For some, war is a mother, while for others, it is a disaster.
The ongoing armed conflict in the Middle East affects not only the price of oil but also a wide range of sectors in the global economy. A typical picture of geopolitical crises is forming — some markets are reaping windfall profits, while others are facing declining demand and rising costs.
Oil Shock
Currently, the hottest topic is oil. From the first days of the war, its price began to rise and by March 8 had increased by 80%, reaching $119. Traders fear a complete halt to oil transit through the Strait of Hormuz amid threats from the Islamic Revolutionary Guard Corps (IRGC). However, after Trump's statement that if Iran attempts to block oil supplies, the U.S. will strike "20 times harder," prices returned to the $90 per barrel mark.
If the conflict drags on, oil exporters outside the Persian Gulf, including Russia, will benefit. The U.S. is considering easing oil sanctions against Moscow, and initial steps have already been taken: Washington allowed India to purchase Russian oil. As for shale oil producers from the U.S. and Canada, they remain cautious, viewing the current price spike as a temporary phenomenon.
An increase in shale oil production is only expected in the case of a serious prolongation of the conflict and a shift in the global balance of supply and demand. One should not hope for a sharp increase in oil production in other regions, such as the North Sea or Africa.
A Chance for Shale Gas
A possible blockade of the Strait of Hormuz will also impact the gas industry. This route accounts for up to 20% of global LNG supplies. In March alone, about 5.8 million tons of Middle Eastern LNG could leave the market — 14% of the monthly global supply volume. Possible additional supplies from all alternative sources are estimated at less than 2 million tons.
The main beneficiaries of the current situation will be American gas producers. The refusal to use Russian LNG has already increased demand for American raw materials, and disruptions in Qatari gas supplies will increase the number of buyers for U.S. LNG.
American LNG exporters are currently rushing to take advantage of the price increase in European and Asian markets by 50%: companies Venture Global and Cheniere Energy, the two largest producers in the U.S., are striving to squeeze out additional gas volumes from facilities in Texas and Louisiana and bring them to market.
Other Beneficiaries
Companies producing interceptor missiles, air defense systems, radars, and detection systems have also benefited from the new phase of the conflict. Shares of the largest contractors in the U.S. and Europe rose on the first trading day after the U.S. and Israel struck Iran. Among the leaders in growth are Lockheed Martin, RTX Corporation, Northrop Grumman, and European BAE Systems.
The Israeli company Rafael Advanced Defense Systems — developer of the renowned "Iron Dome" system — is a beneficiary of the increased demand for air defense systems. Even if the military operation against Iran ends in the coming weeks, countries in the region will likely want to strengthen their defense capabilities, fearing a possible recurrence of armed conflicts in the future.
Logistics companies have also felt the impact of the U.S.-Israeli military operation. Middle Eastern countries are a major hub through which many routes pass. Rocket attacks have driven up the cost of tanker freight: rates have more than doubled. The blockade of the Strait of Hormuz has increased delivery times and costs. Insurance companies are also benefiting — military insurance premiums have risen in some cases by more than 1000%. For example, if previously insuring an oil tanker cost about $625,000, that amount has now risen to $7.5 million.
In the first days of the military operation, more than 150 hacker attacks and "hacktivist" operations were recorded. Europol issued a warning about an increased threat of terrorism, extremism, and cyberattacks. Experts note that cyberattacks are now occurring alongside missile strikes and sabotage. In this situation, demand for critical infrastructure protection solutions and cloud services is growing. Companies engaged in analyzing and predicting critical threats, suppliers of security solutions for industrial facilities, and incident response services in the field of cybercrime will also benefit.
Main Victims
Military actions have virtually wiped out tourist flows to the region's countries. Hundreds of thousands of foreigners are trapped in the UAE, Saudi Arabia, Qatar, and Israel. The global tourism industry, valued at $11.7 trillion, has already suffered significantly from the U.S.-Israeli operation. For example, the total losses of Russian tour operators over ten days amounted to about 3 billion rubles.
Even after the cessation of hostilities, it may take months to restore the previous volume of tourist traffic, so companies working in the tourism sector: flight and cruise organizers, various platforms for renting hotels and apartments — will all face significant revenue declines. One of the hardest-hit sectors has been aviation: since February 28, at least 40,000 flights have been canceled. Air traffic is gradually returning to normal, but any further escalation of the conflict will again lead to the closure of airspace.
The sharp rise in energy prices — oil and gas — will severely impact energy-intensive industries. Here, the most vulnerable are the chemical and fertilizer production sectors: rising gas prices directly increase the cost of nitrogen fertilizers and chemical products, as gas is used both for energy supply and as a raw material in their production. Fuel costs are also rising, leading to increased logistics costs for most goods, including in the food industry. The production of paper, building materials, and heavy machinery is also at risk.
Many energy-intensive industries in Europe, which have not yet fully recovered from the rise in gas prices in 2022, may not survive the new crisis: rising energy resource prices make production unprofitable. Even the current short-term price spike has already increased Europe's energy costs by approximately €1.3 billion.
Companies in the petrochemical and oil refining sectors are already facing difficulties due to raw material prices and supply delays, forcing many Asian manufacturers to cut back on capacity utilization. Enterprises located in the conflict zone sometimes have to halt operations due to drone and missile attacks: this happened with a large refinery owned by Saudi Aramco.
The consumer sector in oil-importing countries is also suffering: energy and fertilizer prices are rising, leading to increased inflation and a decrease in real consumer incomes. Disruptions in shipping, rising fuel and ship insurance costs increase delivery costs, especially for companies with "long" logistics and in the e-commerce sector. Almost the same reasons are putting pressure on industries such as automotive manufacturing and transportation.
The financial sector in the Middle East is also facing new problems: banks are increasing risk assessments for loans to companies in logistics, tourism, and trade; financial markets in the region are experiencing increased volatility, and disruptions in port and air traffic are affecting trade financing and cash flows. These same reasons are impacting the real estate market in the Gulf countries: tourism has fallen to nearly zero, business activity is declining, and risks for developers and infrastructure projects are rising. Moreover, delays in material deliveries will inevitably lead to a slowdown in construction.
The first ten days of the new military conflict have shown the traditional sectoral asymmetry in the global economy characteristic of geopolitical crises. Rising energy prices and logistical disruptions create favorable conditions for certain sectors: arms manufacturers, LNG exporters, tanker fleet operators, and cybersecurity companies. At the same time, fuel inflation and supply chain disruptions worsen the prospects for energy-intensive industries, parts of the petrochemical sector, the consumer sector of oil-importing countries, as well as transportation and high fuel consumption industries. Financial and development markets in the Gulf countries are facing increased volatility and operational risks. As a result, the conflict intensifies the redistribution of income between sectors, simultaneously forming new growth points and areas of increased vulnerability in the global economy.
