Energy — 2026-09-20

Iran War Drives Global Fuel Price Surge Squeezing Economies From Pakistan to Kenya

BLUFSustained triple-digit oil prices will likely push debt-stressed fuel importers toward IMF bailouts or currency devaluations within the next 60 days as emergency subsidies harden into structural fiscal burdens.

Global fuel prices have surged as the US-Iran war continues, with oil climbing back above $100 per barrel last week following further US strikes on Iranian oil tankers in the Gulf and renewed fighting near the Bab al-Mandab Strait 1. Pakistan's Prime Minister Shehbaz Sharif on Thursday approved a nationwide austerity campaign, cutting government vehicle fuel allocations by 50 percent for three months 1. In Kenya, which imports nearly all its fuel from Gulf states, diesel and petrol prices rose 46 percent and 20 percent respectively from prewar levels after back-to-back hikes in April and May, prompting a nationwide transport strike on May 18 that ended only after the government cut diesel prices by 10 shillings per liter at a cost of roughly $20.79 million in lost revenue 2. Protests over fuel costs have also broken out in Syria, Guatemala, Portugal, France and the Philippines 1. The IMF has warned that many of the temporary subsidy and price-cap measures adopted by governments worldwide lack clear expiration dates or cost estimates 3.

Analysis
Brent crude prices likely will climb above $110 per barrel within the next 60 days as continued US strikes on Iranian tankers and renewed fighting near the Bab al-Mandab Strait keep Gulf export routes contested with no negotiated de-escalation in sight. The Houthi ballistic missile strike on Riyadh exposed Saudi interceptor depletion across five target sites, and the FBI boarding of cyberattacked Gulf-bound tankers opened a second attack surface on energy transit. Extended triple-digit pricing will convert emergency subsidy and price-cap measures adopted this year into structural fiscal liabilities, raising the odds that debt-stressed importers seek new IMF program support or devalue currencies to close financing gaps. We have high confidence in this judgment, given the convergence of concrete, dated indicators: tanker strikes, strait fighting, interceptor shortfalls, and the absence of any active negotiating track.

3 sources

Skyrocketing fuel prices spark protests around the globe as US-Iran conflict squeezes energy supplies - CNN
The Iran War Has Sparked a Domestic Crisis in Kenya - Carnegie Endowment for International Peace
Iran war causes global pain at the pump - Axios