By Benadeta Mwaura - Reporter
U.S July 9, 2026 - The escalating conflict in the Middle East is no longer just a regional security crisis, it is rapidly evolving into one of the biggest threats to the global economy since the COVID-19 pandemic, with international financial institutions warning that prolonged fighting could derail economic recovery, push up fuel prices, fuel inflation and place additional pressure on already struggling developing economies.
The warning came from the heads of the International Monetary Fund, World Bank, International Energy Agency and World Trade Organization, who said the war involving the United States, Israel and Iran is disrupting global trade, unsettling financial markets and placing unprecedented strain on global energy supplies, particularly through the Strait of Hormuz, the world's most strategic oil shipping corridor.
The institutions noted that while the global economy has so far demonstrated resilience, the burden of the conflict is falling disproportionately on low-income and energy-importing countries that have little capacity to absorb another inflationary shock.
Higher fuel prices, rising fertilizer costs, supply chain disruptions and growing uncertainty are expected to weaken economic activity, reduce employment opportunities and worsen food insecurity across many developing economies.
For Kenya and much of Africa, the implications could be immediate.
Kenya imports all of its refined petroleum products, meaning any disruption to global oil supplies or increase in international crude prices eventually finds its way into the prices consumers pay at fuel stations.
Higher fuel prices ripple across the economy, increasing transport costs, electricity generation expenses, food prices and the overall cost of doing business.
For the ordinary Kenyan, this translates into more expensive matatu fares, higher food prices at local markets and increased costs for small businesses that depend on transport and electricity. Mama mbogas pay more to transport vegetables, boda boda riders spend more on fuel, manufacturers face higher production costs, and consumers ultimately shoulder the burden through inflation.
The concern extends beyond energy.
According to the IMF and World Bank, prolonged disruptions could interfere with fertilizer supplies, threatening agricultural production and increasing food insecurity in countries already battling climate shocks and high public debt. The IMF has warned that if the conflict persists, millions more people worldwide could be pushed into acute food insecurity as rising fertilizer and transport costs reduce food production and drive up prices.
The institutions have already begun coordinating a joint response aimed at monitoring developments, advising governments and mobilising financial support for vulnerable countries.
"At these times of high uncertainty, it is paramount that our institutions join forces to monitor developments, align analysis, and coordinate support to policymakers to navigate this crisis," the IMF, World Bank and IEA said in an earlier joint statement announcing the coordination framework.
The economic risks stem largely from the strategic importance of the Strait of Hormuz, through which roughly one-fifth of the world's oil and a significant share of liquefied natural gas pass each day. Any disruption along this route immediately tightens global energy markets, triggering price spikes that reverberate across virtually every economy.
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Financial markets have already reacted with increased volatility as investors seek safer assets while commodity prices fluctuate in response to uncertainty surrounding the conflict and future oil supplies. Global institutions warn that sustained instability could weaken investor confidence, delay investment decisions and slow international trade.
The timing is particularly concerning because many countries had only begun recovering from the combined effects of the pandemic, high inflation and rising interest rates. Several African economies are also grappling with record debt servicing costs, leaving governments with limited fiscal space to cushion households from another wave of imported inflation.
For Kenya, which is simultaneously managing high debt repayments, a weakening shilling and elevated living costs, another sustained increase in global oil prices could complicate efforts to stabilise inflation and support economic growth.
Beyond fuel, the conflict could affect shipping costs, insurance premiums for cargo vessels and the availability of imported goods, potentially disrupting supply chains for businesses that rely on international trade.
While global institutions maintain that the world economy remains fundamentally resilient, they caution that resilience should not be mistaken for immunity.
The IMF and World Bank are preparing additional financial support mechanisms for countries most exposed to the crisis, particularly low-income nations that depend heavily on imported fuel and food.
Previous IMF estimates suggested that emergency financing needs for vulnerable economies could range between $20 billion and $50 billion if the conflict persists, while the World Bank has indicated it could mobilise tens of billions of dollars through its crisis response instruments.
For governments across Africa, the message is increasingly clear: while the fighting may be taking place thousands of kilometres away, its economic consequences are already travelling through oil tankers, shipping lanes and financial markets—ultimately reaching households, businesses and consumers far beyond the Middle East.
As the conflict continues, the biggest question is no longer whether the global economy will feel the impact, but how long governments and ordinary citizens can withstand another external economic shock before recovery efforts begin to unravel.