Fuel subsidies may top US$1 trillion as Iran war drags, UN says
Number of countries deploying relief measures nearly doubles between April and September, UN report says
The United Nations predicts that fuel subsidies could cost more than US$1 trillion this year due to the Iran war, according to a recent study. As the conflict drags on, governments worldwide are struggling to provide relief measures for consumers facing higher energy prices, reports the UN Development Programme (UNDP). The UNDP warns that the coming months will be critical for nations running price caps, subsidies, and tax rebates, as soaring oil prices and elevated borrowing costs strain already tight budgets.
The UNDP's analysis, which examined data from the World Bank, International Monetary Fund (IMF), and International Energy Agency (IEA), found that the number of countries using relief measures nearly doubled between April and September. If these countries had not implemented relief measures, an additional 130 million people could have slipped below the US$6.85-a-day poverty line this year.
The pressure on governments is expected to intensify, with the combined crises projected to reach their peak in early 2027, notably due to the impact of this year's El Nino event. El Nino, characterized by unusually warm ocean conditions, can result in floods and droughts that exacerbate food insecurity. Recent surveys conducted by the UNDP indicate that 25 out of 26 offices worldwide anticipate the Middle East crisis to remain a top priority in the next six months, while none of the agency's locations believe the situation is improving.
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