Donald Trump’s war on Iran has unleashed an economic crisis that could take years to recover from, the chief economist of the UN’s Food and Agriculture Organisation has said.

The soaring price of oil and disruption to shipping are already weighing heavily on southeast Asian countries which depend heavily on the Gulf for their energy needs, Africans are queuing to buy petrol, and Australian farmers are having to plant less wheat.

But the full extent of the impact of the war is yet to be seen: the World Food Programme (WFP) estimates that an extra 45 million people could fall into acute food insecurity or worse in 2026, if the conflict does not end by June.

From fertilisers and food staples to microchips, ceramics, clothing and even party balloons, almost everything that is derived from oil or is produced in gas-fired factories is expected to become more expensive and less abundant as the crisis bites.

How bad the damage is depends on how long the conflict – already in its fifth week – drags on.

“If things continue… the situation will be as bad as the ‘70s,” said Maximo Torero, the FAO’s chief economist, referring to the energy crisis which dramatically reshaped the global economy. “If it continues for two to three months, the impacts could take a year or two to recover.”

The crisis has also been compared to the impact of the Covid pandemic, which rattled global supply chains, or the shock that followed Russia’s full-scale invasion of Ukraine in February 2022, which sent gas prices skyrocketing and led to food shortages in the developing world as Kyiv’s agricultural exports slowed.

Yet what we are facing as a result of the war in Iran could be even worse, experts say.

“If it goes further than the next two weeks, the situation will be significantly more complex than what happened at the beginning of the Ukraine war,” Mr Torero told The Telegraph.

Some already think it’s too late. Christine Lagarde, the European Central Bank president, told The Economist last week that “too much has already been damaged” and that there is “no way” the Gulf’s energy supplies can be restored any time soon.

So what is different this time, which regions are most vulnerable, and how long will it last?

Iran’s closure of the Strait of Hormuz has effectively choked off around a fifth of global oil flows, while its strikes on Gulf energy infrastructure have caused sustained disruption.

Oil was trading at $116 a barrel on Monday – up nearly 40 per cent from pre-war levels – while the price of refined oil products has soared even higher.

In Asia, the average cost of refined oil products like petrol, diesel, jet fuel, and heating oil has more than doubled, according to data from S&P Global Energy.

The disruption to oil supplies has been felt almost immediately in the countries most dependent on imports from the Gulf – many of which also have smaller reserves to act as buffers.

A spike in costs at the petrol pump in one country is a full blown crisis in another.

In the Philippines, which relies on the Gulf for 98 per cent of its oil imports and where diesel and petrol prices have more than doubled, the government has declared an energy emergency, moved civil servants to a four-day week, cut ferry services and introduced subsidies for taxi drivers.

In South Asia, India has begun curbing its industrial output, Bangladesh is rationing fuel, and Pakistan is shutting schools to conserve energy.

Sri Lanka, which is still recovering from a recent financial crisis and is heavily dependent on fuel imports from the Gulf, has given schools and universities Wednesdays off. Fuel rationing has also been introduced, limiting drivers to 15 litres per week and motorcyclists to five.

Yet how vulnerable a country is to the effects of the crisis is not only tied to how dependent they are on the Gulf’s energy.

Countries with more developed economies like Britain, with its vast services sector, run more efficiently, getting more productivity out of the energy they use.

By contrast, developing countries with outdated infrastructure and a greater reliance on manufacturing to generate income are less efficient and therefore more exposed.

Poorer countries also have far less purchasing power than advanced economies, a significant advantage when supply shrinks and prices rise.

“Rising oil prices, driven by risks to supply through the Strait of Hormuz, are pushing up fuel costs across Africa. For oil importers, this feeds directly into inflation and currency pressure,” said Tighisti Amare, Director of the Africa Programme at Chatham House.

Fuel costs have already begun to surge in Africa.

Even in Nigeria, which boasts oil riches but can’t refine it itself, fuel prices have surged by 50 per cent.

The International Rescue Committee on Monday warned that the increased cost of fuel has put life-saving health services at risk, with clinics struggling to power critical equipment and mobile health teams having to scale back operations.

“This is how a global crisis becomes a humanitarian one … We are already seeing the consequences. Clinics scaling back. Outreach reduced. Costs rising faster than budgets can keep up,” said Bob Kitchen, IRC Vice President for Emergencies.

In Ethiopia, where people slept overnight in their cars on Friday as they queued for petrol, the government has introduced restrictions to ensure that the army, key industries and essential services remain supplied.

In Kenya, one-in-five petrol stations has already reported shortages of fuel, while in Mauritius, which relies heavily on oil to generate electricity, the government has declared an emergency after a shipment that was due to arrive never materialised, leaving the country with only 21 days of fuel.

Several African governments have warned that they may be forced to introduce blackouts this summer to deal with projected energy shortfalls.

South Sudan has already begun rationing electricity in its capital, Juba, with the main distributor announcing that sections of the city will face daily rolling blackouts.

Looking further ahead, a food crisis is looming that has experts concerned.

Where the Ukraine crisis affected a single large producer of grains and oil seeds, reducing its ability to supply global markets, the Iran crisis has the potential to affect every producer.

This is because it has disrupted one of the global centres of fertiliser production, creating what many have called a perfect storm.

Nitrogen fertilisers – the backbone of modern agriculture and responsible for roughly half of global food production – are created using natural gas through the Haber-Bosch process, in which hydrogen is combined with nitrogen in the air to make ammonia.

Nearly a third of the world’s fertiliser trade passes through the Strait of Hormuz and millions of tonnes of urea and phosphate are currently stuck aboard tankers unable to navigate the 21-mile-wide chokepoint.

Qatar is home to the Qatar Fertiliser Company, based at Ras Laffan – the world’s largest single-site producer of ammonia and urea.

Earlier this month, the facility was hit by a series of missile and drone strikes, forcing a halt in production. Combined with disruptions in the Strait of Hormuz, the shutdown has effectively starved global markets of nitrogen supply.

China and Russia, the two biggest producers of fertilisers, have begun restricting exports to protect their own supplies, while surging energy prices have already forced fertiliser plants in India, Algeria, and Slovakia to shut down because production has become too expensive.

Together with the rising price of fuel, the hit to fertiliser production will have dramatic consequences for agriculture that could long outlast the war, experts say.

“This combination is what makes it so complex and difficult for farmers,” said Mr Torrero, the FAO chief economist.

As with energy, it is developing countries that are likely to bear the brunt of the fertiliser emergency.

If the war continues, global fertiliser prices will rise by an average of 15 to 20 per cent in the first half of 2026, according to the FAO.

Since hostilities began on February 28, the price of urea, the most widely traded nitrogen fertiliser, has jumped more than 30 per cent.

These increases will be devastating for farmers in developed countries, and many will simply have to reduce the amount of food they produce because consumers will not pay more.

Already, farmers in Australia have been planting less wheat than usual because they cannot afford the fertiliser required to make them grow.

But the rising cost of fertiliser will be catastrophic for smallholder farmers supporting themselves and their communities across Africa.

In places like famine-stricken Sudan, where many people rely on subsistence farming to survive, rising costs will mean they can use less fertiliser, leading inevitably to a smaller harvest.

Even in countries with greater stability, such as Ghana, Nigeria and Côte d’Ivoire, farmers are grappling with rising costs that threaten key export crops such as cocoa.

Higher fuel and transport costs are also pushing up prices in local markets across Africa and Asia.

Even the process of cooking food is becoming more expensive, with so many people still dependent on propane or butane for heating food.

The timing could hardly be worse.

The spring planting season, a critical window for crop production across Europe, North America and parts of Asia, has just begun and delays or shortages risk reducing yields and hitting global food supplies later in the year.

Analysts warn that if the disruption persists through the planting season, the consequences could extend far beyond this year’s harvest, deepening food insecurity in already vulnerable regions.

“The important thing in this situation is time – the duration will define how complex the impacts could be,” said Mr Torrero, the FAO’s chief economist.

“If we are within one week or one month, it affects countries already in the planting season. If it goes up to three months, it will affect key exporting countries like Brazil, the United States, Argentina and Australia.”

There are also fears that the fertiliser crisis could impact the June “Kharif” planting season in South Asia, during which India alone plants seeds that will produce over 100 million tonnes of rice.

Again, the other element of the crisis – rising fuel costs – will also have an impact because, unlike industrialised countries like the US or UK, much of South Asia’s irrigation relies on diesel-powered pumps.

The cost of simply preparing fields in May and June has already tripled in some parts of Pakistan, for example.

One sector that has proved especially vulnerable to disruption caused by the war is healthcare.

The intermittent closure of major logistics hubs including Dubai, Abu Dhabi and Doha has disrupted a key transit route for cold-chain medicines like cancer drugs, insulin, blood products and vaccines.

These hubs are part of a so-called “refrigerated bridge” linking Europe, Asia and Africa, enabling the rapid movement of medicines that require strict temperature control by air.

The re-routing means longer transit times and higher fuel costs, driving up transportation fees, she said, as well as use of dry ice to keep medicines cold.

With airports now operating a limited schedule and cargo gateways shuttered, pharma companies have had to reroute their shipments via air, and some are now relying on sea transport, lengthening journey times.

Shipping delays also pose indirect risks to drug supplies like shortages of vial ​stoppers or syringe components. Filters used in the manufacturing of MRNA vaccines became an Achilles heel in similar fashion during the pandemic.

“It’s not always a shortage of the medicine itself,” said David Weeks, who follows the supply chain industry for ratings agency Moody’s. “In some cases, it’s the little stopper on the vial where the dosage ​is extracted.”

In another echo of the pandemic, rising energy costs and supply chain disruptions have also led to a rise in the price of the raw materials used to make drugs.

India’s pharmaceutical sector, which produces the bulk of the cheap, off-patent “generic” drugs used by the NHS, is already being squeezed by rising energy costs and Chinese suppliers ramping up prices.

“The cost of many base chemicals for APIs (active pharmaceutical ingredients) that are linked to crude and petrochemical feedstocks have sky-rocketed due to the [Middle East] tension which is prompting many chemical companies to cut down or shut production,” Pratik Tholiya, director of Institutional Equity Research at Dolat Capital, told the Times of India.

The price of essential chemicals and solvents used in drug manufacturing have surged by as much as 100 per cent in some cases.

The healthcare sector is also the world’s largest consumer of helium.

The recent attack on the Ras Laffan facility in Qatar, which accounts for roughly a third of global helium production, prompted warnings of tighter supplies in the coming weeks, with potential ripple effects across healthcare, research, and tech industries.

In healthcare, helium is used to cool the powerful electromagnets used in Magnetic Resonance Imaging (MRI) machines. It is also mixed with oxygen and used to treat obstructed airways in respiratory medicine.

The disruption has also rippled through humanitarian supply chains, putting the world’s most vulnerable populations at even higher risk.

The World Health Organization (WHO) recently said it had been forced to delay sending a $6m shipment of medicines to Gaza.

Some $130,000 in pharmaceutical supplies intended for Sudan – enough to support approximately 20,000 people – is currently stranded in Dubai due to shipping disruptions, the IRC said.

Save the Children has warned that up to 90 primary health facilities in Sudan could soon run out of essential supplies.

Emergency supplies to treat cholera outbreaks are also stuck in Dubai’s port, where the WHO operates a humanitarian aid complex.

These stockpiles – intended for vulnerable countries such as Chad and Sudan – were pre-positioned ahead of the rainy season beginning in May so they could be rushed into outbreak zones.

The conflict in Iran and its long-term economic consequences have arrived at a pivotal time for many African countries.

This year, the continent was expected to outpace Asia in economic growth for the first time, with several countries set to see the sort of growth that gave Asia’s tiger economies their name in the 1990s.

The International Monetary Fund (IMF) had recently predicted that Africa would account for 11 of the world’s 15 fastest-growing economies.

But the Iran crisis has jeopardised that, experts say.

“The conflict comes at a delicate moment, just as the broader economic narrative around Africa had begun to turn more positive,” said Ms Amare, of Chatham House. “That momentum is now at risk.”

Perhaps the most significant link between the economies of the Middle East, Asia and Africa isn’t energy or fertiliser, but migration.

Many African and Asian economies are propped up by the remittances sent home by workers in the Gulf.

These funds are vital not only for the livelihoods of families back home but provide a critical source of foreign exchange for national economies.

In countries like Nepal and the Philippines, remittances account for more than 25 per cent of GDP, while over three-quarters of residents in Qatar and the UAE originate from developing countries like India, Pakistan, Bangladesh, Egypt, and Ethiopia.

Ms Amare said the war had highlighted how closely Africa is linked to Gulf economies and broader geopolitical shifts.

According to UN Trade and Development, foreign direct investment into Africa reached a record $97 billion in 2024, up 75 per cent from 2023, with Gulf funds playing a major role by financing infrastructure, ports, renewable energy, agriculture, and urban development.

But “instability in the Gulf is already translating quickly into economic and political risk across the continent,” she said.

What is less clear is how long the crisis will last.

Mr Trump, the US President, on Monday appeared to signal that he is preparing to end the war in the next few weeks.

If ceasefire talks fail and the Strait of Hormuz remains closed, “we will conclude our lovely ‘stay’ in Iran by blowing up and completely obliterating all of their electric generating plants, oil wells and Kharg Island (and possibly all desalinisation plants!),” he wrote on his Truth Social platform.

Economists following the crisis remain sceptical.

Ms Lagarde, the ECB president, said predictions of a swift return to normal were “overly optimistic”.

Meanwhile, she warned the consequences of the war will emerge gradually, and it is too early to say how the crisis will unfold in full.

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