How the Israel-Iran Conflict Shakes the Global Economy

As tensions between Israel and Iran escalate, global economic ripple effects are being closely tracked by analysts, traders, and governments alike. From oil supply concerns to inflation fears and disrupted aviation, the potential fallout of a broader conflict is serious.

Oil prices have surged amid attacks on Iranian energy infrastructure and speculation over possible disruptions in the Strait of Hormuz, a maritime chokepoint responsible for nearly one-third of the world’s seaborne oil traffic.

Global markets have reacted with sharp swings. Stock indexes in the U.S., Europe, and the Middle East fell sharply following the initial strikes, though defense and energy companies saw notable gains.

Meanwhile, gold prices climbed as investors shifted to safer assets, and central banks now face limited room to cut interest rates due to inflation risks linked to rising energy costs.

The aviation sector has also been hit, with major airlines canceling or rerouting flights across the region and several countries closing their airspace. While markets currently expect the conflict to remain regionally contained, the situation remains fluid and unpredictable.