Middle East Tensions Trigger Looming Inflation, Recession Fears
(MENAFN) Rising hostilities in the Middle East are intensifying fears around inflation and a looming recession as Israel and Iran engage in escalating attacks since last Friday.
On June 13, Israel executed extensive airstrikes targeting Iran’s military command centers, nuclear installations, and urban areas. In a fierce retaliation, Iran launched 370 ballistic missiles.
Market participants remain on edge, uncertain about the conflict’s duration and the repercussions on global financial markets.
A major source of concern is the possible shutdown of the Strait of Hormuz, a strategic maritime corridor responsible for transporting nearly one-third of the world’s oil and liquefied natural gas (LNG). Any disruption here could send shockwaves through supply chains, hitting industries such as manufacturing particularly hard.
The threat of rising crude oil and natural gas costs, combined with increased market uncertainty, risks stoking inflationary forces and depressing critical economic indicators.
The clash has already driven Brent crude oil prices up by 11.1%, reaching $73.70 per barrel—the largest weekly increase since October 3, 2022.
Meanwhile, natural gas prices in Europe started the week on an upward trajectory. The Dutch TTF virtual trading hub saw July gas contracts rise 3.2%, settling at 39.1 euros ($45.34) per megawatt-hour.
Joachim Nagel, president of Germany’s Bundesbank, warned that although the Israel-Iran conflict is currently causing a notable spike in oil prices, the long-term effects are still unclear.
Experts warn that a potential crisis at the Strait of Hormuz could derail the fragile post-pandemic recovery of the global economy.
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