As the Bank of England keeps interest rates unchanged this week, analysts believe the oil price shock from the Iran war has hit a cooling economy, unlike in 2022. With unemployment rising to a five-year high and demand weakening, policymakers face a historic dilemma: tackling inflation or preventing a recession. The experience of 2011 suggests the central bank may refrain from raising rates to avoid deepening the crisis. Markets are now pricing in a rate increase to 4% by December, rather than a cut.

The Islamic Republic of Iran has rejected Donald Trump's call for a ceasefire and intensified its missile and drone attacks on the UAE and Saudi Arabia. Following an Iranian drone strike on a fuel tank at Dubai Airport, flights were suspended for several hours, and the key oil port of Fujairah was targeted for the second time in three days. With the Strait of Hormuz remaining effectively closed, Brent crude oil prices have surged past $105 per barrel, pushing the region closer to total chaos as tensions enter the seventeenth day of the war.

China's official data shows industrial production and investment grew strongly in the first two months of 2026, but this growth is now overshadowed by the escalating Iran war. While retail and infrastructure sectors performed better than expected, surging oil prices and disruptions to international trade have darkened the outlook for Chinese exports. Beijing is now cautiously delaying economic stimulus measures to assess the impact of the Middle East crisis.

Donald Trump has announced that negotiations with Cuba are underway, but no serious action will be taken regarding the country until the war with Iran is concluded. Simultaneously, with the intensification of U.S. sanctions and the cutoff of fuel supplies to Cuba, sporadic protests have escalated on the island. Cuba has confirmed it is in talks with the U.S. regarding "potential solutions" to bilateral disputes, while simultaneously bolstering its defensive capabilities.