War and your wallet: how the oil price hike due to Israel-Iran affects you

The war in the Middle East has a price, and we're all starting to pay it. The conflict has sent oil prices soaring and global markets are trembling. We explain, bluntly, how this distant war is already affecting your wallet.

As missiles crisscross the skies of the Middle East, economic shock waves are rippling across the planet at lightning speed, directly impacting financial markets and, ultimately, the pockets of ordinary citizens. The escalating war between Israel and Iran has set off alarm bells in the energy sector, causing a sharp rise in oil prices and a stampede of investors toward safe haven assets.

This is not a distant crisis. Its effects are tangible, reflected in the price you pay at the pump, the cost of food, and the uncertainty surrounding the global economy.

The numbers don't lie: the domino effect on global markets

The market reaction to the surge has been immediate and overwhelming. Fears of a disruption in crude oil supply from one of the world's most productive regions have added a geopolitical risk premium that has been instantly reflected in prices.

Immediate Impact of the Conflict on Global Markets (June 17)

| Financial Asset | Change (24h) | Key Reason for Movement |

|—|—|—|

| Brent Oil | ▲ +4.40% (to $76.45) | Fears of supply disruption and escalation with US participation |

| WTI Oil | ▲ +4.28% (to $74.84) ​​| Geopolitical risk premium rises in the Middle East |

| Gold (Ounce) | ▲ +1.4% (to $3,447) | Investors seek safe haven assets amid uncertainty |

| S&P 500 | ▼ -0.85% | Risk aversion amid uncertainty and rising energy prices |

| Dow Jones | ▼ -0.70% | Widespread decline due to geopolitical tensions and economic data |

The ghost of the pandemic: "The economy is contracting like it did with Covid."

Surprisingly, the deepest economic impact so far comes not from the physical destruction of oil infrastructure, but from a more subtle and human phenomenon: fear-induced social paralysis. Israeli economist Zvi Eckstein, former deputy governor of the Bank of Israel, has made a chilling comparison: the war's effect on the Israeli economy is similar to that of the lockdowns caused by the COVID-19 pandemic.

"The impact of the war with Iran, due to the missile attack, is forcing people to stay home. And that has a major impact on the economy," Eckstein explained. "Shops and malls are closing, consumption is decreasing, and this has a negative impact... All very similar to what happened during Covid." This analysis reveals that the most potent economic weapon in this conflict, for now, is not the missile that destroys a refinery, but the fear that empties the streets and halts commerce.

The Strait of Hormuz: the "red button" that could trigger a global energy crisis

At the center of global anxiety is a narrow maritime passage: the Strait of Hormuz. Approximately one-fifth of the world's oil consumption and one-third of its liquefied natural gas transit through this vital artery. Iran, due to its geographical position, has the capacity to block it, a threat it has wielded in the past and which represents its greatest economic leverage.

A closure of the Strait of Hormuz would be a catastrophic scenario for the global economy. It would leave hundreds of oil tankers stranded, cause an immediate supply shortage, and could push crude oil prices well above $100 per barrel, according to Goldman Sachs analysts. A shock of this magnitude would not only be felt at the pump; it would trigger a new global inflationary spiral, affecting the price of almost all goods and services and significantly increasing the risk of a global recession.

"The effects of the attack have spread across global markets, with a sharp shift toward risk aversion across several asset classes… with notable fears of an escalation and broader regional conflict." – Deutsche Bank analysts.

The war between Israel and Iran is being fought on two simultaneous fronts: the military and the financial. And although the bombs are falling thousands of miles away, the economic shock waves are already hitting our doors.