Uncovering trade vulnerability in a prolonged Iran war

A prolonged Iran war would generate a severe and sustained oil-supply shock, with recent developments showing continued volatility and no clear resolution, reinforcing risks of persistent disruption to global trade.

• The impact is uneven across economies. Direct exposure to Gulf Cooperation Council energy exports leaves Asian importers the most vulnerable, reflecting high dependence and limited substitution options. Indirect linkages through regional refining hubs extend this vulnerability, increasing exposure in economies that rely on imported refined products. As shown in cases such as Australia, New Zealand, and the Philippines, the supply-chain structure plays a critical role in shaping how shocks are transmitted.

• Freight cost pressures remain contained despite the energy shock, as shipping networks have adjusted following earlier disruptions and major freight indices remain broadly stable. Higher fuel costs are expected to push freight rates up modestly in the near term, but the impact is limited compared to previous shipping disruptions and doesn’t significantly constrain trade flows, leaving freight as a secondary channel relative to energy-driven trade impacts.

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