In numbers: the global economic bill in the event of an American-Iranian war
At a time when the US military buildup in the Middle East region is increasing, and the rhetoric between Washington and Tehran is escalating, global economic experts are drawing bleak scenarios for any A possible military confrontation, warning that the consequences of a war in the region would extend from the Strait of Hormuz to the pockets of consumers and global financial markets.
A third of the world’s oil is in the crosshairs
The greatest danger lies in the Strait of Hormuz, the narrow waterway through which about a third of the world’s total maritime oil exports passes, in addition to huge quantities of liquefied natural gas, aluminum and copper. At its narrowest point, the strait narrows to only 54 kilometers between the Iranian coast and the Musandam Peninsula of Oman, with no real alternatives to redirect supplies.
Any closure of the strait, even if temporary, would mean an immediate rise in Stock markets with sharp fluctuations in energy-related sectors.
Safe havens shine in the sky of war
In an escalation scenario, experts expect a fierce wave of demand for Safe assets such as gold and silver, being a traditional haven for investors in times of crisis.
On the other hand, with inflation expectations rising and growth slowing, government bond markets will witness sharp fluctuations, as the yield curve is expected to become steeper as central banks anticipate an increasingly complex economic landscape.
Iran is in a high-cost dilemma
Analysts say that any Iranian action in The Strait of Hormuz will serve as "Economic suicide" To Tehran itself. Closing the Strait means stopping its oil exports completely, and eliminating the main source of income for the Iranian regime.
Iran produces about 4% of global oil supplies, at 3.5 million barrels per day, most of which is headed to Asian markets, led by China.
The most likely scenario
Despite the military escalation, the basic scenario that experts are betting on is still reaching a diplomatic settlement. They base this on the calmness of the financial markets so far, as the volatility index is still below its long-term average, without any signs of pricing escalation risks.
But the biggest warning remains, as any error in calculations between the two parties may spark a crisis extending from the Gulf of Hormuz to the pockets of consumers all over the world.
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