Attack on Iran: Rising on oil price and shock to global economy
Israel’s attack on Iran has caused oil price rise, which according to analysts can lead the world economy to a big shock.
Mohammed El-Erian, president of Queens College, at the University of Cambridge and an insurance giant consultant, this rise in price (which has ranged from 8% to 13%) is a « bad shock for the world economy at a bad time ».
The rise to the price of oil, « is something negative short and in the long run. »
Because, as he explains, a higher price of oil, due to the Israeli attack, can lead to a « classic stagnation shock », undermining economic growth and fueling inflation. Immediate consequence, for the average consumer, the greatest uncertainty in their income. Fuel prices will also increase and possibly in some countries, such as Britain, to increase taxation.
In addition, the chance of reducing interest rates, which is one of the permanent demands of US President Donald Trump, is reduced to reduce borrowing costs.
According to El-air, as you can see, the attack on Iran and rise to oil price, « is something negative in the short term and in the long run. »
Real fears of wider conflict
For his part, Deutsche Bank’s Jim Reed points out that this Israeli attack on Iran is much larger than others in 2024.
« For markets, the focus is now focused on how the situation can escalate, as Iran is committed to reacting and President Trump has stated that » it will only get worse! » This raises real fears of a broader conflict, with the risk of being involved in the United States. «
Commenting on the evolution of oil price, he says that « in terms of market, it is extremely important, but today it does not look so great in historical terms. »
However, as he explains, in a « shock, high variability, but very strong performance in many areas (especially for out-of-US shares) » the evolution of oil price is yet another component we need to take into account.
Stock markets in red
The New York Stock Exchange fell to the start of transactions, following the losses in the markets of Europe and Asia-Pacific.
In addition to the price of oil, the news of the attack pushed the main indicators in the red.
- Industrial Average Dow Jones: Falling 480 points or 1.1% to 42,487 points
- S & P 500: Fall of 41 points or 0.7% to 6.003 points
- Nasdaq Composite: Drop 156 points or 0.8% to 19,505 points.
Airline shares are receding abruptly, but the shares of oil companies go up, following the rise to the price of oil
Airlines were the worst performance sector in Europe, as several countries in the Middle East closed their airspace on commercial flights today. In Europe, Air France-KLM (-4.5%), Deutsche Lufthansa (-3.4%) and her parent Airways, IAG (-4.2%) shares are included in major losses. In Asia, Japan Airlines Co. fell by 3.7%. Turkish Airlines fell more than 6% to Constantinople.
