Military escalation against Iran: first reactions in global economy – Alpha Economics

Military actions against Iran are at the center of attention for the entire global community—at all levels, including economic players.

As a rule, any major shock, sometimes even a single statement from leading world actors, can trigger highly sensitive reactions in financial markets. Naturally, the initial reactions are mixed in terms of emotions and long-term planning.

The most sensitive aspect of the current situation in the Middle East, for obvious reasons, is the fluctuation of oil prices, as well as various assessments and expectations related to Iran’s blockade of the Strait of Hormuz.

In practice, the strait has already been blocked, which inevitably affected global oil prices. In the longer term, various negative expectations are beginning to take shape.

Let us begin with the expectations tied to the Strait of Hormuz. From the perspective of global oil logistics, the role of the strait is hard to overestimate. On the one hand, it accounts for 20–25% of the world’s daily oil flows and about one-third of liquefied gas shipments; on the other hand, it is a major supply route to Asian countries, with most petroleum products transported through the strait destined for Asian markets.

Expectations in Asian markets, reflected in part by a general decline in indices, are more than understandable. On one side, current restrictions on the strait’s throughput capacity, and on the other, attacks on Middle Eastern oil tankers as a result of counterstrikes, have already led to rising oil prices.

Incidentally, the most significant change so far is that within just one day, oil prices surged by more than 10 percent.

Moreover, numerous assessments suggest that if the situation drags on, oil prices could exceed the $100 mark, with some forecasts even predicting levels around $200.