These EM Countries Face Greatest Risk If Energy Shock Spreads

The most immediate economic risk to the global economy from the chaos at the Strait of Hormuz chokepoint is a surge in energy prices, with Brent crude rising to around $92/bbl and WTI futures at $90/bbl. The second-order effects are important to understand: a sustained energy shock would almost certainly add to inflationary pressures while acting as a drag on economic growth across both developed and emerging economies. 

Barclays analyst Bum Ki Son in Singapore told clients that his Middle East scenarios envision a broader air campaign than in 2025, but no ground invasion and no full regional war; the scenario is still intact. He said the base case is that fighting stays mostly confined to Iran and Israel, disruption in the Strait of Hormuz persists for several weeks, and the geopolitical risk premium in energy remains higher for longer than past flare-ups. 

Son noted that, at some point, a quick de-escalation and a quick return to US-Iran negotiations is possible. He warned that the most severe tail risk is a wider regional conflict, with stronger Chinese and Russian support for Iran. 

For emerging markets, he said the primary macro implications of higher energy prices are weaker growth, higher inflation, and an adverse effect on account balances. He also outlined which EM countries are likely to benefit and which are likely to be hurt amid the chaos in the Middle East.

He explained: 

Time to revisit the EM oil vulnerabilities

The primary macro implications in EM will come from higher energy prices their effect on growth, inflation and current account surpluses. The Strait of Hormuz has never been fully blocked. While Iran is unlikely to sustain a prolonged closure, it does possess the capability to disrupt maritime traffic temporarily (Risks and implications for EEMEA, 2 March 2026). The strait accounts for roughly 20% of global oil and LNG trade, making it one of the most critical energy choke points globally. Even if energy exporters were able to reroute shipments, transportation costs would rise materially, putting upward pressure on energy prices. This becomes exacerbated by Iran and its proxies attacking oil and gas infrastructure across the region.

The most clear-cut effect will likely be on the current account and oil and gas trade. While net oil exporters are likely to see their external payment metrics benefit from higher oil prices, net importers are likely to suffer some external weakness, all things equal, depending not only on the severity of the move, but also on its sustainability. Our initial assessment is that the current account surplus improvements are likely to be focused on the Gulf states, as well as some oil exporters like Angola and Kazakhstan. The degree may be smaller for net oil exporters like Colombia, Ecuador and Brazil, as well as Argentina and Mexico. Net oil importers in the EM universe such as Turkey, Egypt, Hungary, Chile, South Africa, Israel, and EM Asian economies are likely to seeing the current account being shaved. The effect on growth is in some sense a function of the current account impact, as the net energy consumers end up juggling margin compression and reduced sales volumes due to the cost transfers.

What is likely to be more universal is the inflationary pressure from the energy price spike. Even as the upward pressure on oil is relatively universal, there are several key factors: 1) the degree of oil pass-through, which is a function of stockpiles, subsidies and buffers; and 2) the timing of the price pressure, given the nature of derivative contracts and delayed delivery, as well as the capacity of buffers that mitigates oil price pass-through. We expect the inflationary effects to be larger for the likes of Argentina, Poland, Nigeria, Turkey, South Africa, Chile, Hungary and Israel. Meanwhile, the price effect is likely to be milder for EM Asia, Brazil, Russia, Saudi Arabia and Mexico.

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