The ongoing conflict in the Middle East poses a significant risk to global economic growth, largely due to potential damage to energy production and transportation infrastructure, the Organization for Economic Cooperation and Development’s (OECD) chief economist has warned.

Stefano Scarpetta, newly appointed to the role, highlighted that while current global economic forecasts remain relatively stable, the uncertainty surrounding infrastructure damage could exacerbate energy supply disruptions and elevate prices for an extended period. The Paris-based organization recently released updated projections that assume energy prices will begin to decline later this year after recent spikes following military actions involving the U.S. and Israel against Iran.

“The primary concern is the extent of damage to infrastructure and the time required for repairs,” Scarpetta said, emphasizing that the impact on oil and gas flows—especially through the strategically critical Strait of Hormuz—could be long-lasting even if the strait reopens under a cease-fire agreement.

The conflict has already interrupted oil and natural gas shipments to Asia, a region dependent on Middle Eastern energy supplies that transit through the strait. This disruption has forced some factories to scale back production and led to fuel rationing in affected countries. Although nations like China, Japan, and South Korea maintain sizable energy reserves that offer some buffer, others such as Indonesia and Thailand face greater vulnerability due to smaller stockpiles.

A two-week cease-fire between the U.S. and Iran took effect Wednesday, raising hopes for some normalization of energy flows. Still, Scarpetta cautioned that unless damaged infrastructure is quickly restored, supply shortages could persist, slowing the recovery of global energy markets.

Prior to the conflict, the OECD had revised its global growth forecast for 2026 upward to 3.2% from 2.9%, supported by strong investment in artificial intelligence and easing monetary conditions. The organization has since held that forecast steady but noted that if energy prices remain elevated, growth could slide to as low as 2.6%.

Scarpetta pointed out that energy costs have not yet reached the high levels modeled in the more pessimistic scenario but said infrastructure damage could prolong price pressures.

In response to rising energy costs, several governments have implemented broad support measures to help households manage higher bills. Scarpetta recommended that assistance programs be targeted more precisely to those most in need to improve efficiency and reduce fiscal strain.

“The quicker governments can pivot to targeted measures, the better,” he said, underscoring the urgency of balancing economic support with fiscal responsibility amid ongoing uncertainty.