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SANTIAGO, Chile, CMC – The Economic Commission for Latin America and the Caribbean (ECLAC) has warned that average oil prices in 2026 are expected to be significantly higher than in 2025, meaning the economic effects of the recent Middle East conflict will continue to be felt across the region.
In a special report released on Friday, ECLAC examined how the global economy, and Latin America and the Caribbean in particular, have been affected by the hostilities that began on 28 February 2026 in and around Iran, as well as the de facto closure of the Strait of Hormuz.
ECLAC Executive Secretary José Manuel Salazar-Xirinachs said the conflict highlights the extent of global economic interdependence and how quickly disruptions can spread across countries and regions.
However, he noted that the effects are not uniform and depend on each country’s level of international integration, production structure, and trade and financial links with the rest of the world.
The report comes amid continued uncertainty over diplomatic efforts to end the conflict.
Although the United States and Iran signed a memorandum of understanding last month aimed at ending military attacks, lifting the naval blockade of Iranian ports and reopening the Strait of Hormuz, hostilities resumed on 6 July. Two days later, at the NATO Summit in Ankara, Türkiye, United States President Donald Trump questioned whether the ceasefire agreement had effectively ended.
ECLAC said that even if diplomatic progress is maintained, markets are unlikely to return to normal immediately. It noted that production in Persian Gulf countries and shipping through the Strait of Hormuz will take time to recover, with maritime traffic remaining below normal levels because of ongoing security concerns, logistical disruptions and elevated insurance costs.
According to the report, based on oil prices recorded through June and an assumed Brent crude price of US$75 to US$80 per barrel for the remainder of the year, the average oil price in 2026 is expected to be 20 to 25 per cent higher than the US$69 per barrel recorded in 2025.
ECLAC identified six channels through which the conflict is affecting Latin America and the Caribbean.
The first is the trade channel, where higher energy prices improve the trade balance of oil-exporting countries but worsen it for net energy importers, which make up the majority of countries in the region. Under ECLAC’s base scenario, the impact on the region as a whole is expected to be slightly positive, but negative for non-hydrocarbon-exporting Caribbean countries and for Central America, Haiti and the Dominican Republic.
The second is the fiscal channel. Governments that subsidise fuel or reduce fuel taxes to shield consumers face increased fiscal pressure. While energy-exporting countries may offset some of these costs through higher revenues, importing countries are likely to see further deterioration in their public finances.
The remaining four channels negatively affect both exporters and importers. These include higher inflation, weaker global economic growth, tighter financial conditions, and the impact on monetary policy.
ECLAC said rising fuel prices reduce household purchasing power directly through higher transport costs and indirectly through increased prices for other goods. It also warned that higher fertiliser prices, resulting from supply disruptions in the Persian Gulf, could drive up food prices and increase the risk of food insecurity across the region.
The report also noted that slower global growth is expected to weaken external demand for the region’s exports, while persistent inflation in advanced economies could keep international interest rates higher for longer, making borrowing more expensive.
At the same time, increased geopolitical uncertainty is expected to strengthen the US dollar and place additional pressure on regional currencies.
ECLAC added that central banks across the region may continue lowering interest rates, but at a slower pace than previously anticipated because of inflationary pressures, potentially weighing on economic activity.
While Latin America and the Caribbean are considered to be in a relatively stronger position than many other regions because of limited direct trade exposure to the Persian Gulf and the presence of several hydrocarbon-exporting economies, ECLAC said this overall picture masks significant differences.
It noted that the majority of countries in the region are net importers of hydrocarbons and therefore experience negative effects through all six transmission channels.
