More Iran war? There goes the neighborhood, and global economy.

Key Points:

• The Iran war has caused a significant spike in global oil prices, with Brent crude prices rising from $60 per barrel in January to around $91 recently, despite efforts to moderate the impact through large drawdowns in global oil reserves.
• The highest economic toll is being borne by vulnerable populations in the Global South, where fuel price hikes have led to increased costs for essentials like food and water, triggering protests, business shutdowns, and fears of mass migration back to rural areas.
• Developing countries face compounded financial pressures, including trade deficits, inflation, currency depreciation, and reserve drawdowns, forcing some to sell foreign exchange and gold reserves to stabilize their economies.
• While Europe and Latin America show varying degrees of resilience, with Europe able to provide fiscal subsidies and Latin America benefiting from energy exports, the Global South remains highly exposed to inflation and supply disruptions.
• In the United States, increased domestic oil production and exports have helped mitigate some impacts, but consumers face higher gasoline prices and farmers struggle with rising fertilizer and diesel costs; meanwhile, inflation concerns have pushed U.S. bond yields to 30-year highs, affecting mortgage rates and broader economic conditions.