Kathmandu-After the attack on Israel and the United States on Iran, the war spreading across the Gulf region shows no sign of stopping. Iran continues counterattacks. The region faces instability. Foreign supply chains also face disruption. A broken supply chain will affect many countries around the world, from rising prices to foreign income.

Because of the war, risks are emerging for the global supply chain, the labour market, and remittance sources for countries like Nepal. This is why the government that takes office after the election will have to handle a risky economy. Even if the war ends today, its effects will last for a long time.

Along with the attack on American military bases, Iran has also issued another warning that could shake global consumer markets. Iran has warned it could close one of the world’s major petroleum shipping routes.

This route lies between Iran and Oman, the Strait of Hormuz. Iran has threatened to shut it down. Iran has not fully closed it yet, but navigation and related services are currently disrupted and blocked.

About 20 to 30 percent of the world’s petroleum passes through this route. Oil supplies to India and China mostly move through it. The United States now produces enough petroleum for its own needs, so it does not depend on this route. Iran has issued similar warnings in the past. This time the risk looks higher because the country is at war.

If Iran closes the route, crude oil prices could reach 150 dollars per barrel. That would push inflation worldwide and slow the global economy. Rating agencies and economists say the decision on whether this route stays open or closes will make a major difference. If it closes, alternative routes will raise costs. Consumer prices will rise. Nepal will also feel the impact.

Economies such as Qatar and the United Arab Emirates will face negative effects. Nepal will feel the direct impact through remittances.

Nepal’s domestic economy remains weak. Remittances have kept the external sector strong. Many analysts have pointed to this strength as a base for a major economic takeoff. New challenges now add pressure. The next government will have to carry the burden of a risk filled economy.