The Iran War Energy Shock: Input-Output Analysis of Agri-Food Inflation in Safe-Haven Countries

The 2026 military escalation in the Middle East has caused a shock to energy prices. This has threatened food security throughout the world. Most previous studies have lacked an explanation on how energy price shocks are transmitted to industrial sectors especially the agri-food sector as well as their impacts on "safe-haven" countries. Therefore, this study used the Ghosh Input-Output (I-O) Price Model to simulate the energy price shock in energy-intensive industries across 37 safe-haven countries. The findings show that most of the safe-haven countries’ estimated inflation rates after the shock remain stable, but there are hidden vulnerabilities at the micro-level. The I-O model implies that energy price shocks in upstream sectors will be mechanically transmitted to the downstream agri-food sector; even a slight percentage point increase can disproportionately impact it. Conversely, certain safe-haven countries can insulate their agri-food production from such external energy price shock pressures by localizing their distribution networks. These findings suggest policymakers in transitioning away from consumer subsidy-based programs toward targeted supply-side intervention approaches, while at the same time providing institutional investors with a quantifiable framework for determining which investment destinations will prove resilient to continued geopolitical turbulence.