Middle East Conflict May Trigger Global Inflation, Warns Dr Abid Qaiyum Suleri

Energy crisis from Middle East conflict could trigger global inflation, warns Dr Abid Qaiyum Suleri

ISLAMABAD,Nazrana Times Ali Imran Chattha 

Executive Director of the Sustainable Development Policy Institute, Dr Abid Qaiyum Suleri, has warned that escalating tensions in the Middle East and disruptions in global energy supplies could trigger serious economic consequences worldwide, including rising inflation and economic instability in developing countries such as Pakistan.
*In a press brief*, Dr Suleri said the global economy remains heavily dependent on fossil fuels, particularly petroleum products, which continue to power industrial production, transportation, and electricity generation through internal combustion engines. He noted that energy typically accounts for nearly one-quarter to one-third of the total cost in mechanical production systems.
He cautioned that any major disruption in energy supply chains could sharply increase production costs and accelerate inflation globally. “If energy supplies are disturbed to the extent that transportation and essential services are affected, the risk could move beyond inflation toward hyperinflation, which could stall the global economy,” he said.
Dr Suleri said rising oil prices *and its uncertain supply due to the war* remain a key concern for *the world, especially* the developing economies. Citing a study by the Sustainable Development Policy Institute, he explained that every $10 increase in crude oil prices per barrel leads to roughly *0.1 to 0.2 percentage points increase in domestic inflation in Pakistan. If oil prices rise by $40 per barrel, the country could see inflation increase by half percentage point*, along with a higher import bill and worsening balance-of-payments pressures, he added.
Dr Suleri noted that geopolitical conflict in the Gulf region has already shaken investor confidence and disrupted major economic sectors, including aviation, energy supply, and foreign investment. International companies and financial institutions, he said have reportedly begun evacuating staff or scaling down operations in parts of the region amid rising security concerns.
He said even if *war* were to stop immediately, the economic impact would not disappear overnight. “The consequences of disrupted supply chains, energy uncertainty, and investor panic will continue to affect global markets for some time,” he observed.
Dr Suleri further warned that an escalation of the conflict could intensify the global energy crisis. Statements from regional actors suggesting that oil prices could reach $200 per barrel if tensions worsen highlight the seriousness of the situation, he added.
He also pointed out that Pakistan remains particularly vulnerable because a large portion of its annual remittances estimated at over $30 billion comes from Gulf countries. Any economic slowdown in the Middle East could therefore affect Pakistan’s foreign exchange inflows and overall economic stability, he said.
However, Dr Suleri said diplomatic efforts by regional and global powers could help prevent further escalation. He noted that Pakistan is actively engaged in diplomatic contacts with countries in the region to promote de-escalation, while major powers such as China and Russia have also voiced opposition to the widening conflict.
Describing the situation as a “developing story,” Dr Suleri stressed that the trajectory of the conflict and the stability of energy markets will ultimately determine whether the world faces a temporary slowdown or a deeper economic crisis.