Global Energy Markets and Trade Flows Under Siege as Analysts Warn of Structural Instability Amid Prolonged Middle East Conflict

KPMG analysts warn of structural instability in energy markets and global trade, urging businesses to monitor the Strait of Hormuz as the conflict persists.

By: AXL Media

Published: Mar 31, 2026, 11:28 AM EDT

Source: The information in this article was sourced from Engineering News

Navigating the Intersection of Geopolitics and Markets

The rapid evolution of geopolitical tensions in the Middle East has created an environment where business leaders must make high-stakes decisions without the luxury of extensive processing time. During a global economic outlook webinar on March 31, Regina Mayor, KPMG’s global head of energy and natural resources, highlighted that the conflict now sits at a critical junction of energy markets, global trade flows, and financial outcomes. According to Mayor, the current instability requires an immediate shift in corporate adaptation, as the intersection of these forces leaves little room for hesitation in strategic planning.

Three Strategic Scenarios for Global Business

KPMG International’s global geopolitics lead, Stefano Moritsch, has proposed a structured framework of three possible outcomes to help organizations prepare for the future. In the base case scenario, disruption becomes a permanent feature of multiple global systems, with energy markets remaining highly reactive to the status of the war. This "new normal" assumes that volatility is no longer a temporary spike but a structural component of the market. Even in more optimistic projections, analysts suggest that the underlying threat environment will remain hostile, keeping investor confidence cautious for the foreseeable future.

The Scorched Earth and Global Economic Shocks

In a more dire "worst-case" projection, referred to as the scorched earth scenario, the lack of control over the Strait of Hormuz could lead to an uncontrolled military escalation. This path would likely see direct strikes against energy infrastructure in Iran, potentially triggering retaliatory attacks across the broader Gulf energy network. According to Moritsch, such a development would inevitably result in a severe and significant global economic shock. The reality of the global economy's deep dependence on oil and gas means that any disruption to these primary choke points has no immediate or viable substitute.