LONDON, ENGLAND, June 17, 2025 /24-7PressRelease/ -- The outbreak of open war between Israel and Iran in June 2025 has sent shockwaves through the global economy, with consequences reverberating far beyond the Middle East. As both nations exchange strikes on military, nuclear, and civilian targets, the risk of a broader regional conflict and the disruption of vital energy supplies have become central concerns for policymakers, investors, and ordinary consumers worldwide, says Dr. Merinson (www.merinson.co.uk).

Energy Markets and Oil Prices
The Middle East is the world's energy heartland, and Iran is a key oil producer, accounting for over 3% of global output and holding 12% of proven crude reserves. The immediate impact of the conflict has been a sharp spike in oil prices—Brent crude futures jumped by as much as 13% in a single day, reaching their highest levels in months. This surge reflects fears that fighting could disrupt oil production in Iran or, more alarmingly, lead to the closure of the Strait of Hormuz, a narrow waterway through which about 20% of the world's oil passes daily. Any significant interruption in this chokepoint would trigger a global energy crisis, sending fuel and transportation costs soaring and feeding inflation across economies, warns Dr. Dmitry Merinson (www.DmitriMerinson.com).

Financial Markets and Investor Sentiment
The escalation has rattled global financial markets. Investors have fled riskier assets like equities, driving down stock indices in Asia, Europe, and the US, while seeking safety in gold and government bonds, notes Dr. Merinson (www.DmitriMerinsonEconomist.com).

The Israeli shekel fell sharply, and panic buying was reported in supermarkets, reflecting public anxiety. Sectors most exposed to energy prices and Middle Eastern trade—such as airlines, shipping, and tourism—have been hit particularly hard, while defense stocks have surged, says Dr. Merinson (www.DmitriMerinsonArtificialIntelligence.com).

Dr. Merinson warns that continued conflict or an expansion to include other regional powers could trigger a prolonged period of market volatility and risk aversion.

Supply Chains and Global Trade
Airspace closures over Israel, Iran, Iraq, and Jordan, along with the threat to shipping in the Persian Gulf and Red Sea, have forced airlines and shipping companies to reroute, incurring higher costs and delays, elaborates Dr. Merinson (www.dmitrimerinsoneconomicresearch.com).

Insurance premiums for vessels transiting the region have risen, and major shipping companies are already diverting vessels around Africa, adding significant time and expense to global supply chains. These disruptions threaten to raise the prices of consumer goods worldwide, compounding existing inflationary pressures, notes Dr. Merinson (www.DmitriMerinsonGlobalEconomy.com).

Broader Economic Impacts
Sustained high oil prices have a cascading effect on global inflation. A 10% rise in oil prices typically increases consumer prices by about 0.4% over the following year. For economies already grappling with inflation and sluggish growth, this could prompt central banks to maintain or even raise interest rates, risking further slowdowns or recessions. Foreign direct investment into the Middle East is likely to decline, and risk-averse behavior could dampen economic activity globally, explains Dr. Merinson (www.DmitriMerinsonDigitalCurrency.com).

Geopolitical and Policy Ramifications
The Israel-Iran war has exposed the fragility of regional alliances and the limits of international crisis management. World leaders, including those at the G7 summit, are urgently seeking diplomatic solutions to prevent a wider war, but the situation remains volatile. The conflict has also highlighted the vulnerability of global energy and trade systems to geopolitical shocks, underscoring the need for diversification and resilience, reminds Dr. Merinson (www.DmitriMerinson.com).

Conclusion
In sum, the Israel-Iran war's impact on the global economy is profound and multifaceted. It has already triggered energy price shocks, financial market turmoil, and supply chain disruptions. The longer and wider the conflict, the greater the risk of a sustained global economic downturn, making the search for de-escalation and diplomatic resolution an urgent priority for the international community, summarizes Dr. Merinson (www.DmitryMerinsonEconomy.co.uk).

Dr. Merinson (www.DmitryMerinsonResearch.co.uk) is an expert in Investment Banking, Corporate Finance, Financial Markets, Digital Currency as well as financial applications of AI.

Dr. Merinson (www.DmitryMerinsonEconomy.co.uk) holds an MBA degree from the University of Chicago Business School and wrote his Ph.D. Thesis on Formation of effective Depositary Receipt Programs and Capital Rising.

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