Israel and Iran are locked in an increasingly dangerous war that has just entered its fourth day. This latest round of hostilities started on Friday when Israel launched an aerial assault with the declared intent of wiping out key Iranian bases. This campaign resulted in the deaths of dozens of Iranian nuclear scientists and military commanders. In response, Iran orchestrated missile and drone strikes against Israel. This created a situation that demanded the United States to intervene and help tackle those incoming threats.
The war has already measured in terms of scale—more than 30 percent—blow to oil supply. After the initial attacks, oil prices shot up by more than $8 at one point on fears of a broader conflict. On Monday, future prices for Brent crude fell more than 1.8%. This decline provided a bit of relief following the price spike we experienced late last week. This drop can mitigate the projected increase in gasoline prices for U.S. consumers. Crude oil is an essential ingredient in making fuel for our cars.
Even with oil prices easing down, experts caution that the ongoing conflict could still cause price increases. Patrick de Haan noted, “By later this week, we’ll likely see nearly all states with price increases as retail gas prices rise following Iran/Israel attacks.” Analysts are more concerned about the risk of a wider escalation into conflict. They conclude that even relatively modest changes can lead to large increases in oil and gasoline prices.
On the economic front, U.S. stock markets rallied on Monday in spite of the escalating conflict. The Dow Jones Industrial Average closed up 317 points, or 0.7%, recouping much of the loss suffered on Friday. The S&P 500 similarly rose by an impressive 0.9%, and the tech-heavy Nasdaq surged by 1.5%. Based on what we’ve heard from the investors, they seem to be cautiously optimistic in spite of the international unexpected.
U.S. officials are watching the brewing conflict closely. President Donald Trump has indicated interest, saying, “It’s certainly possible we would do that.” This acknowledgment of potential U.S. involvement raises further questions. Secondly, it draws attention to the ongoing effects of the conflict on international relations and the global economy.
