HONG KONG: HSBC Holdings Chair Brendan Nelson said ​on Tuesday that ⁠a Middle East peace deal was essential to ensure ‌a substantial resumption of global energy flows, withoil-driven inflation looming as a major risk ​to the world economy.

Nelson, speaking at the HSBC Global Investment Summit in Hong ​Kong, added ​that as long as uncertainty persists, energy prices would remain elevated.

Oil prices have surged since the Iran war began, ⁠and prices remain close to $100 a barrel as investors position themselves for prolonged tensions over the crucial Strait of Hormuz, through which a fifth of global oil and gas typically passes.

Nelson warned that ​current ‌global growth, trade ⁠and inflation projections ⁠should be "approached with considerable caution" given that the impacts of the Iran conflict ​are yet to be fully understood.

"The longer the ‌disruption continues, the more the indirect effects ⁠from higher energy costs will lift inflation and depress growth," Nelson said.

With a swift reopening of the strait looking unlikely, Nelson said he expected interest rates to be held steady in the U.S., Europe and Britain this year as a rise in short- and long-term market rates had tightened financial conditions.

The U.S. Navy began a blockade of the strait on Monday, following ‌the breakdown of weekend talks to end the six-week-long war.

ANZ ⁠analysts estimate about 10 million barrels ​per day of crude supply have been effectively removed from the market, adding that a prolonged U.S. blockade could curb an additional 3 million ​to 4 ‌million barrels per day. (Reporting by Selena Li ⁠in Hong Kong; Writing by ​Scott Murdoch; Editing by Christian Schmollinger and Kevin Buckland)