The World Bank has warned that the ongoing conflict between the United States and Iran could push global economic growth to its lowest level since the COVID-19 pandemic. In its latest Global Economic Prospects report released on Thursday, the Washington-based institution cut its 2026 global growth forecast from 2.9 percent to 2.5 percent, citing rising energy prices, inflation, and high borrowing costs.

The report highlighted that Iran’s closure of the Strait of Hormuz, in response to the conflict initiated by the US and Israel, has severely disrupted global energy and supply chains. The Bank expects Brent crude oil to average 94 dollars per barrel this year, 36 percent higher than last year, and fertilizer prices to rise significantly, driving up food costs. Global inflation could reach 4 percent as a result of the strategic waterway’s closure.

If energy supply disruptions persist, the World Bank warned that global growth could fall further to 1.3 percent and inflation rise to 4.4 percent. Developing countries are expected to be the hardest hit, with growth forecasts downgraded for two-thirds of them since January.