Iraq Economic News And Points To Ponder Thursday Afternoon 3-26-26
How Has The Iran War Affected Global Air Freight Rates?
Money and Business Economy News - Follow-up The military escalation in the Middle East is no longer just putting pressure on oil and energy markets; it has begun to impact air freight, one of the most sensitive sectors of global trade. With the closure of major airspaces, disruptions to transit traffic in key hubs like Dubai and Doha, and soaring jet fuel and insurance prices, air freight rates have skyrocketed. Meanwhile, disruptions to maritime shipping have prompted some companies to shift from sea to air freight despite the higher costs.
World ACD Reveals Air Freight Data:
The average global air freight rate rose during the week ending March 15, 2026 by 10% week-on-week to $2.67 per kilogram inclusive of fees, following an 8% increase the previous week.
Global spot prices rose by 12% to $3.19 per kilogram, while the biggest jump was in the Middle East and South Asia, where spot prices reached $4.37 per kilogram, a weekly increase of 22% and an annual increase of 58%.
On some of the main tracks, the jumps appeared more pronounced:
Shipping costs from South Asia to Europe have increased by 70%.
From South Asia to North America, 58%.
From Europe to the Middle East, 55%.
This reflects the widening scope of the impact, from a regional crisis to a disruption affecting global supply chains.
Reduced Capacity Fuels Price Increases
This surge is not so much related to a normal increase in demand as it is to a shock in capacity. The closure of airspace, even partially, over a number of Gulf countries, coinciding with the disruption of shipping in the Strait of Hormuz, has pulled out a significant portion of available global capacity, forcing airlines to cancel flights or reroute them via longer and more expensive routes.
Professor of Aviation Management at Surrey University, Nadine Aitani, says that one of the main reasons for the rise in air freight prices is “the sharp decline in the capacity of Gulf airlines after they closed, even partially, the airspace over Qatar, the UAE, Saudi Arabia and Kuwait.”
She adds that Dubai and Doha are among the world's largest air transit hubs, and that Middle Eastern airlines account for about 13% of global air cargo capacity, meaning that any widespread disruption to them is immediately reflected in the international market.
Aitani told Al Jazeera Net that the problem is not only related to the cancellation of some flights, but also that alternative routes consume more fuel, forcing planes to carry additional quantities of fuel, which reduces the space available for cargo and raises costs at the same time.
Longer Routes
Avoiding the conflict zone has altered the air traffic map on several major trade routes, particularly between Asia and Europe. Instead of transiting through Gulf distribution hubs, many airlines have been forced to operate longer flights with less efficient and flexible stopovers.
Aitani points out that the capacity of the China-Europe air corridor has decreased by more than 35% due to the closure of Gulf distribution centers, while resorting to the sea route around the Cape of Good Hope adds between 10 and 15 days to the transit time, a difference that is not commensurate with the nature of perishable goods or shipments that depend on rapid delivery.
This problem is also evident in what Cathay Pacific CEO Ronald Lam announced, when he explained that many cargo flights to Europe used to stop in Dubai to refuel and load more goods, but the company has started bypassing this stop and heading directly to Europe with cargo restrictions due to the inability to refuel along the way.
From Sea To Air
With some of the shipping traffic in the Gulf disrupted and more than 100 container ships stranded near the Strait of Hormuz, according to Reuters, some companies have turned to diverting some of their goods to air freight, even though this option is several times more expensive than sea freight.
Markets are particularly affected by this shift in the pharmaceutical, food and electronics sectors. Prashant Yadav, a pharmaceutical supply chain expert, told Reuters that some generic drugs and pharmaceutical ingredients coming from India used to be shipped by sea through the strait before being exported to Europe, Africa and some Arab countries, but a number of companies have started shipping them by air to avoid delays and maritime disruptions.
Aitani says that the closure of the Strait of Hormuz has made the ports of the Arabian Gulf unavailable for direct sea freight from Asia, making air transport “the only available option despite the high costs.”
She adds that companies find themselves facing a difficult equation: either bear the increase in cost, or pass it on to the end consumer.
Fuel And Insurance Premium
The pressure on air freight came not only from a lack of capacity, but also from high operating costs. Jet fuel prices increased by 11% weekly, to about 94% higher than pre-war levels, prompting carriers to impose additional fuel surcharges and war risk surcharges.
Aitani explains that fuel and insurance are two key items in the cost of air transport, and that any increase in them is quickly passed on to customers through additional fees. She warns that continued disruption for three to six months could keep fuel and insurance costs high across global supply chains.
Economist Ahmed Aql says that the war and military tensions have raised oil prices by about 45% since the beginning of the crisis, which has automatically been reflected in the costs of shipping companies.
He adds that changing routes, higher insurance costs, and the closure of some air and sea ports all explain the current surge in prices.
During his interview with Al Jazeera Net, Aql points out that some estimates suggest insurance costs could increase fivefold in some cases, meaning that companies are not only facing a higher fuel bill, but also a larger risk bill related to passing through a conflict zone.
Businesses And Consumers
The escalating unrest began to force real changes in corporate decisions. Major shipping companies like Maersk imposed additional charges for fuel and war risks, while companies like FedEx and UPS resorted to temporary increases and fees on shipments related to the Middle East.
Major airlines have also announced a review of their networks and a reduction in some unprofitable capacity due to high fuel pressure.
Conversely, importing and manufacturing companies have begun to reassess their reliance on air freight itself. As prices rise, this mode of transport is increasingly limited to essential, high-value, or time-sensitive goods, such as pharmaceuticals, fresh food, and certain technological components.
Ahmed Aql believes that the impact of rising shipping costs cannot be separated from inflation, noting that most goods go through one or more stages of transport before reaching the consumer.
Therefore, increased transportation costs, according to reason, are reflected in the final price, weaken purchasing power, and, if they continue, may lead to a reduction in both demand and production, which reinforces fears of inflation, slowdown, and perhaps recession in some economies.
Despite some signs of partial recovery in shipping volumes out of the Middle East and South Asia, the overall picture remains highly volatile.
Some airports and airspaces have resumed limited operations, but capacity constraints, delays and bottlenecks remain, and the availability of jet fuel itself has become an uncertain factor at some key points.
https://www.economy-news.net/content.php?id=67158
Government Advisor: Diversifying Export Outlets Supports Economic Stability And Enhances Financial Balance.
Money and Business Economy News – Baghdad The Prime Minister’s financial advisor, Mazhar Muhammad Salih, confirmed on Thursday that Iraq’s location enhances its role in the global energy system, explaining that diversifying export outlets supports economic stability and strengthens financial balance.
Saleh said that "Iraq, in its pursuit of a positive foreign policy based on the logic of negotiation and resolving conflicts by peaceful means instead of resorting to war, highlights the role of Iraqi diplomacy as an effective tool for gaining the respect of the international and regional communities."
He explained that “peace economics is gaining increasing importance, as it is an approach aimed at promoting stability by establishing the principle of non-war in addressing conflicts, especially in the Arabian Gulf region, which is one of the most vital energy corridors in the world, and Iraq is one of its geostrategic components.
He added that “Iraq’s location and production capacity contribute to making it an active element within the global energy supply system, which requires it to adopt flexible policies that ensure the continuation of oil exports within the available capabilities, while preserving its vital interests in light of geopolitical challenges,” noting that “Iraq’s ability to diversify oil export outlets, and to continue exporting even in light of turbulent regional conditions, is a policy aimed at maintaining economic stability and enhancing the state’s financial break-even point without interruption.”
Saleh stressed that "the ability to pass some shipments through strategic waterways, such as the Strait of Hormuz, simultaneously reflects a level of balance in international relations and mutual respect for Iraqi oil policies within the international framework."
He noted that “despite the surrounding geopolitical challenges, the continued flow of oil exports through routes passing through sensitive areas, along with the diversification of land and sea export outlets, contributes to enhancing the resilience of the Iraqi economy and allows it to gradually rebuild its financial balance,” pointing out that “this approach enhances opportunities for engaging in broader international cooperation and underscores the importance of protecting international waterways as a prerequisite for the stability of global trade.”
He stated that "these policies are consistent with the principles of international law and the Charter of the United Nations, which emphasize the need to respect the sovereignty of states, promote good relations between them, and enshrine the right of peoples to live in dignity within a stable and secure environment, leading to the building of a more just and stable international system, and contributing to ending conflicts and achieving sustainable peace."
https://www.economy-news.net/content.php?id=67157
Gold Prices Stabilize As Markets Await Signs Of De-Escalation In The Middle East.
Money and Business Economy News - Follow-up Gold prices were steady on Thursday as investors awaited clearer signs of progress in efforts to de-escalate the conflict in the Middle East, and remained cautious ahead of new geopolitical developments that could affect demand for safe-haven assets.
By 03:00 GMT, spot gold was trading at $4,503.29 per ounce. US gold futures for April delivery fell 1.2% to $4,500.
Iranian Foreign Minister Abbas Araqchi said on Wednesday that his country is studying the American proposal to halt the war but does not intend to hold talks to end the escalating conflict in the Middle East, according to Reuters.
Reports indicate that the United States sent the 15-point proposal to Tehran earlier this week, via Pakistan.
Kyle Rodda, senior financial markets analyst at Capital.com, said: "In the next 24 to 48 hours, (gold prices) will move in accordance with news related to the negotiations."
He added: "The big moves are likely to really happen at the beginning of next week when it becomes clear whether the United States will launch a ground invasion of Iran over the weekend."
White House spokeswoman Caroline Leavitt said on Wednesday that US President Donald Trump vowed to strike Iran even harder if it did not accept "military defeat".
Gold came under increased pressure as crude oil prices surpassed $100 a barrel, with investors reassessing the prospects for easing tensions in the Middle East.
According to the CME FedWatch tool, markets no longer expect any monetary easing from the Federal Reserve this year. Before the conflict erupted, market expectations were for at least two US interest rate cuts this year.
As for other precious metals, silver fell 0.1% to $71.19 an ounce in spot trading. Platinum lost 0.7% to $1,906.90, and palladium dropped 1.4% to $1,404. https://www.economy-news.net/content.php?id=67147