Global financial markets reacted sharply to the escalation of armed conflict in Iran. European stock indices recorded significant losses, exceeding 2% in many cases, while energy commodity prices drastically increased. Gas prices in Europe jumped by nearly 40% after QatarEnergy halted production, and crude oil became 6% more expensive, raising concerns about a new wave of global inflation and rising living costs.

Crash on European stock exchanges

Major indices in Germany, Spain, and Italy lost between 2% and 2.6% of their value in response to the outbreak of war.

Explosion in gas and oil prices

Gas prices rose by 40% after Qatar's decision to halt LNG production, oil became 10 dollars more expensive in a week.

Flight to safe currencies

Investors are massively buying dollars and Swiss francs, forcing the Swiss central bank to take market action.

The outbreak of open armed conflict in Iran led to a sharp collapse in sentiment on global stock exchanges and commodity markets. European exchanges suffered the most: Frankfurt's DAX fell by 2.6%, Madrid's Ibex 35 by over 2%, and Milan's Piazza Affari lost 1.97%, which means a real evaporation of over 17 billion euros from the Italian capital market. Investors are hastily withdrawing capital from risky assets, fleeing towards safe havens such as the US dollar, Swiss franc, and gold. The Swiss National Bank was forced to intervene to curb excessive appreciation of the franc, which hurts local exports. A critical situation prevails in the energy market. The price of natural gas in Europe rose to about 45 euros per megawatt-hour, representing a jump of almost 40% within one trading session. The direct trigger for this price explosion was the halt in LNG production by giant QatarEnergy after attacks on gas facilities. Brent crude oil became 6% more expensive, reaching a level of 77 dollars per barrel, which within just a week means an increase of 10 dollars. Experts warn that a blockade of the Strait of Hormuz, crucial for world trade, could lead to supply paralysis and a permanent increase in fuel prices at gas stations across Europe. Iran possesses some of the world's largest oil and gas reserves, and any tensions in this region have historically led to energy crises, as was the case after the Islamic Revolution in 1979.Despite overall pessimism, some sectors are recording gains. Shares of companies in the defense industry are gaining value, and British securities are treated by some funds as an element of geographic hedging. Simultaneously, the Italian government noted high interest in Btp Valore bonds, indicating a desire to place savings in debt instruments guaranteed by the state amid stock market uncertainty. However, the situation remains extremely dynamic, and further developments on the military front directly determine currency exchange rates and prices of essential goods.

Mentioned People

  • Bufo — Representative of the energy company Iren, commenting on the resilience of the energy system.