NESA Center Alumni Publication
By Nimra Javed
14 April 2026

A ceasefire between the United States and Iran is not only about preventing another exchange of missiles. Much more is riding on it. Pakistan’s recent mediation helped secure a fragile 10-day truce, and Reuters reports that follow-up talks involving Iranian and US delegations are now tied to Islamabad’s effort to turn that pause into something more durable. Success would ease pressure on a world economy already struggling with inflation, debt and climate stress. Failure would push a regional war into the daily lives of millions who live far from the battlefield.

The clearest reason lies in geography. The Strait of Hormuz carries around 20 million barrels of oil a day, roughly one-fifth of global petroleum liquids consumption, and it also handles a major share of global LNG trade. For Asia, this chokepoint is especially important because almost 90 percent of the LNG moving through Hormuz in 2025 was headed to Asian markets, accounting for about 27 percent of Asia’s total LNG imports. Once conflict disrupts Hormuz, the shock does not stay in the Gulf. It moves quickly into Asian energy costs, industrial production and household budgets.

Recent figures show how quickly disruption can spread. UNCTAD reported that daily transits through Hormuz fell from roughly 129 to 141 vessels before the escalation to only five or six in March 2026, a collapse of about 95 to 97 percent. During the same period, oil prices jumped 27 percent and European gas prices rose 34 percent. Reuters has separately reported that LNG prices surged more than 143 percent during the conflict. Markets may calm when headlines improve, but a prolonged war would keep freight costs, insurance premiums and energy prices under pressure for much longer.

Energy shocks rarely stop at petrol stations. The World Bank says urea prices rose nearly 46 percent month on month between February and March 2026 as the conflict disrupted energy and fertiliser flows. Since Hormuz also carries about one-third of global seaborne fertiliser trade, the channel from war to food insecurity is direct. Higher gas prices raise fertiliser costs. Higher fertiliser costs make farming more expensive. Higher transport bills then push food prices up even further. The World Food Programme warns that if the conflict continues and oil stays above US$100 a barrel, another 45 million people could fall into acute food insecurity in 2026, raising the total to as many as 363 million.

Poorer countries would absorb the heaviest blow because many are already financially exposed. The World Bank says developing countries paid out US$741 billion more in debt service than they received in new financing during 2022 to 2024, the largest gap in at least 50 years. In 2024 alone, low- and middle-income countries paid a record US$415 billion in interest. Numbers like these matter because governments with shrinking fiscal space cannot easily subsidise fuel, stabilise food prices or protect health and education spending when a new external shock arrives. Human development suffers long before it appears in annual rankings.

Another transmission belt runs through labour and remittances. The six GCC countries accounted for about US$134 billion in outward remittance flows in 2021, making them the world’s top source region for outward remittances. Migrants are central to the Gulf’s economic model. IOM regional data shows migrants made up about 88 percent of the UAE’s population in 2020, around 77 percent in Qatar and roughly 73 percent in Kuwait. Wages earned in the Gulf pay for food, rent, school fees and medical treatment in South Asia, Southeast Asia and Africa. Any conflict that unsettles Gulf labour markets or economic activity therefore reaches deep into household survival far beyond the Middle East.

Global conditions make the danger even more severe. UNDP’s 2025 Multidimensional Poverty Index found that 1.1 billion people live in acute multidimensional poverty, and 887 million of them are exposed to at least one major climate hazard. World Bank research further estimates that climate change could push between 32 million and 132 million more people into extreme poverty by 2030. A prolonged US-Iran conflict would land on top of those pressures, not beside them. More expensive energy would leave less room for adaptation, less room for welfare protection and less room for the resilience poor societies now urgently need.

An additional layer comes from the AI transition. The IEA says data centres used 415 terawatt-hours of electricity in 2024, about 1.5 percent of global demand, and projects that figure will climb to around 945 terawatt-hours by 2030. AI is the main driver. Reliable and affordable energy is therefore becoming more important at the very moment war threatens one of the world’s most important energy arteries.

A ceasefire that holds would not only reduce military risk. Breathing space for a world trying to manage inflation, poverty, climate stress and rising electricity demand would come with it. A ceasefire that fails would turn all of those pressures into one crisis.