‘Definitely has all the markings...’: Economist warns West Asia war may push world to recession
“Supply is a big issue. The longer this lasts, the problems accumulate because we do not have enough reserves of crude oil and petroleum products, especially for Asia,” he said.
- Mar 26, 2026,
- Updated Mar 26, 2026 7:17 PM IST
The ongoing conflict in West Asia could push the world economy toward a global recession if the war continues for several more weeks, warned economist John Sfakianakis, citing severe disruptions to energy supplies, trade flows and financial markets.
The Chief Economist and Head of Economic Research at the Gulf Research Centre said the scale of economic disruption will largely depend on how long the conflict lasts. If the war continues for another couple of months, he said, the world could face a structural economic shock with widespread consequences.
Also read: ‘Global economy could collapse by early May’: Analyst issues stark warning over oil crisis
“If this continues, it definitely has all the markings of a global recession,” Sfakianakis told ANI, adding that the economic fallout would be “very painful for the global economy, for emerging markets, and for countries like India.”
Energy supply chains under strain
One of the most immediate risks, according to Sfakianakis, is the vulnerability of global energy supply chains due to disruptions in the Strait of Hormuz — a critical chokepoint through which a significant portion of the world’s oil supply passes.
He said the crisis has already created a major supply problem, with global markets facing a shortage of crude and petroleum products.
“The world is short of around 10 to 12 million barrels of oil,” he said, noting that oil exports from several Gulf countries have dropped sharply since the conflict escalated.
Before the crisis, Saudi Arabia exported roughly 7-7.5 million barrels of oil per day, but shipments have now fallen to about 4.5-5 million barrels. Exports from the United Arab Emirates have also declined significantly from nearly 4 million barrels per day to around 1.2-1.5 million barrels.
Meanwhile, Qatar has reportedly halted exports from some of its energy facilities, with parts of its LNG production expected to remain offline for years. Other Gulf states such as Kuwait have also faced export challenges.
Rising impact on global trade and daily life
The supply disruptions are already being felt across sectors ranging from aviation to food supply chains.
Sfakianakis said airline ticket prices for routes to Asia have surged dramatically due to the crisis, while shortages of essential commodities such as cooking oil are beginning to emerge in India.
Asia remains the largest market for Gulf oil, making the region particularly vulnerable to prolonged disruptions.
“Supply is a big issue. The longer this lasts, the problems accumulate because we do not have enough reserves of crude oil and petroleum products, especially for Asia,” he said.
Financial markets face volatility
The economist also warned of significant volatility in financial markets if the conflict escalates further.
Stock markets in the United States and Europe, as well as global commodity markets, are likely to remain unstable as investors react to geopolitical developments. He cautioned that oil prices could surge dramatically if the conflict intensifies.
“If there is another attack, oil will not stay around $102 or $103 per barrel. It could skyrocket to $150 or even $200 per barrel,” Sfakianakis said.
Gulf economies remain resilient
Despite the immediate economic shock, Sfakianakis said Gulf economies are financially resilient due to large sovereign wealth reserves.
Countries such as Saudi Arabia, the United Arab Emirates and Qatar collectively control investment assets worth roughly $6 trillion, providing them with significant financial buffers.
He added that the conflict could accelerate long-term economic restructuring across the Gulf, with governments focusing more on diversification, localization and strategic self-reliance.
“I’m very confident that Gulf economies will remain resilient, but they will operate under a different prism — one focused on self-reliance and stronger regional partnerships,” he said.
Sfakianakis also highlighted the close economic ties between Gulf nations and India, noting that around 10-11 million Indians live and work in the region, making stability in West Asia critical for both economies.
Global economic order may shift
Looking ahead, Sfakianakis warned that prolonged conflict could reshape the global energy and economic order.
Higher energy prices, rising manufacturing costs in Europe, and supply disruptions across Asia could trigger long-lasting structural changes in global trade and energy systems.
“If the war continues, the global impact will be felt by everyone — India, China, Asia and Europe,” he said.
The coming weeks, he added, will be crucial in determining whether the conflict stabilizes or evolves into a broader economic crisis with global consequences.
The ongoing conflict in West Asia could push the world economy toward a global recession if the war continues for several more weeks, warned economist John Sfakianakis, citing severe disruptions to energy supplies, trade flows and financial markets.
The Chief Economist and Head of Economic Research at the Gulf Research Centre said the scale of economic disruption will largely depend on how long the conflict lasts. If the war continues for another couple of months, he said, the world could face a structural economic shock with widespread consequences.
Also read: ‘Global economy could collapse by early May’: Analyst issues stark warning over oil crisis
“If this continues, it definitely has all the markings of a global recession,” Sfakianakis told ANI, adding that the economic fallout would be “very painful for the global economy, for emerging markets, and for countries like India.”
Energy supply chains under strain
One of the most immediate risks, according to Sfakianakis, is the vulnerability of global energy supply chains due to disruptions in the Strait of Hormuz — a critical chokepoint through which a significant portion of the world’s oil supply passes.
He said the crisis has already created a major supply problem, with global markets facing a shortage of crude and petroleum products.
“The world is short of around 10 to 12 million barrels of oil,” he said, noting that oil exports from several Gulf countries have dropped sharply since the conflict escalated.
Before the crisis, Saudi Arabia exported roughly 7-7.5 million barrels of oil per day, but shipments have now fallen to about 4.5-5 million barrels. Exports from the United Arab Emirates have also declined significantly from nearly 4 million barrels per day to around 1.2-1.5 million barrels.
Meanwhile, Qatar has reportedly halted exports from some of its energy facilities, with parts of its LNG production expected to remain offline for years. Other Gulf states such as Kuwait have also faced export challenges.
Rising impact on global trade and daily life
The supply disruptions are already being felt across sectors ranging from aviation to food supply chains.
Sfakianakis said airline ticket prices for routes to Asia have surged dramatically due to the crisis, while shortages of essential commodities such as cooking oil are beginning to emerge in India.
Asia remains the largest market for Gulf oil, making the region particularly vulnerable to prolonged disruptions.
“Supply is a big issue. The longer this lasts, the problems accumulate because we do not have enough reserves of crude oil and petroleum products, especially for Asia,” he said.
Financial markets face volatility
The economist also warned of significant volatility in financial markets if the conflict escalates further.
Stock markets in the United States and Europe, as well as global commodity markets, are likely to remain unstable as investors react to geopolitical developments. He cautioned that oil prices could surge dramatically if the conflict intensifies.
“If there is another attack, oil will not stay around $102 or $103 per barrel. It could skyrocket to $150 or even $200 per barrel,” Sfakianakis said.
Gulf economies remain resilient
Despite the immediate economic shock, Sfakianakis said Gulf economies are financially resilient due to large sovereign wealth reserves.
Countries such as Saudi Arabia, the United Arab Emirates and Qatar collectively control investment assets worth roughly $6 trillion, providing them with significant financial buffers.
He added that the conflict could accelerate long-term economic restructuring across the Gulf, with governments focusing more on diversification, localization and strategic self-reliance.
“I’m very confident that Gulf economies will remain resilient, but they will operate under a different prism — one focused on self-reliance and stronger regional partnerships,” he said.
Sfakianakis also highlighted the close economic ties between Gulf nations and India, noting that around 10-11 million Indians live and work in the region, making stability in West Asia critical for both economies.
Global economic order may shift
Looking ahead, Sfakianakis warned that prolonged conflict could reshape the global energy and economic order.
Higher energy prices, rising manufacturing costs in Europe, and supply disruptions across Asia could trigger long-lasting structural changes in global trade and energy systems.
“If the war continues, the global impact will be felt by everyone — India, China, Asia and Europe,” he said.
The coming weeks, he added, will be crucial in determining whether the conflict stabilizes or evolves into a broader economic crisis with global consequences.