Middle East Conflict Between Iran and Israel Threatens Global Economy, Impacting Oil, Trade, and Markets

The escalating conflict between Iran and Israel in the Middle East is set to impact the global economy, clearly affecting oil imports, trade, stock markets, the price of gold and silver, and inflation.

The Strait of Hormuz, located between Iran and Oman, is the world's most crucial oil route. Neighboring India imports nearly 50% of its crude oil from countries like Saudi Arabia, Iraq, and the UAE via this route. According to data, about half of India's monthly oil supply comes through this route. If Israel attacks Iranian oil reserves or if Iran closes this passage, more than half of India's monthly oil supply will completely halt, which is certain to have a direct impact reaching Nepal.

Crisis in Non-Oil Exports Too

Not just oil, but India's non-oil exports could also be seriously affected by this war, Indian media outlets have reported. According to one report, more than 10% of India's total non-oil exports pass through the Strait of Hormuz. This includes essential products such as Basmati rice, tea, spices, fresh fruits, vegetables, and engineering goods. Most exports to West Asian countries (6 Arab nations) travel via this route. If this route is closed or shipping costs increase, the cost for Indian exporters will rise, which will reduce the competitiveness of Indian goods in the global market.

Fear of Surge in Crude Oil Prices and Decline in Stock Markets

Crude oil has always been a sensitive factor for the Indian stock market. According to experts, if the price of Brent crude goes above $80-$85 per barrel due to Iran-Israel tensions, a major decline could be seen in the Indian stock market. On Friday, the price of Brent crude oil rose by 2.875 to reach $72.87 per barrel. Sectors such as paint, tires, aviation, and logistics, which are highly dependent on crude oil, will be directly affected in terms of their margins. Foreign institutional investors are already pulling money out of the Indian market; in such a situation, this geopolitical tension will further increase.

Surge Expected in Gold and Silver Prices

When there is an atmosphere of tension and uncertainty globally, investors may pull money out of equity markets and move towards safe investment options like gold and silver. According to commodity experts, the price of gold and silver could reach new heights due to the Iran-Israel war. If the US is directly involved in this war, the demand for gold against the dollar will increase further. An acceleration in both industrial and investment demand for silver is also expected, which may become a good source of returns for investors in the coming days.

Threat of Inflation

If crude oil becomes expensive, transportation costs will increase, which will directly affect the prices of fruits, vegetables, and other essential goods. This could lead to an increase in the retail inflation rate, directly burdening the pockets of the general public.

Meanwhile, on Saturday morning, Israel attacked Iran's capital Tehran and several other cities. According to the IRNA news agency, 40 female students died and 45 were injured in these attacks in southern Iran. In response, Iran has also started retaliatory attacks on Israel. Iran has also fired about 400 missiles in retaliation.

This rising level of tension between the two countries has become a matter of concern for global peace and stability.