Several assessments of the economic impact caused by the Middle East wars

This is the assessment by Balaji, a Silicon Valley investor—renowned as a serial entrepreneur, technology expert, and futurist of Indian origin, whose ideas and perspectives carry notable influence in the tech industry. Last year, he predicted that U.S. tariff hikes would not spur domestic manufacturing; looking back now, that forecast proved remarkably accurate—his perspective thus holds some reference value. (1) Destroying Middle Eastern oil infrastructure would have catastrophic consequences: Bombing all oil infrastructure across the Middle East is a reckless idea—one highly likely to trigger the most severe global economic collapse and humanitarian crisis experienced by our generation. Against a backdrop of already high inflation, prices for everything from food to fuel would surge globally. All responsibility for this would fall squarely on the war’s instigator. (2) The pre-war equilibrium was not so bad: The status quo prior to February 27, 2026, was actually tolerable—but we have almost certainly lost the chance to return to it. Prepare yourself mentally: instability in the Middle East will be long-term and open-ended, affecting every facet of life and economy. (3) Tech financing will remain paralyzed for the long term: The ‘clever tactic’ of dragging Gulf states into armed conflict has effectively incinerated the tech industry’s funding sources—including LP commitments, data center construction, and IPO plans. Any tech-sector figure who once supported this war may soon personally experience what ‘force majeure’ truly means—watching helplessly as capital is withdrawn. (4) Capital will flow back toward Maslow’s foundational needs: A large number of capital allocators will redirect resources toward more basic necessities—such as food and energy. (5) Energy independence is urgent: Although progressive voices have misjudged timelines and channeled funds into corruption while sounding the alarm on the ‘climate crisis,’ their overarching direction remains correct: We must immediately sever our dependence on Middle Eastern energy.

With tensions in the Middle East persisting, what outcomes are most likely for its future trajectory?

The National Development and Reform Commission (NDRC) has clearly stated that achieving the GDP growth target of 4.5%–5% rests on solid foundations; six emerging pillar industries will be prioritized, with projected output expected to exceed RMB 10 trillion by 2030. The Ministry of Finance announced that this year’s fiscal expenditure will surpass RMB 30 trillion for the first time, allocating RMB 10 billion in coordinated fiscal-financial measures to boost domestic demand. The People’s Bank of China (PBOC) stated it will flexibly deploy reserve requirement ratio (RRR) cuts and interest rate reductions to promote a reasonable rebound in prices. The upcoming session will also deliberate draft laws including the Ecological Environment Code, and address hot-button issues such as China-U.S. relations and the private economy. Data shows that in 2025, China’s total retail sales of consumer goods exceeded RMB 50 trillion for the first time, with consumption contributing 52% to GDP growth. This meeting lays the policy groundwork for the opening phase of the 15th Five-Year Plan; stabilization measures are expected to bolster market confidence and consolidate the foundation for sustained economic recovery. 4. U.S.-Iran conflict persists for one week, with widening impact This week, the U.S.-Iran conflict escalated further and spilled over significantly. Shipping through the Strait of Hormuz effectively ground to a halt this week: since the first round of attacks on March 2, only a handful of merchant vessels—switching off their positioning signals—dared to transit, reducing throughput by 90% compared to pre-war levels. Energy supply chains disrupted: Major shipping giants Maersk and Hapag-Lloyd suspended all Middle East routes; QatarEnergy halted LNG production; crude oil exports from Iraq’s Basrah Port dropped to zero. Energy supply chains across multiple countries suffered direct shocks. Global oil prices surged to multi-year highs. Overall, the U.S.-Iran conflict has evolved into a regional confrontation. The de facto blockade of the Strait of Hormuz has interrupted nearly one-third of globally seaborne crude oil and 20% of LNG trade—posing a severe test to global energy supply chains. Fertilizer supply chain impacted: Iran is the world’s second-largest urea exporter (accounting for 10%–15% of global trade) and top sulfur exporter (over 30% share), while 17% of its natural gas reserves feed nitrogen fertilizer production. Supply disruptions pushed Egypt’s granular urea FOB price to USD 505 per ton. Over 50% of China’s sulfur imports originate from the Middle East; cost pressures are cascading down the industrial chain, ultimately raising agricultural production costs and threatening global food security. Shipping rates skyrocketed: Global oil tanker and general cargo shipping rates surged this week. The BDTI and CTFI indices rose sharply within the week; VLCC daily charter rates spiked to USD 480,000. Container freight rates on the Middle East route soared to USD 6,000 per FEU, with carriers imposing steep war-risk surcharges amid tight vessel availability and soaring costs. Data centers targeted: Iran launched precision strikes using suicide drones against data centers across multiple Middle Eastern countries—the first-ever real-world physical attack targeting ultra-large-scale cloud data centers operated by U.S. tech giants. Amazon AWS facilities in the UAE (two sites) and Bahrain (one site) were struck, causing widespread outages of AWS services across the Middle East. Microsoft and other U.S. corporate data centers have been placed on subsequent strike lists. 5. China’s February PMI seasonally declined, yet high-tech sector remained expansionary China’s official manufacturing PMI stood at 49.0% in February, down 0.3 percentage points month-on-month, remaining in contraction territory for two consecutive months—mainly due to seasonal factors such as the Spring Festival holiday and enterprise shutdowns.

Sasol Sees Middle East War-Related Impacts Moderate in Q1 2027

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Sasol reported a 3% year-over-year decline in chemical sales volumes for Q1 FY2027 as Middle East conflict-driven demand moderated, while revenue rose 11% to $2.22 billion. Supply was impacted by force majeure declarations and plant shutdowns.

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