Investors weigh potential profits in Irans tumultuous economic landscape

US-Iran Conflict Enters One-Month Mark, Global Energy Crisis Widespread

The United States-Israel war on Iran has entered its first month, with the Strait of Hormuz remaining closed. The Organization for Economic Co-operation and Development (OECD) has warned that the conflict will have a significant impact on the global economy, particularly in the UK, where inflation is expected to reach 4 percent this year.

Japan has announced its largest release of national oil reserves, releasing 80 million barrels to refiners, enough to last for 45 days. The country imports 90 percent of its crude oil from the Middle East. In a meeting with G7 foreign ministers in France, UK Foreign Secretary Yvette Cooper stated that Iran cannot be allowed to hold the global economy hostage.

US President Donald Trump has made several policy reversals regarding the conflict, including extending his original deadline for Iran to reopen the Strait of Hormuz by five days and promising to delay attacks on Iran’s energy facilities. This has led to a phenomenon known as TACO, or “Trump Always Chickens Out,” where investors bet that Trump will back down.

Oil markets have reacted to these developments, with prices rallying following each extension of Trump’s deadline. However, some analysts argue that global markets are less likely to rebound in response to Trump’s policy shifts compared to his tariff policies. According to Lena Komileva, chief economist at consultancy firm (g+)economics, the complexity of the conflict means that the US cannot unilaterally retreat on its point.

The OECD has also warned that the conflict will have a significant impact on global energy markets, with the Strait of Hormuz remaining closed and oil prices continuing to rise. The situation remains uncertain, with investors and policymakers waiting for further developments.

Source: Al Jazeera