Iran War Spirals + Oil Shocks Keep Coming + China’s Advantage
As the U.S.-Israel conflict with Iran escalates, global markets are absorbing the shocks: oil prices are swinging, inflation expectations are rising, and safe-haven assumptions are being tested. China, by contrast, is looking relatively resilient, buoyed by strategic energy reserves, diversified supply chains, and policy flexibility. This episode examines how the conflict is driving inflation, complicating monetary policy, and handing China a geoeconomic edge.
Published
Hosts
- Sebastian MallabyPaul A. Volcker Senior Fellow for International Economics
- Rebecca PattersonSenior Fellow
Producer
- Molly McAnanyProducer, Podcasts
Supervising Producer
- Gabrielle SierraDirector, Podcasting
Supervising Producer
- Jeremy SherlickDirector of Video
Audio Producer
- Markus ZakariaAudio Producer & Sound Designer
Researcher
- Liza JacobResearch Associate, Finance, Business, and Technology
The Hook: The war in Iran is pushing oil prices higher and disrupting energy flows worldwide, revealing potential vulnerabilities in China’s economy.
The Spillovers: Energy shocks are leading to higher bond yields and reduced expectations for interest rate cuts, as markets price in more persistent inflation. Supply chain disruptions are spreading beyond oil into natural gas, fertilizer, and food, amplifying cost pressures globally. Equity markets are reacting negatively, with sharp selloffs tied to rising oil prices and geopolitical uncertainty. Still, despite being a major energy importer, China has remained relatively stable, benefiting from oil stockpiles, diversified energy sourcing, and the shift to electric vehicles.
The Spillover is a production of the Council on Foreign Relations. The opinions expressed on the show are solely those of the hosts and guests, not of the Council, which takes no institutional positions on matters of policy.
Mentioned on the Episode:
Sebastian Mallaby, The Infinity Machine: Demis Hassabis, DeepMind, and the Quest for Superintelligence, Penguin Random House
Coco Feng, “China Issues New Safety Rules for OpenClaw. Here Are the Dos and Don’ts” South China Morning Post
Hany Abdel-Latif and Adina Popescu, “Spillovers From Large Emerging Economies: How Dominant Is China?,” International Monetary Fund (IMF)
Michael Langemeier and Joana Colussi, “Farmer Sentiment Drops Sharply at the Start of 2026 as Economic Concerns Increase,” Purdue University/CME Group
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