403
Sorry!!
Error! We're sorry, but the page you were
looking for doesn't exist.
Geopolitical tensions, economic concerns drive global market transformation
(MENAFN) Global markets have recently experienced a significant shift from bullish to bearish sentiment due to escalating geopolitical events in the region, U.S. jobs data, and its implications for the timing of interest rate cuts expected in September. Fears of a global recession are mounting alongside the release of corporate earnings, adding to the overall economic anxiety. The recent unprecedented escalation in the region has raised concerns about potential economic consequences and heightened alertness across the area. While experts believe a full-scale war involving multiple parties, including Iran and the United States, is unlikely, they do not dismiss the possibility of disruptions to international shipping lines due to current events.
World Bank experts, through the bank's blogs, have highlighted that attacks on commercial ships have significantly reduced maritime trade activity. The crisis has led to increased shipping and insurance costs, contributing to inflation and negatively impacting both regional and international economies dependent on maritime trade. This situation underscores the broader economic repercussions of the ongoing geopolitical tensions.
Investors are now paying close attention to global oil markets, anticipating a potential short-term spike in prices due to the Middle East's pivotal role in oil production and reserves. The region produces a third of the world's oil and holds more than half of its oil reserves. Additionally, the Middle East contributes 16 percent of global liquefied natural gas production, with Iran alone holding 17 percent of the world's gas reserves. Despite these significant contributions, oil prices fell to their lowest levels since January 2024 at the end of last week's trading. This decline was influenced by slower-than-expected U.S. job growth in July and concerning Chinese economic data, which exerted additional downward pressure on prices. Experts predict increased market volatility due to the rising tensions in the Middle East.
Brent crude futures dropped 3.41 percent to settle at USD76.81 per barrel, while U.S. West Texas Intermediate crude futures fell 3.66 percent to USD73.52. Shipping experts anticipate that shipping prices will rise, as the repercussions of the current tensions extend beyond energy production, affecting global supply chains. The Middle East is a critical nexus between East and West, with 11 percent of global trade passing through the Red Sea, including 12 percent of global seaborne oil trade and 8 percent of global liquefied natural gas trade. The situation could also lead to the closure of the Strait of Hormuz, the world's most crucial oil transit point, through which 25 percent of global maritime oil trade and 20 percent of gas trade flow.
World Bank experts, through the bank's blogs, have highlighted that attacks on commercial ships have significantly reduced maritime trade activity. The crisis has led to increased shipping and insurance costs, contributing to inflation and negatively impacting both regional and international economies dependent on maritime trade. This situation underscores the broader economic repercussions of the ongoing geopolitical tensions.
Investors are now paying close attention to global oil markets, anticipating a potential short-term spike in prices due to the Middle East's pivotal role in oil production and reserves. The region produces a third of the world's oil and holds more than half of its oil reserves. Additionally, the Middle East contributes 16 percent of global liquefied natural gas production, with Iran alone holding 17 percent of the world's gas reserves. Despite these significant contributions, oil prices fell to their lowest levels since January 2024 at the end of last week's trading. This decline was influenced by slower-than-expected U.S. job growth in July and concerning Chinese economic data, which exerted additional downward pressure on prices. Experts predict increased market volatility due to the rising tensions in the Middle East.
Brent crude futures dropped 3.41 percent to settle at USD76.81 per barrel, while U.S. West Texas Intermediate crude futures fell 3.66 percent to USD73.52. Shipping experts anticipate that shipping prices will rise, as the repercussions of the current tensions extend beyond energy production, affecting global supply chains. The Middle East is a critical nexus between East and West, with 11 percent of global trade passing through the Red Sea, including 12 percent of global seaborne oil trade and 8 percent of global liquefied natural gas trade. The situation could also lead to the closure of the Strait of Hormuz, the world's most crucial oil transit point, through which 25 percent of global maritime oil trade and 20 percent of gas trade flow.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.
Comments
No comment