Global Markets Jittery as Israel-Iran War Shows No Signs of Slowing

With missiles exchanged between Israel and Iran for the fourth consecutive day, economic repercussions are rippling well beyond the region—affecting energy prices, global markets, and international travel.

Significant Oil Price Volatility

Oil surged nearly 7% within hours of Israel’s weekend strikes, hitting roughly $74.60 per barrel before dipping slightly. Brent crude has risen about 11% since early June, rallying fears of an impending oil shock should Iran close the Strait of Hormuz—through which around 21 million barrels of oil transit daily. Goldman Sachs warns prices could exceed $100 if that chokepoint is blocked washingtonpost.com+1ft.com+1theguardian.com+1stocktwits.com+1.

Inflation and Interest Rate Risks

Rising energy costs translate into higher prices for consumer goods globally. Central banks like the G7 face constrained monetary policy now, as they were already cutting rates. Economists caution that an energy-driven inflation spike could delay interest rate relief .

Markets React

Friday’s rally in commodity prices rattled stock markets: U.S. indexes dropped over 1% (S&P 500, Nasdaq), while emerging markets in the Middle East and Egypt saw deeper declines. Conversely, defense and energy stocks—including BAE Systems, Lockheed Martin, BP and Shell—rallied alongside safe-haven gold, which neared record highs .

Monday saw some recovery as hopes for back-channel diplomacy eased fears—but analysts caution that markets remain fragile until major targets, like U.S. military assets, are hit marketwatch.com+2reuters.com+2nypost.com+2.

Grounding Global Air Travel

Airspace over Iran, Iraq, Jordan, and parts of the Gulf region has been closed in response to escalated air strikes. Airlines including Emirates, Etihad, Qatar Airways, and even Israel have canceled or rerouted flights. Regional travel and tourism have taken a hit, though recovery could be swift if tensions remain contained, according to experts .

Broader Economic Implications

Despite the turbulence, economists believe the U.S. economy may weather this phase—unless Iran successfully disrupts energy supply at scale. A deep, prolonged conflict involving key energy routes could boost oil to above $120 and inject broader global instability .

Bottom Line for Investors and Consumers

Markets remain in a “wait-and-see” mode. Continuing exchanges without escalation hit hard—especially if Iran targets the Strait of Hormuz. However, diplomatic signals and the U.S.’s limited economic vulnerability suggest this crisis may be serious yet containable. Watch energy prices, central bank decisions, and any U.S. or allied involvement closely.