21 May 2026
The impact of the Middle East conflict is spreading through the global economy. The latest Fidelity Answers podcast hears what Fidelity’s analysts are saying about the effects on companies and supply chains.
As those on the ground in the Middle East count the human cost of the eruption of another conflict, the economic implications continue to worry financial markets worldwide. Higher oil prices mean higher inflation in the months ahead, and an effective tax on consumer wallets that the OECD has already calculated could almost halve growth rates in some major economies this year.
The latest episode of the Fidelity Answers podcast digs into what that means for the day-to-day of businesses across the globe. Head of Equity Research, Europe, Punam Sharma is one of a handful of senior managers overseeing more than 120 sector analysts who track the realities of the companies that portfolio managers invest in - and the scale of the fallout is growing. For markets, she draws comparisons with the announcement of US trade tariffs in April last year.
To listen to the podcast click here.
“We've seen risk premiums go up, but they are not coming back as quickly as we saw in the previous case of Liberation Day last year,” she says. “There are supply chain disruptions, there are second-level impacts. Some of these effects may be transitory, and some of them may probably be long drawn, even after the conflict ends.”
Commodities markets have naturally been at the centre of the storm, and it’s not just oil and gas. Polymer prices have gone up, affecting packaging costs, while the impact on solvent supplies may threaten a shortage of paints, Sharma says.
The Middle East also has 25 per cent of the global capacity for aluminium smelting outside China.
“That has impacts not only on the packaging industry, but on the auto industry, on airline parts,” Sharma says.
“So analysts need to know what percentage of packaging costs are aluminium and if aluminium costs have gone up so much, or aluminium is not available, what kind of price changes do the companies need to make, and what will be the impact on gross margins as a result of such disruption.”
In general, Sharma says the geopolitical turbulence of the past decade has prepared companies and markets better for the past month’s volatility, and there are areas of risk she points to where companies are doing better than markets initially expected. Semiconductor companies, for example, experienced a crisis in helium supplies when Russia invaded Ukraine in 2022. This time a build-up in inventory has protected them.
“Sometimes it's very easy to get carried away with the headlines without doing the necessary work,” she says. “We know that the tech companies have enough [helium] inventory for multiple months.”
She worries about the signals on overall consumer demand, however.
“Even before this crisis started, consumer wallets were not necessarily in a fantastic place,” she says. “If this is the state of the economy, there may be some down-trading, so I would not be buying consumer companies, especially the consumer companies which are selling premium goods.”
It isn’t just helium. The last time global gas supplies were at stake as they have been in recent weeks, it forced a full-scale reset of the European energy system. Portfolio Manager Marcel Stotzel says that has left the European economy better prepared this time. But the actual impact on gas supplies is also less pronounced.
“A far higher percentage of gas went offline [in 2022]. And also, Europe just wasn't ready for it, it didn't have the import facilities […] by sea that there are now.”
The surge in investment into renewable energy in the past decade has also helped. And a rise in the price of oil benefits the economics of solar and other green energy sources that has been questioned by rollbacks in policy in the US.
“Renewables is really one area where Europe leads the world,” Stotzel says. “Both in terms of operators of things like offshore wind, but also in the underlying technology, whether it's wind turbines, or the underlying grid technology.”
But he is worried about the overall impact of higher oil prices on growth.
“If the conflict ends soon, I think the base case is we don't end up moving into a massively stagflationary environment, but obviously every additional day that the conflict goes on increases the probabilities.”
Before the launch of the US campaign a month ago, one widely-held investment thesis for 2026 was the promise held by emerging markets. The conflict has turned that on its head. Sharma and her analysts are picking apart what is now a more complex equation.
“There are some geographies, which are automatically the low-cost producer of many commodities, and the currency depreciation helps in the export part of it,” she says.
“But all conflict is really bad for humanity, and it is especially bad for the poor in emerging markets.”
In India, gas is already becoming an issue for some. Construction workers typically live on site during projects and cook with gas canisters they buy locally. Rationing has made access to canisters difficult and businesses in the cities report [MS1] labourers returning to their villages in response. With monsoon season due soon, they may not return until later in the year, limiting the supply of labour.
“Higher raw material prices, supply chain-induced inflation. All of this does not auger well […] in all these geographies,” Sharma says.
“It impacts the consumer at every level.”