How has six-month war affected global markets?

Tehran - BORNA - Reuters examined how the war against Iran has affected oil, equities, safe-haven assets and food prices over the past six months.

Costly energy

Oil prices surged as Persian Gulf production was disrupted and shipping through the Strait of Hormuz declined.

Brent crude briefly climbed above $120 a barrel in April and has averaged around $90 so far in 2026, up from roughly $70 last year.

The biggest impact has been on refined fuels. Diesel prices have jumped sharply amid shortages of middle distillates, shutdowns at Russian refineries caused by Ukrainian attacks and the loss of export flows from the Persian Gulf.

Jet fuel was hit particularly hard in the early stages of the conflict because of the Persian Gulf’s importance to global supplies. Prices have remained elevated despite increased production and exports from US refineries.

With the Northern Hemisphere winter approaching, further disruption to shipping through the Strait of Hormuz, combined with risks to Russian energy infrastructure, could add to heating-oil prices and inflationary pressures.

AI boom helps shield stock markets

Trillions of dollars flowing into the artificial intelligence sector have helped global equity markets absorb the economic fallout from the war.

The MSCI global equity index reached a record market value of $105 trillion this month and has gained nearly $7 trillion, or 9%, since the war began, although stock markets in the Persian Gulf have underperformed.

Pranav Agarwal, an analyst at Fidelity, said the broader rally suggests investors remain relatively calm and still expect the war to end this year.

“Equities are actually having a very good year,” he said. “They are up around 14% [this year]. If you expect 8% to 9% in a standard year, then 14% by August is very good.”

Search for safety

None of the assets investors traditionally turn to in times of turmoil — including highly rated government bonds, gold and the US dollar — have consistently performed their traditional safe-haven role.

Since the war began, the dollar has gained 1.4% against a basket of major currencies, although analysts say much of the increase reflects weakness in the Japanese yen.

US Treasuries, traditionally considered a core defensive asset in investment portfolios, have lost 3.5% in total returns as higher inflation erased expectations for US interest-rate cuts.

Recent concerns surrounding new Federal Reserve Chair Kevin Warsh and Washington’s unexpected debt-buyback plans have also weighed on the market.

Gold fell nearly 25% between the start of the war and July, although it has more than tripled since 2022, when Western powers froze Russian central bank reserves over the war in Ukraine.

The precious metal, however, has risen more than 15% this month amid renewed concerns over depreciation of the US dollar.

Food and fertilizer

The closure of the Strait of Hormuz has also disrupted shipments of fertilizer, a key input for global food production.

Analysts say the shock, combined with a strong El Niño weather pattern and renewed disruptions to grain shipments linked to the war in Ukraine, is increasingly threatening agricultural production.

According to the UN Food and Agriculture Organization, global food prices rose in July to their highest level in more than three years.

Experts, however, warn that much of the impact has yet to be felt.

The FAO has warned that the world could be heading toward another period of food-price inflation.

JPMorgan estimates that a strong El Niño alone could add around 0.7 percentage points to global food inflation at its peak.

The impact is likely to be felt most strongly in Asia, Latin America and Africa, where households spend a larger share of their incomes on food and policymakers remain wary of renewed price pressures.

Persian Gulf economies take a direct hit

The direct impact on Persian Gulf economies has been severe.

Saudi Arabia’s exports fell 10% between the first and second quarters.

JPMorgan estimates that Dubai property sales have dropped by between 70% and 80%, while Oxford Economics has warned that Qatar’s economy could contract by nearly 30% this year due to damage to the Ras Laffan gas facilities.

Stock markets in Qatar and the United Arab Emirates have both fallen by around 14%, underperforming global equities by more than 20 percentage points.

The cost of insuring the sovereign debt of both countries against default has also risen.

Bahrain, which carries a heavier debt burden, has been hit hardest, with the price of its credit default swaps rising by nearly 40%.

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