What would an Israel-Iran war mean for the global economy? | Israel-Iran conflict News

While Israel and Iran exchange deadly salvas for a fourth dayIt is increasingly worrying that the conflict spreads in one of the main regions producing oil and gas in the world. The stock markets were initially rolled after Israel surprise attack Friday but stabilized since.

A day after Israel killed several of the Iran Top Military Commanders And nuclear scientists and damaged some of its nuclear sites, Israel then struck Iran fossil fuels sector Saturday with the Iranian state media reporting a fire to the South Pars Gasfield. According to Iranian authorities, more than 220 people were killed in Israeli attacks, including at least 70 women and children.

Iran replied With a dam of ballistic missiles and drone strikes, a small percentage of which has managed to penetrate the Israeli defenses, killing at least 24 people.

On his social platform of truth, American president Donald Trump warned Tehran that the next “already planned attacks” would be “even more brutal”, adding: “Iran must conclude an agreement [on its nuclear programme] Before nothing remains.

While the conflict between the two most powerful soldiers in the Middle East shift towards a full-fledged war, the financial markets and the aviation sector take a hit. Analysts look at oil prices and investors turn to shelters safely like gold.

And a full -fledged war could worsen things – much worse, warned experts.

What happened to the price of oil?

Brent Crude, the world reference, joined $ 74.60 per barrel early on Monday.

This marked an increase of almost 7% compared to Thursday, the day before the launch of Israel launched its surprise attack.

A large part of world oil and other key products such as natural gas pass through maritime tracks animated in the Middle East, including the Hormuz Strait.

The Strait, a narrow navigable track separating Iran from the Gulf States, connects the Oman Sea to the Indian Ocean.

It is a duct for a third of worldwide supply of maritime oil, channeling around 21 million barrels per day.

At its narrowest point, it measures 33 km (21 miles) wide. The shipping channels in the navigable track are even narrower, which makes them vulnerable to attacks.

The conflict between Israel and Iran has relaunched a question of decade of Si Tehran will close the maritime strangulation point, triggering a rally in oil prices.

Quoting the ESMAI Kosari Kosari Conservative legislator, the Iranian news agency Irinn reported that Tehran was planning to close the Strait while the conflict with Israel is intensifying.

According to Goldman Sachs, a worst scenario involving blockages in the Hormuz Strait could push the oil prices greater than $ 100 per barrel.

However, during the Iran-Iraq war from 1980 to 1988, in which the two countries targeted commercial ships in the Gulf, Hormuz was never completely closed.

In addition, attempts to block the Hormuz Strait would probably disrupt Tehran’s own exports, in particular to China, reducing precious income.

According to Hamzeh Al Gaaod, economic analyst at TS Lombard, a research firm on strategy and research, “the repercussions when the strait closes would be serious for Tehran himself.”

Have global inflation rates been affected?

When oil prices increase, the cost of production also increases. This is ultimately transmitted to consumers, especially for products with high energy intensity such as food, clothing and chemicals.

Important oil countries around the world could undergo higher inflation and slower economic growth if the conflict persists.

For the future, analysts have warned that central banks will be faced with a drop in flexibility in policies by trying to control the price increase.

“The G7 central bankers are currently on a [interest rate] Cup cycle, and you are therefore concerned with a potential price of energy price, “Al Gaaod told Al Jazeera.

The Bank of England recently reduced the basic interest rate of the United Kingdom to 4.25%, although the American federal reserve has maintained reduction rates following Trump prices, imposed on almost all countries since its return to power in January.

How did the markets respond?

Wall Street took a hit. Friday, the composite indices S&P 500 and Nasdaq lose 1.1 and 1.3%respectively. In the Middle East, the EGX 30 reference index of Egypt dropped 7.7% on Sunday while the Tel Aviv 35 scholarship index fell by 1.5%.

European actions have also derived the news of the attacks of Israel. The Dax of Germany and the CAC 40 of France fell just over 1.1% at the end of last week, while the FTSE 100 of the United Kingdom finished 0.5% less on Friday.

However, some British companies have gathered. Bae Systems, a defense entrepreneur, increased by almost 3% on Friday, reflecting the concerns that tensions could degenerate.

In the United States, the share price of military suppliers, including Lockheed, Northrop Grumman and RTX, also increased.

Elsewhere, the BP and Shell oil companies have gained in value, the first fence almost 2% higher and the second closing at just over 1% higher.

The price of gold was also negotiated at around 1% more Friday at $ 3,426 per ounce, near the record summit of $ 3,500 which he reached in April.

Monday, Investors tempered part of their risk positioning with petroleum and the prices of gold down and increasing equity prices.

“It seems that the markets provide that the conflict will remain relatively contained. Above all, Iran has attacked any American military assets in the region,” said Al Gaaod.

What was the impact on the aviation sector with airspace closings?

Several airlines have suspended or canceled flights in the Middle East, and some countries have closed their airspace.

Here is a list of a few suspension and reacted flights:

• EmiratesThe largest airline in the Middle East, said they suspended flights to Iraq, Jordan, Lebanon and Iran until June 30 with flights to Lebanon until Sunday.
• Etihad Airways canceled all thefts between Abu Dhabi and Tel Aviv until Sunday. The airline also redirects several other services and has advised customers to wait for updates regarding their flight status.
• Qatar Airways temporarily canceled flights to Iran, Iraq and Syria due to current tensions with advisable passengers to check the condition of their flights before traveling.

Elsewhere, Iran’s official news agency IRNA reported that the air authorities had closed the country’s air space until further notice.

On Friday, Iraq also closed its airspace and suspended all traffic in its airports, Iraqi state media reported. The eastern Iraq is home to one of the most frequented air corridors in the world. Dozens of flights cross there at any time, flying between Europe and the Gulf – a lot on the roads of Asia to Europe.

The Jordan’s Civil Aviation Authority said that it “temporarily” closed Jordanian airspace “in anticipation of any dangers resulting from the climbing that occurs in the region”.

For Al Gaaod, “there may be short-term disturbances for tourism in the Middle East, but only for about a month. I suspect tourism will rebound. “

He made a similar prediction on the global financial markets: “As long as strikes remain contained, I think that the prices of the shares will continue to recover last week.”