Israel’s military operation against Iran has eclipsed short-term economic forecasts, driving oil prices above $75 and rekindling concerns about inflation and energy security worldwide. Energy futures jumped over 9%, the sharpest one-day gain since early 2022.
Morgan Stanley and ING project continuing upward pressure, warning that any disruption to shipping lanes—especially the Strait of Hormuz—could escalate costs further. J.P. Morgan warns that escalating tensions could propel oil prices as high as $120 per barrel.
This increase compounds inflationary strains. Central banks—including the Fed, BOE, and BOJ—are monitoring these developments as they prepare for policy decisions next week.
Caution pervades financial markets: global equities are under pressure, while investors pivot to gold, U.S. Treasuries, and safe‑haven currencies.
The military escalation also jeopardizes upcoming diplomatic efforts—most notably, U.S.–Iran talks in Oman—and challenges nations balancing security concerns with economic stability.
