War within the Middle East: in the direction of a significant world financial disaster? | EUROtoday

A navy operation with probably uncontrollable financial penalties. By launching Operation Epic Fury in opposition to Iran on February 28, the United States and Israel in return triggered a response from Tehran, notably materialized by the blockade of the Strait of Hormuz.

Some 20% of the world’s oil and liquefied pure gasoline (LNG), in addition to different uncooked supplies, go by way of this bottleneck. Bounded to the north by Iran, to the south by Oman and the United Arab Emirates, the Strait of Hormuz is roughly 50 kilometers vast at its entrance and exit. Its narrowest level is 33 kilometers.

A scenario which led in two weeks to a surge in hydrocarbon costs – the worth of a barrel of Brent skyrocketed, from round $72 to almost $108 between February 27 and March 18 – in addition to these of fertilizers, aluminum, sulfur and even helium. And the Strait of Hormuz doesn’t appear near unblocking in the intervening time, US President Donald Trump failing to seek out allies to safe this passage strategic for the worldwide economic system.

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“A priori, there is a 20% shortage of oil to make the world economy work. But with private and public reserves as those of the International Energy Agency (which announced it would release 400 million barrels, Editor’s note), as well as alternative routes to transport hydrocarbons, the real oil deficit is today estimated at eight million barrels per day, which is already a slightly less shock than expected”, tempers François-Xavier Chauchat, member of the funding committee, economist and strategist at Dorval Asset Management.

The undeniable fact that the worth of a barrel of oil has reached a plateau for nearly per week – it has stabilized round 100 {dollars} – shouldn’t be, nevertheless, reassuring information, as Philippe Waechter, chief economist at Ostrum Asset Management, explains: “If this current price settles in for the long term, it will be penalizing because it will reflect a shortfall in oil supply. Many Asian countries could be affected by this situation, which would also penalize consumers and businesses in Europe and the United States.”

“The current situation is not compatible at the moment with a global economic crisis”

From there to saying that the present scenario resembles the beginning of a significant world financial disaster, it’s a step that the specialists interviewed by France 24 don’t take. For them, solely time will enable issues to be named accurately. “If oil remains around $100 with a daily shortage of eight million barrels per day over the next three months, models suggest this would reduce global growth by 0.4 pointspushing global economic growth a little below the symbolic threshold of 3%”, notes François-Xavier Chauchat.

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These 3% are the barometer of the nice financial well being of the planet. If world GDP had been to seek out itself round 2.5% progress, “the worldwide economic system would then start to supply a rise in unemployment, even with constructive progress, and it’s this dynamic which might materialize the disaster”, specifies the expert. But, according to him, “the present scenario shouldn’t be suitable for the second with a world financial disaster.”

Considering the indicators of the major international financial organizations, there is indeed no reason to play the Cassandra: the International Monetary Fund (IMF) and the Organization for Economic Cooperation and Development (OECD) have both estimated global growth at 3.2% in 2025. Even removing the 0.4 percentage point that would be generated by blocking the Strait of Hormuz for several months, this indicator would still remain above 2.5%.

Furthermore, current energy tensions have little in common with past oil shocks, starting with the fact that the world is less dependent on oil in 2026 than it was in the 1970s. The share of black gold in global primary energy consumption has, in fact, fallen from 46% to 31%..

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And even if the blockage at the mouth of the Arabian Gulf simultaneously creates a surge in the price of oil, a collapse in maritime traffic and a contraction in global energy supply, optimism remains essential on the financial markets, according to François-Xavier Chauchat: “We are much less delicate to the worth of oil than within the Seventies, and buyers on the markets don’t contemplate the present situation as a disaster,” explains the economist. “For them, the Strait of Hormuz will reopen, not in 5 years and even six months, however slightly within the coming weeks or months. They could also be improper, however that’s the situation they’re taking part in.”

A situation not comparable to the financial crisis of 2008 nor to the inflation of 2022

The French Nobel Prize winner in economics Philippe Aghion also does not see a “collapse” of the world economy or even an “equal of the 2008 monetary disaster”, during which the price of a barrel of Brent exceeded 140 dollars – its historic record.

“Prolonged, expanded battle will cut back world progress. (…) I see a potential slowdown (however) I do not see a collapse. I do not see the equal of the 2008 monetary disaster,” said the economist on RTL. The 2008 crisis was born from an American mortgage crisis (“subprime”), which became a financial crisis and then a global economic crisis.

An observation shared by François-Xavier Chauchat, according to which “rates of interest aren’t rising a lot and the inventory markets aren’t falling a lot at present. This implies that the liquidity of the worldwide economic system stays good, there isn’t a monetary disaster like in 2008.”

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The comparison of current energy tensions, which are causing the prices of several raw materials to rise in parallel, also does not seem to hold up with the large-scale Russian invasion of Ukraine in 2022. That year, the surge in energy prices had led to record inflation – of 10.6% – in the euro zone.

“Four years ago, it was also the reopening of the global economy after the Covid pandemic,” underlines the Dorval Asset Management strategist. “Today, this scenario is much less likely because we are not in a high phase, the labor market is much softer than in 2022. Wages are currently decelerating, so we are not in an atmosphere where it is enough to light a small spark for inflation to soar.”

For Philippe Waechter also, “an energy shock is not enough to create inflation”. The chief economist at Ostrum Asset Management recalled in a note that in 2022, in addition to the increase in energy prices, the rise in food prices – Ukraine being a leading producer of cereals – and the lack of sufficient stocks of companies had then also contributed to fueling inflation.

Also learnPirates, oil, wars… The lengthy turbulent historical past of the Strait of Hormuz

Incomparable to the monetary disaster of 2008 or the inflation of 2022, the present world financial scenario is not any much less unstable at current. If the blockage of the Strait of Hormuz had been to proceed past the subsequent three months, and the worth of a barrel of Brent got here near 150 {dollars}, the scenario would change radically, undoubtedly for the more severe.