Geopolitics

War in Iran sends shockwaves across the globe

The knock on effects stretch far beyond the Middle East.

• 3 min read

The US and Israel continued bombarding Iran yesterday in an aerial campaign that began with the killing of the country’s supreme leader and military top brass this weekend. Iran kept striking US allies in the Gulf region after earlier attacks on American bases. And with markets back open, the world mulled the economic disruptions a protracted war would entail.

The conflict broadened with Qatar shooting down two Iranian bomber planes, Israel exchanging rockets with the Iran-aligned militant group Hezbollah in Lebanon, and Iranian drones striking the US embassy in Saudi Arabia and Amazon data centers in the United Arab Emirates. Meanwhile, three US F-15E fighter jets were shot down in Kuwait yesterday in what the DOD called an episode of friendly fire from Kuwait. All six pilots ejected and landed safely.

Casualties are rising: The deaths of three additional US service members were announced yesterday, bringing the US death toll to six. The Pentagon warned that it expects “additional losses.” The Iranian Red Crescent said at least 787 Iranians have been killed so far.

Beyond the battlefield

Industries reliant on safely moving people and products through skies and seas are struggling, and investors are wary:

• Commercial flight cancellations across the region—which caused some to evacuate Dubai by road-tripping across borders and others to pay a premiumfor private flights—are hurting airlines. The US Global Jets stock index, which includes several major airlines, fell 2.6% yesterday. - Middle Eastern waters becoming off-limits tanked the stocks of sea cruise operators Norwegian Cruise Line and Carnival by 11% and 8%, respectively.
• Liquified natural gas prices surged after Qatar stopped production at the world’s largest export facility following an Iranian drone attack. This could drive up electricity costs globally.

Meanwhile…Shares of weapons manufacturers soared, with Northrop Grumman and Lockheed Martin gaining 6% and 3% yesterday. Oil producers outside the Middle East also stand to profit. Oil futures surged as Iran doubled down on its blockade of the Strait of Hormuz yesterday, choking off a fifth of the world’s petroleum exports.

And gold prices rose almost 2% as investors sought safety amid market volatility.

*When will the war end? *Despite US commanders reportedly expressing concerns about potential munition shortages, President Trump said yesterday the US expects to fight for four to five weeks or “far longer.” And Defense Secretary Pete Hegseth said he would not rule out sending ground troops.—SK

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Morning Brew delivers quick and insightful updates about the business world every day of the week from Wall St. to Silicon Valley.