Energy Price Shock Unlikely to Persist, Global ‘Inflation Resurgence’ Concerns Are Exaggerated

TradingKey - Since the United States and Israel launched strikes against Iran on February 28, 2026, local time, the Middle East conflict has entered its 11th day. Although the situation has not significantly eased, both the Trump administration and Iran have recently signaled a potential ceasefire.

Previously, Kazem Gharibabadi, Iran's Deputy Foreign Minister for Legal and International Affairs, stated that amid intensive diplomatic efforts by global leaders, Iran has explicitly designated the "cessation of further aggression" as a prerequisite for initiating a ceasefire. He added that several countries, including Russia, have proactively approached Iran to seek a de-escalation of the situation.

In fact, the conflict between the United States, Israel, and Iran is unlikely to persist for long.

U.S. experience in the Middle East over the past few decades has proven that the cost of long-term military intervention is extremely high. Therefore, U.S. policy often focuses on controlling the intensity of conflict rather than expanding it.

Most importantly, due to Iran's control over the Strait of Hormuz, international oil prices and most energy prices have continued to surge, and this increase has gradually trickled down to consumer spending, leading to a steady rise in global commodity prices.

Although some countries are buffering energy shocks through reserve releases and price interventions, global energy supply uncertainty will continue to rise if Iran maintains long-term control over the Strait of Hormuz.

Sustained high energy prices will gradually pass through to end-users via transportation, manufacturing, and power costs, pushing up a broader range of goods and services prices. This could re-intensify global inflationary pressures, further erode the real purchasing power of residents, and evolve into heightened internal economic pressure and social contradictions within the U.S., thereby narrowing the government's political space to maintain long-term external conflicts.

Previously, Trump's contradictory statements regarding the Iranian conflict have caused his public approval ratings in the U.S. to continue declining. Sources said that while many in Trump's conservative camp supported the initial military action, a prolonged war could exhaust that support.

Analysis suggests that under the influence of multiple factors, the Trump administration may be forced to or seek a compromise to suspend strikes against Iran.

Rupert Thompson, Chief Economist at IBOSS, also stated in a report that the current disruptions in international oil and gas markets are unlikely to persist in the long term.

The institution's baseline forecast is that most disruptions in the energy market should not last more than a few weeks. Thompson noted that global economic fundamentals are sound and are likely to withstand the energy price shocks of recent days caused by geopolitical conflicts.

Based on this judgment, some institutions believe that market concerns about "resurgent inflation" caused by energy are exaggerated. In fact, whether inflation is triggered still depends on whether the Middle East situation can ease in the near term; if the conflict remains severe, inflation will continue to be a key global issue.