Economic implications of a possible US military action in Iran

[YUriy1991]

Have you ever wondered what will happen to the global economy if US President Donald Trump orders a strike on Iran? What impact will it have in the value of the US Dollar? Will such action strengthen the "greenback"? Or weaken it? And what about crypto? Do you think the market will crash? Or will prices "pump" shortly thereafter?

The US now controls the biggest oil reserve in the world (via Venezuela), so maybe the US has nothing to lose by engaging against Iran?

What do you think? Your input would be greatly appreciated. Thanks in advance.  🙂

War always carries implications, especially regarding the economic impact it will have. Currently the Middle East is heating up. Countries that rely heavily on Middle Eastern oil will undoubtedly be affected by this war. A country internal economy will undoubtedly be shaken, especially when oil supplies are disrupted. This will cause a new disaster for every industrial sector. Prices of basic necessities will rise due to increased production costs due to limited oil supplies. Iran blockade of the Strait of Hormuz has had a major impact on the global economy. Many government owned and private oil vessels are stuck, unable to pass through and there is no certainty when it will reopen. This will cause panic in some places. It is almost certain that if this war continues, the economy will be paralyzed. I hope Trump will immediately stop his reckless actions to prevent the global economy from becoming even more chaos.

[AmoreJaz]

Oil went up, gold went up, and I saw that someone mentioned Bitcoin went down, but from what I saw, it also went up; now it's worth a little over $73,000. Even a more conservative type of investment we have here, government bonds, also went up. It seems that in the short term it was beneficial, but perhaps it won't last long; it may just be an initial fear reaction from investors.

What we can hope from this war is for them to stop this, not because we don't want our investments to go up, but for the humanity in general. Because a lot of civilians are getting affected, not only with the missiles but their living conditions as well. Commodities are increasing in prices and of course, the oil prices is now like going up and we don't know when it will stop. Challenging times are ahead not only for those neighboring countries of Iran but this war has global impact.

[abhiseshakana]

But it's predicted that Iran will close the "Strait of Hormuz", effectively blocking oil shipments to the world. That will result in a severe blow to the global economy. Particularly, Asian countries such as China, India, Japan, and South Korea. China is the second-largest economy in the world, so anything affecting the country will have severe repercussions over the rest of the world.

Trump has calculated the numbers and so on if this continues, but I suspect that Trump has made a mistake in his calculations regarding war with Iran because war with Iran is different from war with Iraq and Syria.
What makes the effect different is the Strait of Hormuz. If the Strait of Hormuz is completely closed, the impact on the world economy will be felt, albeit not directly, because of its central location.
Honestly, I condemn those who play a role in war, even if it is under the slogan of security and other reasons, but they ignore the citizens who have to lose everything. Young people have to lose their lives as soldiers and ordinary people have to lose everything while they sit safely at their desks.

Many moslem in my country see Iran as a country which not easily bow to US's pressure, their political identity show resisitance to western domination. They already experience long term conflict, sanction and embargo, previously they often demonstrated a strong will to persevere when facing threat from major power especially US, so i assume their military structure also prepare for long term resilience, but how long Iran can be persist, only prediction depend on end solution to this conflict.

For Trump's miscalculation possibility, the result seems inconsistent with Trump prediction, he failed to overthrow the regime. This miscalculation due to unclear strategies more reactive than planned. Air attack make Iran cripple also failed and the most important evidence, conflict and escalation spread wider on midlle east region. So if Trump predict war can be resolve fast and Iran surrender quicky then we can can call it miscalculation.

[whiteblue]

Oil went up, gold went up, and I saw that someone mentioned Bitcoin went down, but from what I saw, it also went up; now it's worth a little over $73,000. Even a more conservative type of investment we have here, government bonds, also went up. It seems that in the short term it was beneficial, but perhaps it won't last long; it may just be an initial fear reaction from investors.

Yes, many say that Bitcoin will decline when a war breaks out, but today is different. The increase in the last 24 hours is 9%, and during the war, we saw a gain of over 10%. Gold may have corrected slightly yesterday, but other assets also experienced increases. This implies that the war won't have a significant impact. However, oil will certainly rise if a war breaks out.

I think this implication would be very positive if it were positive for Bitcoin.

[terrific]

I am having confusion right now.
The currency is becoming stronger but the retaliation goes with the inflation and the oil prices are about to increase next week.
So, it's a double pain for all of the people of the world who lives in a not self sufficient country.
Those that imports their oil and comes from that area where it goes through the Hormuz strait.
The dollar's value might increase but the same goes for everything that we consume as it requires oil for transportation, another impact of high inflation.

[coupable]

I am having confusion right now.
The currency is becoming stronger but the retaliation goes with the inflation and the oil prices are about to increase next week.
So, it's a double pain for all of the people of the world who lives in a not self sufficient country.
Those that imports their oil and comes from that area where it goes through the Hormuz strait.
The dollar's value might increase but the same goes for everything that we consume as it requires oil for transportation, another impact of high inflation.

The situation will worsen if the war continues much longer, since oil exporting countries can currently use their reserves to continue supplying the global market. (Except for USA who benefits from the Venezuila oil)
That's why we still witness a small increase in oil price which expected to reach recorded levels after just two to three weeks of continious war.

[Abiky]

Actually, as early this week, a lot of Asian countries have already announced an increase of their gasoline/diesel prices. So yes, there's impact on as early as now in the economy of a lot of countries which are heavily relying oil in the Middle Eastern countries. If this will not stop, and we know, it won't stop anytime soon, a lot of people will suffer from these increasing commodity prices. Because it will be a domino effect with the goods and other basic necessities. When oil prices will increase, and so the other commodities.

Yet I've thought the oil industry was going to be history. Especially with solar energy and lithium-ion batteries showing promising results. I guess I was wrong. The world is still heavily-dependent on oil, and it will be like that for quite some time. Perhaps, the current situation will force countries to seek other solutions/alternatives? China can buy oil from Russia until the conflict ends. Or maybe it will start using nuclear energy at a large scale? Same goes for other countries. Japan is already one step ahead of the game in this. The only thing is that also needs LNG (Liquified Natural Gas) for energy. This goes through the "Strait of Hormuz", unfortunately.

I'm afraid Donald Trump's actions will cost everyone dearly. It's going to be a long (and bumpy) ride. I sure hope everybody can "go home" soon and we can get back to living in peace.

[slapper]

History is tedious when it is repeated. You can see the mechanism clearly but nobody listens. The Gulf War. Iraq 2003. The pattern of oil market reaction to US military action in the Middle East is extremely well documented. Yet each and every time we act surprised.

In 1990 the price of oil almost doubled in months. Then crashed almost as fast when the ground campaign began. 2003 the market had already priced in for the war. prices actually fell the moment bombs dropped. Markets price in uncertainty, not in outcomes. And certainty even bad certainty takes off some of the pressure from certain instruments. What we don't know as yet about this Iran situation is what pattern we're in. And that's the honest answer that nobody in the financial media wants to give because "we don't know" doesn't generate clicks.

What I'm pretty sure about is the Strait of Hormuz variable. About 20% of the world's oil supply passes through that chokepoint. One-fifth of all LNG trade. There is no alternative route that handles this volume - the pipelines and bypass infrastructure exists but they're fractional, they'd handle maybe 30% of a redirected load. How long can it be contested? At what point does the economic pain on Asian importers become so great that China and India start chomping on their own relations with Tehran? China receives about 69% of its Hormuz crude oil from there. That's not a little dependency they can casually suck up.

The US administration says that regime change is the objective. But experts who study these transitions seriously, they're fairly consistent: Regime change in Iran is not the same thing as stable, post-conflict Iran. The IRGC has strong roots in the economy and the state. Even if Khamenei is gone (and apparently he is now, confirmed kille) the structural conditions that make Iran a regional disruptor don't go away with leadership change. They could get worse during transition period. Civil war scenarios with loose nuclear material floating around would be categorically more dangerous that any current version of Iran.

[YOSHIE]

What do you think? Your input would be greatly appreciated. Thanks in advance.  🙂

If you talk about the economic implications of the consequences, impacts or events currently occurring between As-Israel and Iran, economic activity will certainly experience significant changes in certain indicators.

Maybe we will see a little trace of Iran's specialness towards the outside or global world, in general we can see that Iran is a middle power country where Iran has fossil fuel reserves including gas the second largest natural world in the world and the most strategic route for travel between countries in terms of imports and exports, this can be seen geographically, in fact before the US, Israel accused the nuclear bomb, in fact Iran already had it long ago naturally, namely the Strait of Hormuz, If the Strait of Hormuz is closed, it will clearly trigger the most devastating shock to the global energy market, economy and so on. In fact, the Strait of Hormuz is one of the nuclear bombs for the global economy.

For this reason, we can understand that Iran has an active role globally in terms of the economy. Well, in a situation like this, I think the crypto market is a safe target globally, because Bitcoin is one of the safest digital markets when war occurs, rather than gold. fiat and so on, the risks are not the same as Bitcoin which only requires digital keys and wallets.

[aylabadia05]

Trump has calculated the numbers and so on if this continues, but I suspect that Trump has made a mistake in his calculations regarding war with Iran because war with Iran is different from war with Iraq and Syria.
What makes the effect different is the Strait of Hormuz. If the Strait of Hormuz is completely closed, the impact on the world economy will be felt, albeit not directly, because of its central location.
Honestly, I condemn those who play a role in war, even if it is under the slogan of security and other reasons, but they ignore the citizens who have to lose everything. Young people have to lose their lives as soldiers and ordinary people have to lose everything while they sit safely at their desks.

Many moslem in my country see Iran as a country which not easily bow to US's pressure, their political identity show resisitance to western domination. They already experience long term conflict, sanction and embargo, previously they often demonstrated a strong will to persevere when facing threat from major power especially US, so i assume their military structure also prepare for long term resilience, but how long Iran can be persist, only prediction depend on end solution to this conflict.

For Trump's miscalculation possibility, the result seems inconsistent with Trump prediction, he failed to overthrow the regime. This miscalculation due to unclear strategies more reactive than planned. Air attack make Iran cripple also failed and the most important evidence, conflict and escalation spread wider on midlle east region. So if Trump predict war can be resolve fast and Iran surrender quicky then we can can call it miscalculation.

Explaining how these three countries are fraught with political tension, and if we try to explain how world civilization, especially the history of Iran, would be very inappropriate to include here.
Everything has pros and cons, including the media, which is the mouthpiece for people around the world to receive information about these three countries. We can only hope that everything will return to normal because war is not something noble for humanity.

During his first term as president, Trump did not steer towards war, so the effects could be analyzed.
It was only during his second term that he headed towards armed conflict. This time, the effects of this conflict also impacted sports activities and other sectors. Honestly, I don't want to force myself to think about it too much.

[abhiseshakana]

Actually, as early this week, a lot of Asian countries have already announced an increase of their gasoline/diesel prices. So yes, there's impact on as early as now in the economy of a lot of countries which are heavily relying oil in the Middle Eastern countries. If this will not stop, and we know, it won't stop anytime soon, a lot of people will suffer from these increasing commodity prices. Because it will be a domino effect with the goods and other basic necessities. When oil prices will increase, and so the other commodities.

Yet I've thought the oil industry was going to be history. Especially with solar energy and lithium-ion batteries showing promising results. I guess I was wrong. The world is still heavily-dependent on oil, and it will be like that for quite some time. Perhaps, the current situation will force countries to seek other solutions/alternatives? China can buy oil from Russia until the conflict ends. Or maybe it will start using nuclear energy at a large scale? Same goes for other countries. Japan is already one step ahead of the game in this. The only thing is that also needs LNG (Liquified Natural Gas) for energy. This goes through the "Strait of Hormuz", unfortunately.

I'm afraid Donald Trump's actions will cost everyone dearly. It's going to be a long (and bumpy) ride. I sure hope everybody can "go home" soon and we can get back to living in peace.

Yup, we are still on oil age, and matter of fact the more conflicts, the stronger the role of oil and gas because many country realize they need energy security and strengthened its strategic reserves and in the end renewable energy investment delayed due to another priority.

I believe all tension , conflict and war in middle east are driven or directly related to global energy system and never be pure military issue, even though Iran is part of West Asia but geographically often included as middle east nation. Beside that its also have connection with Eurasia as world energy center, who control energy route in Eurasia automatically will have power of influence to global economy. This is in accordance with the Hearthland theory, just imagine if there are power which can connected Rusia energy sources with asian trade route  and european market, they can be global dominator.

In the case of Iran,I think Trump use energy routes as geopolitical weapon, my observation that mostly conflict revolve around distribution road not energy sources. Iran play important role as its position is the energy crossroad of Eurasia, can you imagine if Iran freely connected to Rusia, China and Central Asia, i predict there are new powerfull energy bloc formed, the pattern also same with Russia Ukraine energy route conflict. So, the phrase who controls the oil controls the world (Henry Kissinger) show reality of modern geopolitics that energy determine military strenght, its also influences international relation and its the backbone of the modern economy stability. Big possibility also, Trump want to weaken and slowering China development with cut of its energy sources from Venzuella and Iran.

https://en.wikipedia.org/wiki/The_Geographical_Pivot_of_History
https://en.wikiquote.org/wiki/Talk:Henry_Kissinger

[bhadz]

The closing of the Strait of Hormuz means that 1/5 of oil's supply in the world will be halted. And I think each country that's been getting its oil from that point, mostly from Asian countries and European countries will have that inflation to absorb. We're already feeling the increase of the oil prices and that's why most of the gasoline stations here are full and the scheduled increase is no longer followed. Note that these are just buffer stocks that are being sold and not yet from the new supply they're importing from those countries in that Strait. So, with small country like us, we're going to feel the huge inflation rate for this month.

[terrific]

I am having confusion right now.
The currency is becoming stronger but the retaliation goes with the inflation and the oil prices are about to increase next week.
So, it's a double pain for all of the people of the world who lives in a not self sufficient country.
Those that imports their oil and comes from that area where it goes through the Hormuz strait.
The dollar's value might increase but the same goes for everything that we consume as it requires oil for transportation, another impact of high inflation.

The situation will worsen if the war continues much longer, since oil exporting countries can currently use their reserves to continue supplying the global market. (Except for USA who benefits from the Venezuila oil)
That's why we still witness a small increase in oil price which expected to reach recorded levels after just two to three weeks of continious war.

I don't think that the price increase is just small.
It's all over the news that a barrel can be $100 from the current price that it is right now of $84 for a Brent oil.
That almost 20% of increase isn't that small and that impact is going to be big for everything globally due to the usage of oil from logistics, etc.
But aside from that, you're right that the situation can be worsen if this war becomes longer and since Iran doesn't want to have ceasefire and talks.
It's like them talking that USA and Israel started this, and they're the ones that going to end it without looking back.

[coupable]

I am having confusion right now.
The currency is becoming stronger but the retaliation goes with the inflation and the oil prices are about to increase next week.
So, it's a double pain for all of the people of the world who lives in a not self sufficient country.
Those that imports their oil and comes from that area where it goes through the Hormuz strait.
The dollar's value might increase but the same goes for everything that we consume as it requires oil for transportation, another impact of high inflation.

The situation will worsen if the war continues much longer, since oil exporting countries can currently use their reserves to continue supplying the global market. (Except for USA who benefits from the Venezuila oil)
That's why we still witness a small increase in oil price which expected to reach recorded levels after just two to three weeks of continious war.

I don't think that the price increase is just small.
It's all over the news that a barrel can be $100 from the current price that it is right now of $84 for a Brent oil.
That almost 20% of increase isn't that small and that impact is going to be big for everything globally due to the usage of oil from logistics, etc.
But aside from that, you're right that the situation can be worsen if this war becomes longer and since Iran doesn't want to have ceasefire and talks.
It's like them talking that USA and Israel started this, and they're the ones that going to end it without looking back.

Economically, a rise of 13% in just 4 days in not an insignificant percentage, but the fear is from expectations to reach 200$ per barrel within few days if Iran officially closes the Strait of Hormuz. Despite OPEC attempts to rise production to calm the markets, the panic from the war to spread the whole region kept the expectations opened for worst scenarios. This threats to be another global inflation wave that press big economies especially in Europe.
We can infinitely argue who has started this because from what we can see in the actual scene, Iran is playing its last card within a a war that drains its strength (without a possible end scenario in sight) and the USA will have less damage compared to the rest of the world (except for American continent relying on Venezuila).

[STT]

Oil was cheap and now it isnt, that sharp rise raises inflation as higher costs.  That rise in inflation stops the rate cuts of central banks most likely and is the most impactful widespread effect globally.
   So its likely lower growth both from rising energy costs but also from a requirement of tighter currency standards.   Its mostly disruptive and a loss event because of how it will stop shipping, alter business planning and cycles causing a requirement for alternatives to develop; in short all of this is higher costs lower output.

[terrific]

I don't think that the price increase is just small.
It's all over the news that a barrel can be $100 from the current price that it is right now of $84 for a Brent oil.
That almost 20% of increase isn't that small and that impact is going to be big for everything globally due to the usage of oil from logistics, etc.
But aside from that, you're right that the situation can be worsen if this war becomes longer and since Iran doesn't want to have ceasefire and talks.
It's like them talking that USA and Israel started this, and they're the ones that going to end it without looking back.

Economically, a rise of 13% in just 4 days in not an insignificant percentage, but the fear is from expectations to reach 200$ per barrel within few days if Iran officially closes the Strait of Hormuz. Despite OPEC attempts to rise production to calm the markets, the panic from the war to spread the whole region kept the expectations opened for worst scenarios. This threats to be another global inflation wave that press big economies especially in Europe.
We can infinitely argue who has started this because from what we can see in the actual scene, Iran is playing its last card within a a war that drains its strength (without a possible end scenario in sight) and the USA will have less damage compared to the rest of the world (except for American continent relying on Venezuila).

You're right, it's going to trigger a massive inflation globally since the oil that they are producing is also being sent to many part of the world.
As per the interviews that I've watched about Iran. They're more than prepared as they say and they want USA and Israel to bring it on.
They are not going to negotiate anymore because when they did, US have bombed while they're on the talks as that spokesperson said on an interview.

[Abiky]

Big possibility also, Trump want to weaken and slowering China development with cut of its energy sources from Venzuella and Iran.

It's all part of the plan. If the conflict extends, China will struggle to meet its energy demands. Unless, it finds alternative ways to acquire oil until the "Strait of Hormuz" opens again. Buying oil from Russia, would be the best way to protect their economy while the conflict ends. If we thought inflation was going to go away that easily, we have another thing coming.

Things are going to get worse for the US, China, and the whole world. Especially when the global economy depends on it. I hope the current situation forces countries to ditch oil in favor of alternative energy sources. Nuclear and solar energy is the future. We'll see what happens...

[coupable]

I don't think that the price increase is just small.
It's all over the news that a barrel can be $100 from the current price that it is right now of $84 for a Brent oil.
That almost 20% of increase isn't that small and that impact is going to be big for everything globally due to the usage of oil from logistics, etc.
But aside from that, you're right that the situation can be worsen if this war becomes longer and since Iran doesn't want to have ceasefire and talks.
It's like them talking that USA and Israel started this, and they're the ones that going to end it without looking back.

Economically, a rise of 13% in just 4 days in not an insignificant percentage, but the fear is from expectations to reach 200$ per barrel within few days if Iran officially closes the Strait of Hormuz. Despite OPEC attempts to rise production to calm the markets, the panic from the war to spread the whole region kept the expectations opened for worst scenarios. This threats to be another global inflation wave that press big economies especially in Europe.
We can infinitely argue who has started this because from what we can see in the actual scene, Iran is playing its last card within a a war that drains its strength (without a possible end scenario in sight) and the USA will have less damage compared to the rest of the world (except for American continent relying on Venezuila).

You're right, it's going to trigger a massive inflation globally since the oil that they are producing is also being sent to many part of the world.
As per the interviews that I've watched about Iran. They're more than prepared as they say and they want USA and Israel to bring it on.
They are not going to negotiate anymore because when they did, US have bombed while they're on the talks as that spokesperson said on an interview.

Iran is working to put pressure on the global economy to defend its position. What are we waiting for from a country which international forces are targeting its infrastructure and military capabilities and strangling it economically. It's her fateful war.

Don't be fooled by political commentators on television programs. They are paid to promote an agenda or their opinions is always based on the ideological orientation of the channel they appear on.
Actually it is ambiguis to differentiate between different positions of the parties involved in the war, two days ago Trump said the authorities in Iran want to negotiate with him to end the war, and yesterday the Irani presendent that his administration refuses to nogotiate with the USA. Iranian says that they are targeting only military based in the Gulf, while the occident media says that Iran targets vital facilities.
It's an ongoing media war in parallel with military operations. Of course the occident allies cooperated with Israel have the top hand over the global media and the social media, at the same time targeting the internet infrastructure in Iran.