Conflict, Energy Shock, and the New Middle East Economic Outlook — April 2026

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The April 2026 World Bank update presents a region hit by a severe conflict shock centered around the Gulf, with effects extending far beyond the immediate battlefield. The closure of the Strait of Hormuz, widespread damage to energy and civilian infrastructure, surging oil and gas prices, and a sharp rise in uncertainty have materially weakened the 2026 outlook for the Middle East, North Africa, Afghanistan, and Pakistan. Excluding Iran, MENAAP growth is now projected to slow from 4.0% in 2025 to 1.8% in 2026, while GCC growth is expected to drop from 4.4% to 1.3%. Global transmission has been immediate. Between March 2 and March 22, average ship crossings through the Strait of Hormuz fell to 5 per day from 96 a year earlier, a 95% decline. Brent crude, which closed at US$72.5 per barrel on February 27, rose almost 40% within a week and exceeded US$112 per barrel by March 27, leaving it close to 60% above its pre-conflict level. European natural gas prices rose from around US$11/MMBtu to over US$18/MMBtu, almost a 70% increase. Within the region, the most direct economic damage falls on Iran, Iraq, Lebanon, and the GCC. Iraq, Kuwait, and Qatar face especially severe output disruption because of their dependence on hydrocarbon exports routed through Hormuz.