The Iran war is no longer just a market story; it is showing up in factory costs, service activity and inflation across the world. Reuters’ survey of purchasing managers found the euro zone slipping back into contraction in April, while U.S. business activity held up only because companies appear to be front-loading orders and output before supply lines worsen. soaring production costs are now feeding through to the real economy.
The mechanism is the same everywhere: higher fuel prices, shipping bottlenecks and shortages of intermediate goods are forcing firms to raise prices or rush shipments. Reuters said the euro zone’s input-price index jumped to 76.9 from 68.9, while U.S. delivery times and output prices hit their highest levels since the post-COVID supply crunch; the Brent crude market has also been swinging sharply on every sign of movement in the Strait of Hormuz. Companies from Danone to Otis Worldwide have already flagged shipment disruption, and Reuters counted 26 firms withdrawing or cutting guidance since the war began.
That leaves policymakers and businesses facing a slower, nastier problem than a simple oil spike. The IMF has cut its global growth forecast to 3.1 percent for this year, while Oxford Economics said one in four businesses expects the disruption to last beyond year-end, a sign the shock may outlive the fighting itself. Even where activity is holding up, the Reuters data suggest it may be artificial, driven by panic buying and front-loading that could fade fast once inventories catch up.
For poorer, energy-importing countries, the pressure is more immediate and more dangerous. BBC reporting said the World Bank is preparing up to $100 billion of support for countries hit by higher energy and food costs, while warnings around fertilizer shortages suggest the next phase could hit food availability in coming months rather than this quarter.
