The World Trade Organization's annual global trade outlook is being released nearly three weeks into an escalating war in the Middle East that is already causing soaring energy prices and reviving fears that a major economic crisis is looming.

"Sustained increases in energy prices could increase risks for global trade, with potential spillovers for food security and cost pressures on consumers and businesses," World Trade Organization chief Ngozi Okonjo-Iweala warned in a statement.

Since US-Israeli forces launched the war against Iran on February 28, Tehran has responded with attacks throughout the Middle East and threats that have nearly halted shipping in the Strait of Hormuz, through which one-fifth of global oil supplies normally pass.

And the conflict appears to be escalating, with massive attacks targeting oil and gas production, storage and transportation infrastructure across the region.

Since the start of the war, WTO economists have been working to revise their annual forecasts.

Give the high degree of uncertainty around the impact of the war and how long it will last, the organisation on Thursday presented two possible scenarios for how global trade will evolve this year.

- Trade normalisation -

In the first scenario with excludes possible energy price shocks, growth in global merchandise trade volumes is expected to slow this year to 1.9 percent, down from 4.6 percent last year.

That scenario assumes a slight dip in global gross domestic product (GDP) growth, from 2.9 percent in 2025 to 2.8 percent this year and in 2027.

According to the WTO, that scenario would see merchandise trade "normalise" this year, regardless of the war in the Middle East, after stronger-than-expected growth in 2025 driven especially by a surge in artificial intelligence-related products.

Trade last year was also boosted "by resilient demand in emerging markets, by expansionary fiscal and monetary policies in advanced economies, and, in the first half of the year, by the front-loading of imports in North America ahead of the expected imposition of 'reciprocal' tariffs by the United States", the WTO said in its report.

In the first scenario, global merchandise trade volumes are projected to grow by 2.6 percent in 2027.

The the volume of trade in services would meanwhile swell by 4.8 percent this year and 5.1 percent next year, WTO economists projected.

"The outlook reflects the resilience of global trade, buoyed by trade in high technology products and digitally delivered services, adaptations in supply chains and the avoidance of tit-for-tat retaliation on tariffs," Okonjo-Iweala said.

However, she cautioned, "this baseline forecast is under pressure from the conflict in the Middle East".

- 'Economic burden' -

In the second scenario, the WTO cautioned that if crude oil and liquified natural gas prices were to remain high throughout the year, that "would shave 0.3 percentage points off the GDP forecast for 2026".

That in turn would reduce the trade forecast for this year by 0.5 percentage points, it said.

"This would mean merchandise trade volumes would grow by just 1.4 percent in the high energy price scenario," WTO said, adding that services trade would also grow at a slower rate of 4.1 percent this year.

Okonjo-Iweala stressed that "WTO members can help cushion the impact and ease the economic burden on people worldwide by maintaining predictable trade policies and strengthening supply chain resilience".

WTO economists noted that there was also a possibility that merchandise trade growth could be stronger than expected if the war in the Middle East is short-lived and if AI-related trade remains strong.

In that case, merchandise trade growth could reach 2.4 percent this year and 2.7 percent in 2027, the report said.