The economic fallout from the Middle East conflict is spreading beyond the region, disrupting global supply chains and raising inflation fears. Persian Gulf ports have become military targets, with the Strait of Hormuz effectively closed and shipping rates soaring. The vital waterway handles about a fifth of global oil and LNG supplies, hitting Asian buyers like China, India, Korea, and Japan hardest.

Companies exposed to the region face shortages of crucial components, higher costs, and thinner profit margins. Air cargo capacity dropped by 18% as flights were suspended, with rates potentially doubling or tripling on Middle East routes. Container bookings east of Hormuz plummeted 81% in just two days, while roughly 100 ships remain trapped in the Gulf.

Major shipping lines including MSC Mediterranean Shipping Co. and A.P. Moller-Maersk A/S have suspended bookings for routes linking Asia to the Middle East and Europe. German tire maker Continental AG warned the conflict may affect sales and earnings through higher costs and operational disruptions. With the conflict intensifying and no clear resolution in sight, economists say the longer it drags on, the greater the economic impact will be.