By Sama Marwan,
In the past few hours, global attention has shifted to the Middle East amid a dangerous escalation in tensions between Israel and Iran. The situation flared up following Israeli airstrikes on nuclear and military facilities inside Iranian territory, which were followed by Iranian missile strikes targeting various locations inside Israel. This dramatic escalation signals potentially severe consequences on both economic and political fronts.
The impact of this military escalation was not limited to the battlefield—it quickly rippled into global energy markets, which are highly sensitive to disruptions in this critical region. Iran, a key global oil producer, contributes around 4% of global oil supply, making any military targeting of its territory a direct threat to market stability. As news of the strikes spread, oil prices surged between 9% and 17%, with the price per barrel reaching approximately $75, amid growing fears of further escalation that could impact oil infrastructure.
But the greatest threat lies in Iran’s suggestion it might resort to more drastic measures—chiefly, threatening navigation through the Strait of Hormuz, a key maritime passage through which nearly one-fifth of the world’s oil exports flow. Any disruption to this vital artery could lead to a massive spike in fuel prices, directly impacting transportation and production costs across all global sectors and compounding pressure on economies already grappling with energy challenges.
Global financial markets reacted swiftly. Major stock exchanges dropped significantly as investors rushed to reduce exposure to risk. Meanwhile, gold and the U.S. dollar surged sharply, being traditional safe havens during crises. Conversely, cryptocurrencies like Bitcoin suffered major losses, with prices falling to around $103,000 due to investor concerns over potential volatility.
Supply chains and essential goods were also affected. Rising fuel prices are expected to drive up shipping and production costs, which in turn will raise the prices of food and basic commodities globally. Several economic reports warned that if the conflict continues, it could trigger a new global wave of inflation, one that many nations may struggle to manage amid a broader economic slowdown.
Israel’s own economy has taken a hit as well. Panic buying swept the country, with citizens rushing to stock up on food and essentials. The Israeli shekel dropped sharply against foreign currencies, while local stock indices experienced extreme fluctuations. Economic analysts now predict a decline in growth rates next year due to increased military spending and the costs of damage caused by the conflict.
Neighboring countries are also starting to feel the fallout. Field estimates indicate that energy exports—especially from Gulf nations—are being affected, with these countries relying heavily on maritime security for export operations. The Levant region may also face economic disruption due to supply chain interruptions and rising fuel costs.
Meanwhile, signs of international involvement are emerging. Reports indicate that Washington provided intelligence and logistical support for the Israeli strikes, a move that could draw additional global powers into the conflict, further complicating the geopolitical landscape.
Adding to the chaos, cyberattacks have targeted banks and government institutions on both sides, opening the door to a possible digital war that could damage the digital infrastructure of multiple countries—at a time when cyber systems are essential to global commerce and finance.
The international community is now urgently called upon to act—not only to halt the cycle of violence, but to preserve what remains of a fragile global economic balance that is on the brink of collapse. The world is standing at the edge of a major energy crisis, which could spiral into a comprehensive humanitarian and economic catastrophe if not swiftly contained.
