The United Nations lowered its forecast for global economic growth by 0.2%, as the Iran conflict continues to strain the world's energy markets.

According to the Associated Press, the UN adjusted its global GDP growth projection for 2026 from its initial 2.7% forecast from January, to 2.5%, while noting that it could even come in as low as 2.1% in certain more extreme scenarios. Global inflation is also expected to rise by 3.9% in 2026, up from the 3.1% rate that had been projected at the start of the year. 

At a May 19 news conference, UN Department of Economic and Social Affairs Director Shantanu Mukherjee said that this would represent one of the weakest growth rates so far this century, excepting the pandemic and the 2008 housing market crash.

“Increased energy prices are a potent factor, as are the prices of refinery products that are crucial to industrial production and commercial transport,” he said, referring to how the ongoing closure of the Strait of Hormuz has strangled shipments of oil, natural gas, fertilizer and other petroleum products. Speaking to CNBC, Abaxx Commodity Exchange executive co-chairman Jeff Currie warned that Europe could start seeing oil shortages "any day now," which could lead to even more dramatic price increases that policy makers have yet to account for.

The Strait of Hormuz accounts for roughly a fifth of global oil supplies, as well as a third of global seaborne fertilizer. With shipping through the waterway at a standstill, the impacts have been widespread, from farmers who have had to deal with disruptions to fertilizer supplies right as they enter the spring planting season, to trucking operators feeling the pressure from soaring diesel prices.