Ongoing instability in the Middle East is once again making waves across the global economy, with Canadian economist and author Todd Hirsch warning that recent geopolitical unrest could trigger widespread economic consequences—especially if oil prices surge.
While unrest in the Middle East isn’t new, Hirsch notes that the recent escalation and tentative pullbacks have already rattled global markets. The main concern centres around the Strait of Hormuz—a vital passage for over 20% of the world’s oil supply. Any disruption there could send oil prices soaring past $100 per barrel, a level high enough to potentially push the global economy into recession.
Hirsch explains that oil remains largely inelastic in demand. That means higher fuel costs would hit both consumers and industries hard, siphoning money away from discretionary spending and slowing economic activity.
In Canada, a global spike in oil prices presents a paradox. As a net oil exporter, provinces like Alberta, Saskatchewan, and Newfoundland would benefit from higher revenues, boosting provincial budgets. However, individual Canadians would face rising fuel costs at the pump and increased inflation pressures.
This situation could further complicate decisions for central banks. As Canada’s inflation rate inches downward, the Bank of Canada had been expected to consider interest rate cuts. But a sharp rise in oil prices could reverse that trend, potentially forcing central banks to keep—or even raise—rates to manage inflation.
Hirsch also pointed out that heightened global tensions tend to suppress business sentiment. When uncertainty rises, companies and consumers alike become hesitant to make major investments or purchases, waiting instead for more stability before committing resources.
As the situation unfolds, all eyes will be on oil markets—and central banks’ next moves.
Here’s the video interview with Hirsch.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024 and 2025.
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