ISTANBUL
The World Trade Organization (WTO) announced that ongoing conflicts in the Middle East are putting significant pressure on global trade growth expectations and pose a downward threat to 2026 trade projections.
The WTO released an update to its Global Trade Outlook and Statistics Report on Thursday, warning that if the escalating tensions in the region, triggered by US and Israeli attacks on Iran, keep energy prices at high levels, global trade could suffer a much harsher blow than expected.
The report highlighted that if the conflicts persist, rising energy costs could place additional strain on food supply and trade in services, noting that disruptions in the travel and transportation sectors, in particular, could reduce trade volumes.
Following the strong growth recorded last year, driven by AI-powered products, the report noted that a slowdown is expected in 2026, noting: "If sustained, the high oil prices related to the recent Middle East conflict could shave 0.5 percentage points off the 1.9% merchandise trade growth in 2026.
"Conversely, growth could also be boosted by 0.5 percentage points if trade in AI-related goods remains as strong as in 2025. Which factor will predominate over the course of the year remains to be seen."
It also predicted that the impact of the Middle East conflict on services trade could be as strong as on merchandise, subtracting 0.7 percentage points from growth in 2026, due to significant downside risks to international transport and travel.
"A prolonged conflict could keep transport and fuel costs structurally elevated, disrupt key shipping and air routes, and weigh on regional tourism and global travel demand," the report said.
The WTO added that there is upside potential if the conflict is short-lived and if the strength of AI-related trade persists through 2026
- Hormuz reduces supply, raise cost of fertilizers
Related to the war on Iran, the disruption of shipments through the Strait of Hormuz has not only reduced the flow of petroleum to the world economy, but also limited the supply and raised the cost of fertilizers, increasing short-term and long-term pressures on food security, according to the report.
Given that the Gulf region is a major exporter of both energy and fertilizers, a prolonged interruption in supply could ripple across food systems, exacerbating the effect of pre-existing export restrictions, it underlined.
"In addition to Iran, Gulf states such as the Kingdom of Bahrain, Qatar and the Kingdom of Saudi Arabia together export significant quantities of fertilizers including urea and ammonia, with around one-third of the world’s supply passing through the Strait of Hormuz," the report said.
- 'Food security at risk'
Citing the report, WTO Director-General Ngozi Okonjo-Iweala said in a press release: "The outlook reflects the resilience of global trade, buoyed by trade in high technology products and digitally delivered services, adaptations in supply chains and the avoidance of tit-for-tat retaliation on tariffs.
"However, this baseline forecast is under pressure from the conflict in the Middle East."
She stressed that sustained increases in energy prices could increase risks for global trade, with potential spillovers for food security and cost pressures on consumers and businesses.
Nevertheless, WTO members can help cushion the impact and ease the economic burden on people worldwide by maintaining predictable trade policies and strengthening supply chain resilience, she added.