In this live edition of The Inside Brief, host Manus Cranny is joined by Adam Posen, president of the Peterson Institute for International Economics, and Bob McNally, president of Rapidan Energy Group, to assess the rapidly escalating conflict in the Middle East and its implications for oil markets, global growth and geopolitical stability.
Mr McNally warns that the world is adjusting to a major disruption in energy supply, with as much as 20 per cent of global energy flows affected. He argues that traditional policy responses are insufficient to offset a shock of this scale, describing the situation as a "math problem that is not solvable by the usual toolkit".
In Mr McNally's view, a resolution depends on either a ceasefire or the degradation of Iran’s military capabilities, which would allow energy flows to resume.
In the conversation, Mr Posen urges caution in interpreting the economic impact, arguing that policymakers should avoid overreacting. He emphasises that the global economy, particularly advanced economies, has shown resilience to past energy shocks. However, he highlights significant risks for emerging markets, where higher energy prices, weaker currencies and rising costs for food and fertiliser could lead to elevated inflation and economic strain.
Mr Posen also outlines how central banks are expected to respond in the near term, saying they will remain on hold while monitoring inflation expectations and allowing price signals to work through the system before taking action.
The Inside Brief with Manus Cranny is available on YouTube, Apple Podcasts, Spotify and all other major platforms.
