The escalating conflict between the US, Israel, and Iran risks triggering a significant oil price surge, potentially derailing global economic growth and inflation targets. The Strait of Hormuz, a critical maritime chokepoint carrying one-fifth of the world's oil, faces potential disruption. If traffic halts, analysts warn oil prices could soar above $100 a barrel, adding 0.6-0.7% to global inflation. A sustained $10-per-barrel oil price hike could shave 10-20 basis points off annual growth.

While Iran's oil exports (3.45mn barrels/day) are less than 3% of global supply, Gulf disruption impacts benchmarks, straining consumers and businesses. The US Federal Reserve might delay rate cuts amid higher energy costs, and the dollar could strengthen against other currencies. China, a major Gulf oil buyer, faces significant economic damage from any supply shock. The conflict arrives amid market volatility, adding to existing shocks like tariffs and geopolitical tensions in Venezuela and Greenland.