The bombings that have been shaking the Middle East since Saturday are having immediate effects on the global economy. Gas and oil, widely produced in the region, are seeing their prices soar, with up to a 50% increase for Dutch TFF, a European gas reference, and barrels of oil flirting with $80. These increases are due to the bombings on oil infrastructures as well as the blockade of oil tankers in the Strait of Hormuz, bordered to the north by Iran and monitored by the Revolutionary Guards. One in five barrels of oil in the world usually pass through this narrow strip of sea between the Arabian Peninsula and Iran. These ships must now take detours, but the Suez Canal, which opens the doors to the Mediterranean, is not a better option. Additionally, Houthi leaders in Yemen, armed by Tehran, have warned that “the first strikes will take place soon.” Airspace is also compromised, with many flights canceled, leaving thousands of tourists without a solution for repatriation as neighboring countries of Iran are targeted by the regime’s missiles and drones. The tourism industry is also suffering. As for European and Asian stock exchanges, they significantly declined this Monday. Wall Street fared better at closing, but if oil prices remain high, this could lead to an increase in consumer products prices, a resurgence of inflation, and potentially central bank interest rates being raised. The duration and intensity of the conflict will determine the power of the domino effect on the global economy.
