The World Trade Organization (WTO) warned Thursday that prolonged conflict in the Middle East could exacerbate global trade slowdowns, with 2026 growth projected at just 1.9%—down from 4.6% in 2025. The U.S.-Israeli war with Iran threatens to deepen disruptions, as energy prices soar and critical shipping routes like the Strait of Hormuz face near-total blockades. Oil and liquefied natural gas prices have surged, risking further economic strain on energy-importing regions like Asia and Europe. Over 40,000 flights have been canceled since the conflict began, crippling air freight and raising costs for businesses reliant on timely deliveries.

The WTO highlighted that nearly all commercial shipping through the Strait of Hormuz—a vital artery for 20% of global oil trade—has halted, disrupting fertilizer exports critical to agricultural hubs like India, Thailand, and Brazil. Gulf states, heavily dependent on imported grains and soybeans, face acute food insecurity. Global trade growth is now forecast at 2.6% for 2027, down from earlier optimism, as the WTO struggles to model the conflict’s cascading effects.

Director General Ngozi Okonjo-Iweala acknowledged trade’s resilience amid AI chip demand and limited tariff retaliation but stressed risks from sustained energy volatility. Transportation and insurance costs have skyrocketed, squeezing profit margins for exporters and importers alike. The closure of key routes has also diverted shipping lanes, increasing delivery times for goods bound for Europe and Africa.

Chief Economist Robert Staiger admitted the war’s unpredictability has made forecasting nearly impossible, with trade growth hinging on whether the conflict resolves swiftly or drags on. Asia remains the fastest-growing trade region at 3.3%, but even this could falter if energy prices remain elevated. The WTO urged policymakers to prioritize de-escalation to avert deeper global economic fallout.