The ongoing conflict between Iran, Israel, and the United States has led to an increase in oil prices up to $120 per barrel. The ongoing conflict has disrupted production and shipping in the Middle East, heavily impacting the market.

Early on Monday the price of Brent crude reached $119.50 but later lowered to $107.80 per barrel.

What is the impact of Iran conflict globally

As the conflict escalates in the Middle East, it has shown a visible impact on global energy markets. While Iran has targeted the desalination plant, affecting drinking water supply, Israel has set oil depots in Tehran on fire.

War has entered its second week, leading to a surge in global oil prices, and the supply chain has been massively affected.

Market Reactions and Strategic Reserves

According to reports, the oil price has shown a slight sign of stability as members of the Group of Seven are releasing their strategic oil reserves. However, the reports are not confirmed yet. Meanwhile, the United States announced it has enough energy supplies and noted that prices would decline in the coming days.

Shipping through Strait of Hormuz disrupted

The Strait of Hormuz is a crucial passage through which approximately 15 million barrels of crude oil, 20 percent of the world’s oil shipments move every day, but movement has been disrupted due to the high risk of missiles and drone attacks. Export difficulties have increased, showing signs of growing challenges in countries like Iraq, Kuwait, and the United Arab Emirates.

Economic Impact

Fuel prices are increasing worldwide as pressure mounts on oil and natural gas; this has started affecting and causing pressure on economies in India as well. Due to the ongoing tension the financial market has shown sharp decline. Nikkei 225 in Tokyo fell by 5.2% on Monday. U.S. stock futures declined by more than 1.5%, while the S&P 500 and Dow Jones Industrial Average saw major losses.

The price of gasoline has increased up to $3.45 per gallon (approximately 47 percent in a week). Diesel prices have also shown a sharp rise, up to 83 percent, at $4.60 per gallon.

Following the conflict there has been a rise in natural gas prices; although the price has been moderately affected, a 4.6 percent increase has been recorded, reaching $3.33 per 1,000 cubic feet.