How Israel-Iran Conflict Could Shatter World Economy

How Israel-Iran Conflict Could Shatter World Economy

Sputnik

The April 1 attack on the Iranian embassy in Damascus, believed to be carried out by Israel, is widely seen as a major escalation. What if a war between Iran and Israel breaks out?

Further escalation of tensions between Iran and Israel is fraught with a risk of a large-scale regional conflict which will immediately backfire on the already fragile world economy, Sputnik's pundits say.

The Iran-Israeli hostilities could have a huge impact on the oil market to begin with, according to Marc Ayoub, a Lebanese energy policy researcher and non-resident fellow at the Tahir Institute for Middle East Policy.

"If any escalation happens, it's going to be far worse than what we have seen already from the Red sea tensions, because what happened in the Red sea had minimal impact yet on the oil markets," Ayoub told Sputnik. "And all markets have been so far stabilized. But I think especially if the [straits of] Hormuz enters into the play of the tensions and if Iran gets more power to close the Hormuz canal, then all the Gulf tankers won't have a way forward."

Ayoub drew attention to the fact that crude prices have been climbing up even before Iran's possible response to Israel over the killing of its elite officers. Immediately after the attack, Brent crude prices rose 1.03 percent to $87.90, while West Texas Intermediate (WTI) soared by 1.45 percent to $84.38. All in all, oil prices have already jumped more than 10 percent this year.

"We could really see the barrel price beyond hundred dollars and even reaching something between $140 and $150, based on the previous World Bank and Bloomberg estimations," suggested Ayoub. "This is due to the tensions, but also to the supply chain disruptions, especially if Hormuz is included in addition to the Red Sea. If Iran enters, the Houthis will not stay observers — they will be part of this, and the Red sea will be closed."

A spike in hostilities between Iran and Israel could also have geopolitical consequences, affecting their neighbors, including Egypt, Turkiye, Jordan, Syria, Iraq and Lebanon, according to Rodney Shakespeare, visiting professor of binary economics at Trisakti University in Jakarta, Indonesia, and co-founder of the Global Justice Movement.