Oil shock from Iran conflict spreads surcharges across global economy

Saturday 14 March 2026 - 11:50

By: Dakir Madiha

Oil shock from Iran conflict spreads surcharges across global economy

Companies around the world are rapidly introducing energy surcharges as the oil shock linked to the Iran conflict pushes costs higher across transport, manufacturing, agriculture, and consumer industries. Economists warn that the combination of rising inflation and slowing economic growth is reviving fears of stagflation on a global scale.

Over the past week, businesses across multiple sectors have begun passing higher energy costs to customers. Cleaning and industrial services company Ecolab announced a global energy surcharge of 10 to 14 percent on its products and services starting April 1. The company cited crude oil prices that have surged nearly 60 percent since late 2025 and European natural gas prices that have climbed about 80 percent.

Airlines are also adjusting prices. Cathay Pacific said it will more than double its fuel surcharge on all tickets issued from March 18, with long haul fees departing from Hong Kong rising from 569 Hong Kong dollars to 1,164 Hong Kong dollars.

In the shipping industry, Maersk introduced an emergency bunker surcharge that will take effect on March 25 across global shipping routes. The company plans to charge up to 400 dollars for standard dry containers and 600 dollars for refrigerated containers on major long distance routes. Chief executive Vincent Clerc told the BBC the higher costs will ultimately be passed to customers and eventually to consumers.

Logistics companies are following a similar path. UPS increased its fuel surcharge index by one percentage point starting March 9, marking the third increase in 2026. The company’s domestic ground fuel surcharge now stands at 22.75 percent compared with 7.13 percent a decade ago. FedEx Ground surcharges are projected to reach 24.75 percent as diesel prices have climbed to about 4.86 dollars per gallon.

Agriculture and food supply chains are also under growing pressure. California’s agricultural sector, valued at about 61.2 billion dollars and responsible for roughly half of the fruits, nuts, and vegetables produced in the United States, faces rising fuel and fertilizer costs.

The state already has the highest diesel prices in the country, averaging about 4.86 dollars per gallon before the most recent increases, compared with a national average of 3.53 dollars. Higher natural gas prices are also pushing up the cost of nitrogen fertilizers. Baseline projections for California’s Central Valley indicate fertilizer prices could reach between 450 and 575 dollars per ton by the end of 2026.

Transportation costs are a major factor in food pricing. According to PBS, fuel accounts for roughly 50 to 60 percent of trucking expenses used to move agricultural goods.

Major US shipping hubs are also feeling the impact. The twin ports of Los Angeles and Long Beach, which together handle about half of all containerized imports entering the United States and contribute roughly 300 billion dollars to the country’s gross domestic product, are seeing logistics costs rise as shipping companies impose new fuel surcharges beginning March 16.

At the same time, economic data is increasing concerns about stagflation in the United States. The core personal consumption expenditures price index, the Federal Reserve’s preferred inflation measure, rose to 3.0 percent in early 2026, well above the central bank’s 2 percent target.

Meanwhile, the US economy lost 92,000 jobs in February and the unemployment rate climbed to 4.5 percent. Chicago Federal Reserve president Austan Goolsbee told the Wall Street Journal that a stagflationary environment could emerge if rising inflation continues alongside slowing growth.

Financial markets have already adjusted expectations for US monetary policy. Predictions for the first interest rate cut by the Federal Reserve have shifted from July to September, and some traders now expect rates to remain unchanged throughout the year.

Richard de Chazal, a macroeconomic analyst at William Blair, said expectations for near term rate cuts have effectively disappeared. Economist Mohamed El Erian also warned that the cumulative impact of energy disruptions could trigger a new wave of stagflation across the global economy.