Rising Oil Prices from Middle East Conflict Pose Economic Risks for Emerging Markets

The escalating conflict involving Iran, Israel, and the US has driven up global oil prices, raising concerns for emerging markets. Countries like Pakistan, India, Thailand, and South Korea face risks including higher inflation, widened current account deficits, and currency pressures. Pakistan may experience significant economic strain due to increased oil costs impacting inflation and fiscal space. In India, rising fuel prices could indirectly affect housing demand and construction costs, though impacts are expected to be gradual and linked to affordability. Analysts warn that prolonged oil price increases could deepen financial vulnerabilities across affected economies.