The escalation of the conflict between the United States, Israel, and Iran is beginning to affect not only the Middle East but also the global economy. Supply chains are being disrupted, energy and transportation costs are rising. Learn more about how a new wave of tension could change global markets and international trade

The escalation of the conflict between the United States, Israel, and Iran is already beginning to affect the global economy. Due to security risks in the Persian Gulf, trade routes are disrupted, transportation costs are rising, and instability in financial markets is increasing. This is reported by Bloomberg.

Experts pay special attention to the Strait of Hormuz, a strategic route through which a significant portion of the world's oil and liquefied natural gas supplies pass. Any disruption in this region could quickly affect energy prices, international trade, and global supply chains.

In our previous article, we talked about the scale of Iranian shelling and the consequences for the affected countries.

When traveling to regions where the security situation can change quite quickly, it is worth taking care of additional protection. Regular travel insurance does not always cover the risks associated with military events or other emergencies. The Visit World platform offers insurance policies for travelers that include coverage of military risks in different countries. Such a policy can help you get medical care, reimbursement of expenses, or support in case of unforeseen situations during your trip.

How does the war in the Middle East affect the global economy?

The escalation of the conflict between the United States, Israel and Iran is already creating serious risks for the global economy. Security disruption in the Persian Gulf affects international trade, logistics, and energy markets, as this region is one of the key transportation hubs for global supplies.

One of the main problems has been the situation around the Strait of Hormuz, a strategic sea corridor through which approximately one-fifth of the world's oil and liquefied natural gas supplies pass. Due to the threat of military attacks, shipping in the area has significantly decreased, and some carriers have temporarily suspended operations on the routes.

Air cargo transportation also faced problems. Due to the restrictions on flights in the Middle East, some flights were temporarily canceled, which led to delays in the delivery of goods. Experts note that at some point, global air logistics lost up to 18% of its cargo capacity, which could lead to a sharp rise in transportation costs.

In addition to energy, disruptions in the operation of ports and transportation routes can affect the supply of various resources: from fertilizers and metals to construction materials. Therefore, even short-term disruptions in logistics can trigger a chain reaction in various sectors of the global economy.

The impact of disruptions in shipping through the Strait of Hormuz on the Gulf and African countries. Source: Bloomberg.

Markets, logistics, and global trade: what impacts are already visible

Financial markets have already begun to respond to the risks associated with the escalation of the conflict in the Middle East. Investors fear a rise in inflation due to possible disruptions in energy supplies and higher transportation costs. Fluctuations are observed in the equity, currency and bond markets, indicating increased uncertainty in the global economy.

According to Kristalina Georgieva, Managing Director of the International Monetary Fund, the global economy is still showing some resilience to crisis factors. However, the margin of this resilience is gradually decreasing, and many countries are entering a new period of global instability with limited financial resources.

Economists believe that the greatest risks are associated with energy markets. In the event of prolonged disruptions in sea routes, Asian countries such as China, India, Japan, and South Korea, which are among the main buyers of oil from the Persian Gulf, may suffer the most. For these economies, even a short-term reduction in supplies could lead to higher energy and production costs.

At the same time, not only energy carriers pass through the Gulf ports. Much of the world's supply of other resources also depends on the stability of this region. In particular, approximately:

- About 7% of global fertilizer exports;

- Almost 6% of precious metals;

- More than 5% of aluminum and aluminum products;

- More than 4% of cement and other non-metallic materials.

Any disruptions in the transportation of such resources could affect various industries, from construction to electronics and pharmaceuticals.

Dynamics of retail gasoline prices in the US amid geopolitical tensions in the Middle East. Source: Bloomberg.

The situation has also affected global logistics. Due to security risks, some container carriers have suspended bookings on routes between Asia and the Middle East. Currently, more than 100 container ships remain in the Persian Gulf, unable to leave the region.

This is already causing congestion at ports in other parts of the world. For example, the Indian port of Nava Sheba near Mumbai has seen a sharp increase in congestion - from about 10% to 64%. A similar situation is observed in the ports of Singapore and Colombo, which are forced to accept additional cargo flows.

Logistics companies have already begun to adapt their routes. Some operators, in particular international delivery services, are redirecting cargo to alternative airports and using land transport more often to avoid delays in the region.

Nitrogen fertilizer exports from the Gulf countries in recent years. Source: Bloomberg.

Monetary expenditures of countries on military operations: estimates and figures

Military conflicts always have a significant economic cost. Even short-term hostilities can cost states hundreds of millions of dollars, while protracted campaigns can cost tens of billions. In the case of the confrontation between Iran, the United States, and Israel, missiles, air defense systems, intercepting strikes, and logistical support for operations account for a significant portion of the costs.

Iran

Iran's financial costs can be roughly estimated based on the cost of missiles and drones used in attacks. Experts estimate that the price of the cheapest Iranian missiles is about 250 thousand dollars, while more sophisticated systems can cost up to 8 million dollars per unit.

According to available data, Iranian forces launched more than 170 missiles in just one day. Even if we assume that only cheaper types of weapons were used, the cost of such strikes could exceed $40 million.

A separate item of expenditure is drones. The cost of a single Shahed drone is estimated at about 30 thousand dollars. According to experts, in combination with missile attacks, Iran can spend up to $110 million a day on such operations, and in a month of active hostilities, this amount could reach more than $3 billion.

In our previous article, we talked about the scale of Iranian shelling and the consequences for the affected countries.

USA

The United States also incurs significant costs, although some of them are related not only to direct hostilities but also to supporting its allies in the region. According to analytical studies, from October 2023 to early 2026, the United States spent approximately $34 billion on conflicts in the Middle East, much of which was directed to military assistance to Israel.

Experts estimate the potential daily cost of the US war against Iran at about $30 million, in terms of direct military operations. In this scenario, even a short campaign lasting one month could cost about $900 million.

However, the actual costs could be higher, as they include the costs of deploying military forces, logistics, air power, and support for allies in the region.

Israel

For Israel, the cost of war could be even higher, as the country actively uses expensive missile defense systems to intercept attacks. Analysts estimate that intercepting Iranian missiles alone could cost up to $200 million a day.

Separately, significant costs are associated with the use of Arrow-2 and Arrow-3 missile defense systems designed to intercept ballistic missiles. The cost of launching one interceptor missile is estimated at about $3-4 million.

According to Israeli economists, a month of war against Iran could cost the country about $12 billion. For comparison, this is almost three times more than the cost of Ukraine's one-month war against russia.

To learn more about the sharp rise in oil prices due to the conflict in the Middle East, please follow the link.

What are the long-term consequences for the global economy?

Economists say that the overall impact of the conflict on global GDP may remain relatively limited for now, if the escalation does not last long. However, even short-term disruptions in trade and logistics are already creating additional risks for global markets.

The energy sector remains one of the main factors. Any restrictions on the transportation of oil and liquefied natural gas through the Persian Gulf could quickly lead to a rise in energy prices. This, in turn, affects production, transportation, and the cost of goods in different countries.

Another important consequence could be problems in global supply chains. The redirection of cargo flows puts more pressure on alternative ports and transportation routes. This increases the delivery time of goods and raises costs for companies operating in international markets.

Experts also remind that many companies have become more prepared for crisis situations after the COVID-19 pandemic. However, in the event of a prolonged escalation of the conflict, even these adaptation mechanisms may prove insufficient, and the global economy will face new challenges.

Before traveling to any country, it is important not only to follow the news, but also to take care of your own financial and medical safety. Having insurance covering military risks can be an important element of protection when traveling to regions with a high level of tension. At Visit World, you can take out international insurance covering the risks associated with military events. This will help you feel more confident while traveling and be prepared for unforeseen situations.

We remind you! Some countries are island states with political neutrality, which means that the likelihood of military conflict is quite low. Read more about the countries that are likely to participate in World War III and the top safest countries in the world.

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