Military strikes involving the United States and Israel against Iran are expected to ripple through global energy markets, shipping routes and financial conditions, although the scale of the impact will largely depend on how long the conflict lasts.
Analysts say a short-lived escalation would limit the economic damage. Oil prices have already risen in response to the tensions, but forecasts suggest they could average around 70 dollars a barrel this year, with a temporary peak near 85 dollars. At that level, the effect on the global economy would be relatively contained. Economists estimate that a 10% increase in oil prices typically raises inflation in the United States and Europe by around 0.1 to 0.2 percentage points in the short term. That would be unlikely to significantly alter the policy path of major central banks such as the Federal Reserve or the European Central Bank.
However, the outlook becomes more uncertain if the conflict continues for longer. A war lasting beyond four to six weeks could begin to generate broader economic consequences, while a conflict stretching to around three months could mark a turning point where recession risks rise and markets shift into a more unstable phase.
One of the main concerns is disruption to shipping through the Strait of Hormuz, a narrow waterway that carries roughly 30% of the world’s seaborne oil and gas supplies. Early market reactions appear to have been driven more by fears of maritime disruption than by actual shortages of crude production. Oil prices briefly climbed to around 82 dollars a barrel, while shipping data indicated that more than 200 oil and liquefied natural gas vessels were waiting outside the strait, partly due to higher war-risk insurance costs and operational caution.
If disruption to the strait becomes prolonged, oil prices could temporarily climb to around 100 dollars a barrel. In a more extreme scenario, involving attacks on regional energy infrastructure and major shipping interruptions, prices could spike above 130 dollars before easing as global supply adjusts.
Financial markets are already responding to the uncertainty. Rising energy prices risk pushing inflation higher and delaying expected interest-rate cuts, keeping borrowing costs elevated. Sectors such as energy, defence and consumer staples may benefit, while industries heavily exposed to fuel costs, including airlines and petrochemicals, could face greater pressure.
