The ongoing conflict has global effects due to the strategic relevance of the region. A summary of key moves underway.
Beyond raising concern over the humanitarian consequences of war, the conflict in the Middle East is directly impacting the global economy by causing volatility in energy markets and increasing overall economic uncertainty.
With tensions between Iran and Israel steadily escalating, the presence of armed groups in the area, and instability surrounding the Strait of Hormuz, investors and analysts are closely monitoring potential shifts in oil and natural gas prices, as well as broader macroeconomic effects projected for 2024 and 2025.
Energy supply during war global response
The Middle East holds a central role in the production and export of energy, with several countries in the region contributing a significant share of the world’s oil and gas supply. For this reason, the scale and scope of the conflict affect both output and transportation, generating price volatility across international markets.
Transport routes like the Strait of Hormuz have become strategic conflict zones, resulting in threats to the free passage of oil tankers. These tensions have driven oil prices to fluctuate between 80 and 100 dollars per barrel.
This price range posed risks to the stability of energy trade. In response, the Organization of the Petroleum Exporting Countries (OPEC+) adopted a cautious stance and adjusted its production targets in an effort to avoid supply shocks or overproduction that could destabilize pricing.
Natural gas also experienced rising benchmark prices due to the ongoing tensions and potential disruptions in supply chains.
In light of this, investors adopted a defensive strategy and shifted capital toward safe-haven assets such as gold and the US dollar. This strategic move reduced liquidity across emerging markets.
Looking ahead, there is concern that rising energy prices could slow down the disinflation trend in Western economies. This may prompt more restrictive monetary policies in the months to come, potentially triggering renewed inflationary pressure from central banks.
Countries such as the United States, Canada, and Brazil responded by ramping up domestic energy production to mitigate market disruptions. At the same time, the crisis has accelerated the transition to renewable energy as a viable alternative in the face of supply shocks.
Although the end of the conflict remains a desired outcome, it is considered unlikely in the near term. Therefore, further developments in the Middle East will continue to shape the energy market landscape in both 2024 and 2025.
Investors and governments will need to remain prepared to navigate a climate of high uncertainty. Risk management and energy source diversification will be key strategies for reducing exposure to geopolitical disruptions. In this context, as noted by expert Fernando Boudourian, analyzing economic trends is essential for making informed strategic decisions.