Iran War Drives Global Economic Strain

The conflict in the Middle East is reviving the specter of inflation and hobbling the global economy just as it was showing signs of strengthening at the start of the year, the OECD said. In its updated outlook on Thursday, the Paris-based organization sharply increased its inflation forecasts for major economies and now sees the average rate for the Group of 20 this year jumping to 4% — with an even higher pace in the US — rather than the 2.8% it predicted in December. Bloomberg's Chief Emerging Markets Economist Ziad Daoud joins Caroline Hepker and Rachel Evans to discuss the growing economic fallout from the war.  Iran and Israel exchanged missile fire and Tehran targeted several Gulf states, underscoring the willingness of the two sides to keep fighting even as US President Donald Trump pushes for peace talks.

Saudi Arabian authorities reported that they intercepted several drone and missiles on Friday, many heading to the capital, Riyadh. In Qatar, residents of Doha got missile alerts on their phones for the first time in days, while Israel said it detected launches from Iran. Kuwait said drones damaged two ports. There were no casualties announced for any of the incidents.

Israel, meanwhile, continued to strike what it said were missile- and mine-production sites in Iran. Defense Minister Israel Katz said the military would escalate its assault on the Islamic Republic in response to the targeting of civilians, echoing the general sentiment from Israeli leaders that they remain committed to the campaign.   The attacks came hours after Trump pushed back his deadline for Iran to agree to reopen the Strait of Hormuz or face attacks on its power infrastructure. The 10-day extension was his second since Saturday’s threat to destroy the critical infrastructure in the absence of Tehran reopening the critical waterway, a chokepoint that’s become increasingly urgent with global energy and commodity shortages mounting.

Brent crude rose 2.7% to about $111 a barrel on Friday, extending its climb this year to 82%. The conflict has caused fuel shortages and fears of stagflation across major and emerging market economies.

Iran has rejected a 15-point list of ceasefire terms delivered by the US via intermediaries in Pakistan, and has countered with five conditions of its own, including the maintaining of sovereignty over the Strait of Hormuz.

Follow Latest in Iran War After Trump Extends Deadline: TOPLive

While the two sides appear far apart in the effort to reach an agreement, Trump said talks with Iran are going “very well.” Still, he said the American war effort is “ahead of schedule,” and the lo    The Wall Street Journal reported that the Pentagon is considering sending as many as 10,000 additional soldiers to the Middle East.

Some European governments think it’s all but inevitable the US will deploy ground troops, despite the high risk of casualties, according to a diplomat familiar with the matter who requested anonymity to discuss sensitive subjects.

Read More: Europe’s Economy Starts to Feel Pain From Trump’s Iran War

Iran’s government believes there’s a high likelihood Trump tries to take over Kharg Island, the Persian Gulf site from which Iran sends most of its oil exports, according to an official from the Islamic Republic, who spoke on condition of anonymity.

Read More: US Troop Movements Fan Fears of a Risky Ground Attack on Iran

Military analysts say that aside from Kharg Island, the US could try to take control of the Iranian side of the Strait of Hormuz in a bid to reopen the vital waterway to oil and gas tankers and container ships. It could send special forces to retrieve Iran’s roughly 440 kilograms of highly-enriched uranium, the whereabouts of which have been a mystery to nuclear inspectors since the US and Israel last bombed Iran in June. All options would be highly risky for American troops.

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