By Zulkhayo Nishanova, Assistant Teacher at the Department of International Economics of UWED
The escalation of the military-political situation in the Middle East, including the conflict surrounding Iran and the temporary restriction of maritime traffic through the Strait of Hormuz, has had a significant impact on global energy and food markets. The Strait of Hormuz is a key route in global energy logistics, through which approximately 20% of the world's oil supply and more than 30% of liquefied natural gas pass. Amid transit restrictions in late February–March 2026, the global oil market experienced a sharp price surge: Brent crude prices increased by 60–64% over a short period, exceeding USD 110 per barrel. This price increase was accompanied by high volatility and the emergence of a so-called “war premium” in energy prices.
As of April 8, 2026, partial stabilization of the situation is being observed. The United States and Iran, with mediation by Pakistan, reached an agreement on a two-week ceasefire, conditional upon ensuring safe navigation through the Strait of Hormuz, which Israel also joined. The Republic of Uzbekistan officially supported this decision, noting its importance as a step toward de-escalation and a transition to a political and diplomatic resolution. Global markets responded promptly to these developments: Brent crude prices declined to around USD 94 per barrel, while natural gas prices in Europe fell by approximately 18.5% to USD 518 per thousand cubic meters. This indicates a reduction in the geopolitical premium and a high sensitivity of prices to changes in the external political environment. At the same time, the increase in prices of precious metals reflects the persistence of uncertainty and cautious behavior among investors.
The rise in energy prices during the escalation period had a multiplicative effect on the global economy, primarily through increased transportation, logistics, and production costs. This has already been reflected in global food price dynamics. According to the Food and Agriculture Organization of the United Nations (FAO), the global food price index increased by 2.4% in March 2026 compared to the previous month. The highest growth was recorded in certain categories: vegetable oils rose by 5.1%, sugar by 7.2%, and wheat by 4.3%. Additional pressure is being generated through the fertilizer market: urea prices exceeded USD 700 per ton, increasing by approximately 70% since the beginning of the year. The global mineral fertilizer price index rose by 38 points over the month, reaching 183 (with a base value of 100 in 2010). Considering that a significant share of fertilizer supplies passes through the Persian Gulf region, logistical constraints are increasing agricultural production costs and creating risks of delayed food price growth.
The economy of the Republic of Uzbekistan is also, to some extent, exposed to these external shocks. According to official statistics, annual inflation in March 2026 amounted to 7.1%, with the main contribution coming from the food sector (accounting for 76.2% of the increase in the consumer price index). Monthly growth in food prices reached 1.2%, significantly exceeding the dynamics of non-food goods (0.3%) and services (0.2%). In particular, price increases have been observed for meat (up to 15% year-on-year), eggs (17%), as well as sugar and fish. Food inflation stands at approximately 5.6% on an annual basis, reflecting the continued pressure from external factors.
External shocks are transmitted to the domestic economy through the fuel channel. Rising prices for oil and petroleum products lead to higher transportation and production costs, creating a chain effect of increasing prices for goods and services. In addition, rising fertilizer prices may affect the cost of agricultural production in subsequent production cycles.
At the same time, the current situation is characterized by mixed trends. On the one hand, the achieved ceasefire and the initiation of negotiations create conditions for short-term stabilization of energy prices and a reduction in inflationary pressure. If the ceasefire is maintained and a stable political and diplomatic dialogue is established, further declines in oil and gas prices and gradual normalization of logistics chains are possible. Under this scenario, inflation in the Republic of Uzbekistan may remain within the range of 7–7.5% by the end of 2026.
On the other hand, the temporary nature of the ceasefire (two weeks) implies the persistence of high risks of renewed escalation. In the event of a breakdown of the agreement and a resumption of the conflict, there is a likelihood of oil prices rising again to USD 110–130 per barrel, further increases in fertilizer prices, and intensified inflationary pressure, which could accelerate inflation to 8% or higher.
Thus, the escalation in the Middle East has had a significant impact on global markets and the economy of Uzbekistan. However, current signs of de-escalation create a window of opportunity for stabilizing the macroeconomic situation. In these conditions, the implementation of a balanced economic policy aimed at reducing vulnerability to external shocks becomes crucial.
To minimize negative impacts and capitalize on emerging opportunities, it is advisable to: in the short term — strengthen monitoring of fuel and socially significant food prices, ensure readiness to apply targeted regulatory measures, and utilize state reserves and commodity intervention mechanisms when necessary; in the medium term — intensify diversification of energy and fertilizer supply sources, develop alternative logistics routes, and expand support measures for agriculture, including subsidizing fuel and fertilizer costs; in the long term — accelerate the development of alternative energy, improve energy efficiency of the economy, reduce dependence on imported resources, and increase domestic food production and processing capacity.
In addition, it is recommended to take advantage of the current stabilization of global prices to build strategic reserves of energy resources and food at more favorable prices, thereby enhancing the resilience of the economy to potential future external shocks.
Overall, despite the existing risks, the current situation creates preconditions for stabilizing price dynamics and strengthening the macroeconomic stability of the Republic of Uzbekistan, provided that comprehensive and proactive policy measures are implemented in a timely manner.
* The Institute for Advanced International Studies (IAIS) does not take institutional positions on any issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of the IAIS.
