If the Iran war drags on, it could have important consequences on energy prices, global trade, inflation, monetary policies and stock markets.
When the president of the United States, Donald Trump, began to threaten Iran and send his aircraft carriers, we all began to fear the worst.
Last Friday, we went to bed worried, aware that Trump usually orders attacks during the weekend. It does so so that the markets have a couple of days to assimilate the consequences of these actions.
And on Saturday we woke up to the news of the joint attack by the armed forces of the United States and Israel, which killed Ayatollah Ali Khamenei and beheaded the Iranian regime.
The problem is that Iran is not Venezuela or Gaza. The Persian country is a strategic enclave in the Middle East, one of the largest crude oil producers in the world and, furthermore, it has a important weapons arsenal.
Therefore, this attack has indeed shaken the markets, although its impact has not yet been too great. However, If the conflict drags on, the consequences can be very serious.
Oil rise…
The energy market is already suffering the consequences of this military escalation. The price of a barrel of Brent is up 16% this weekup to around 80 dollars. At the beginning of the trading day on Monday it had already risen 10%.
And this is noticeable when going to refuel, with an iAverage increase of 4 cents in both gasoline and dieselas reported The Country. Although There are gas stations that have recorded increases of more than 10 cents.
Still There have been no major interruptions in supply, but Coface points out that the Risk of Iran hindering transit in the Strait of Hormuz could pose a threat to the global economy if the conflict drags on.
“A conflict limited to a few days or weeks, the most likely scenario at present, should have limited impact. However, If the conflict continues, its macroeconomic impact could be significant and transcend the issue of energy prices.“says Ruben Nizard, director of Sector Research at the insurer.
Coface emphasizes that The oil market had a large surplus before the attack, with abundant supply, which kept prices at bay. However, he believes that “The conflict changes the rules of the game, reintroducing extreme uncertainty about the security of supply.”
This is explained by the risk of interruption in the Strait of Hormuz, through which around 20% of the oil consumed passes worldwide and almost 30% of maritime crude oil shipments.
The insurer predicts that Prolonged or repeated interruptions could push the Brent above $100 a barrel“with the possibility of exceeding the February 2022 maximum ($122/barrel) or even the 2008 record ($147/barrel),” he specifies.
Furthermore, he warns of risk posed by the destruction of Iran’s infrastructure. Although it is not the main producer in the area, if it stops supplying oil it will also be noticed in the market.
Half of its production goes to China. Its buyers, especially Asian countries, would have to look for alternatives, pulling prices up.
…and other energies
The experts from Santalucía report that Around 20% of liquefied gas (LNG) also passes through the Strait of Hormuz.
José Carlos Díaz Lacaci, CEO of SotySolar, points out that The price of liquefied gas has increased by 50%. This is explained for two reasons. “Tasteproducer of 20% of the world’s LNG, has suspended production at its Ras Laffan complex. And the European gas reserves are at minimum levelssince we started the year with half the reserves than the previous year, this situation is exacerbated by the fact that the gas cut has been sudden and without the ability to react, causing a greater impact than in the 2022 Ukraine crisis,” he clarifies.
Besides, The increase in the price of oil and gas also impacts electricity production. “The rise in the price of electricity and a 50% increase in gas can have an impact up to bill increase of between 25%-30% in the residential market and a spraying of margins in industries as a consequence of the rising cost of energy, the driving force of its production,” notes Díaz Lacaci.
Difficulties in transporting goods
It is estimated that About 35% of maritime trade passes through the Strait of Hormuz. Coface insists on the importance of this location in the transport of goods such as LNG, fertilizers, industrial metals—aluminum, essentially—and petrochemical products.
Furthermore, he emphasizes that Other strategic points, such as Bab el-Mandeb1 or the Suez Canal, could also be affected in case of a regional escalation. And this could increase shipping costs and marine insurance premiums.
“This gradual disruption of supply chains poses a increasing risk of shortages and inflationary pressuresespecially for the economies most dependent on energy imports,” he details.
Jan Jonckheere, professor of international business at OBS Business School, warns that “Disruption in Gulf ports will force shipping companies to go around Africawhich adds two weeks to delivery times, making freight more expensive and generating bottlenecks at strategic points such as the Strait of Gibraltar.”
Likewise, Díaz Lacaci warns about a “potential delay in the supply chain of raw materials and manufactured goods, not only fuel, as transit through the strait and supply to China, the main global manufacturer, are compromised.”
This situation bears some similarity to the one we already experienced at the beginning of 2024. Then, the attacks by the Houthi rebels in the Red Sea forced shipping companies to change their routes. And this delayed deliveries and affected the global supply chain.
Inflation and change in monetary policy
Coface considers that an extreme scenario, with oil above $100 per barrel, would cause a new rise in global inflation.
This would cause a reaction of central bankswho would have to reverse their strategy and go from monetary easing to generalized restriction.
This would result in a increase in interest rates, which would make loans more expensive and, therefore, slow down business investment.
“A prolonged increase of 15 dollars in crude oil prices Brent This could reduce global growth by around 0.2 percentage points and add almost 0.5 percentage points to inflation. In such a context, the risk of stagflation would once again become a credible threat to the global economy, with serious consequences for businesses and trade,” he concludes.
Investment instability
The conflict also impacts the stock and financial markets. “In equities, the impact has been uneven. The United States showed greater resilience than Europe and Asia. At a sector level, they gain energy and defense, and lose travel, leisure and fuel-intensive sectors. In fixed income, the reaction has been contained and concentrated on the most subordinated assets (AT1, High Yield),” comments Agustín Bircher, Investment Director of Santalucía Asset Management, in a market report that provides answers to the key questions about the conflict.
“The central scenario is that of a shock of volatility rather than structural deterioration. The key will be in the duration of the conflict and whether there is a sustained disruption of energy flows,” he adds.
NORZ Patrimonia points out that “equity markets have reacted negatively due to the effects that it may have on supply chains, as well as the impact that a higher energy price can generate on the economy, accentuated in European markets due to energy dependence and business issues of a more cyclical nature, and once again focusing on the effects that these prices may have on inflation.
AND Investors are seeking refuge in commodities and currencies considered more defensive. In this way, there have been increases in the price of safe haven assets such as gold (+3%), silver (+2.4%). And it has also been appreciated dollar.
“In times of war, capital flees towards safe haven assets such as gold, US bonds or the Swiss franc,” Jonckheere agrees.
“From a strategic point of view, the current environment once again places value on the diversified portfolios with exposure to real assets and sectors less sensitive to the economic cycle”, points out NORZ Patrimonia.