World Insights: Middle East war pushes up oil prices, disturbing global economy in World Economy News 05/03/2026 The global economy could be plunged into a dire situation as U.S.-Israel strikes on Iran, unfolding over the weekend, will deal a heavy blow to global energy supply, trade and equity market, analysts have warned. MARKET LOSSES Following the start of the strikes, major world stock markets were gripped by the escalating tensions in the Middle East, sending indices into negative territory. In Asia, Japan’s Nikkei stock index briefly lost 3 percent on Wednesday morning, extending its losses, amid concern that the conflict could drag on, with the Strait of Hormuz, a key waterway for oil and gas transportation, effectively shut down. South Korean stocks opened sharply lower on Wednesday, extending losses from the previous session’s 7 percent plunge. The country’s main bourse operator, the Korea Exchange, issued a sell-side sidecar for two consecutive days, suspending the selling of KOSPI futures. In Europe, the DAX Index closed at 23,790.65 points, down 847.35 points, or 3.44 percent, on Tuesday. The FTSE 100 Index closed at 10484.13 points, down 295.98 points, or 2.75 percent, while the Paris CAC 40 closed at 8103.84 points, down 290.48 points, or 3.46 percent. On the same day, U.S. key stock indices declined, with the S&P 500 Index closing at 6,816.63 points, down 64.99 points, or 0.94 percent, and the Nasdaq Composite Index closing at 22,516.69 points, down 232.17 points, or 1.02 percent. The Dow Jones Industrial Average closed at 48,501.27 points, down 403.51 points, or 0.83 percent. SOARING OIL PRICES What really matters for the market is oil — its implications for inflation and the broader world economy. A senior Iranian military advisor said on Monday that the country’s armed forces will not let any oil be exported through the Strait of Hormuz. Ebrahim Jabbari, an advisor to the chief commander of Iran’s Islamic Revolution Guards Corps (IRGC), made the remarks in an interview with state-run IRIB TV while warning that the country’s armed forces will take action against any movement by oil tankers through the Strait of Hormuz, a shipping route carrying one-fifth of oil consumed globally. Earlier, Iranian media reported that the IRGC had closed the strait to shipping, declaring the vital oil and gas waterway unsafe due to U.S. and Israeli attacks. “War in Iran could cause the biggest oil shock in years,” The Economist warned. The benchmark Brent crude oil contract gained 1.2 percent in early trading on Wednesday to 82.45 U.S. dollars per barrel, its highest since July 2024, and has gained 14 percent since Friday. Also, a widening Middle East conflict looks set to create the most significant disruption for gas markets. Iran’s neighbors, including Qatar, are some of the world’s most important producers, and the region is also a vital supply route, with 20 percent of liquefied natural gas exports traveling through the strait, analysts said. The U.S. think-tank Council on Foreign Relations said oil acts as a foundational feedstock, and disruptions will likely lead to high inflation and significant economic downturns. “Escalating conflict in the Middle East, particularly involving Iran, poses a severe threat to global energy supplies. Disruptions in the Strait of Hormuz could cause major oil price spikes, significant inflation, and knock-on effects on the global economy,” it said. Market traders said that oil prices will continue to