Israel-Iran war fuels risks for Mideast economies, energy flows after US strikes
The global economic fallout from the Israel-Iran clash has been limited but US strikes are adding to the risk.
The Israel-Iran war injected a major dose of uncertainty for Middle East economies that had entered 2025 with growth forecasts on the upswing — and US President Donald Trump’s June 21 decision to strike Iranian nuclear sites has only raised the stakes further.
The US escalation stoked new fears of a broader regional conflict with direct implications for global energy flows through the Strait of Hormuz, a chokepoint for roughly one-fifth of the world’s oil and liquefied natural gas shipments. Any move by Iran against Gulf energy assets or to disrupt regional energy flows would send shockwaves through the global economy and could push crude prices past $100 per barrel.
As of this writing, the key waterway remains open despite Iran ratcheting up rhetoric following the US attacks. Reports indicate that more tankers are avoiding the area.
So far, global economic fallout from the Israel-Iran clash has been limited. Initially, oil prices surged over 10% and financial markets slid after the fighting began on June 13, but the volatility was largely contained. Now, the markets are bracing for more volatility and there is potential for another spike in energy prices and stock turmoil.
