prices.
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Bond Markets: Investors in government and corporate bonds are adjusting strategies amid heightened uncertainty and the prospect of prolonged instability in energy markets.
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China’s Economy: Amid global volatility, China shows signs of economic rebound, bolstered by policy support and increasing industrial activity, which may provide some stability to global trade flows.
Conclusion
As the Middle East conflict continues to reverberate through energy markets, global economic players—from governments to businesses and consumers—face a period marked by uncertainty and adjustment. Deloitte’s ongoing analysis underscores the critical need for agile responses to shifting energy dynamics and the broader economic impacts involved.
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Contact: Ira Kalish, Chief Global Economist, Deloitte Services LP; [email protected]; +1 310 420 0392
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