Washington prefix, the US-Iran war heated up into an all-out crisis after President Donald Trump’s June 21 attacks on Iran’s nuclear facilities at Fordow, Natanz, and Esfahan.
Trump’s Truth Social tweet, with a “very successful attack,” prompted Iran’s missile counterattack, injuring 23 in Israel, according to Al Jazeera.
This crisis pushed Brent crude oil prices up 8% to $92 a barrel and crashed stock markets worldwide, with alarm over Iran potentially disrupting the Strait of Hormuz adding to the economic shock.
According to Reuters and The New York Times, this crisis has threatened inflation, trade, and global stability, with the worst possibly still to come.
Iran’s Retaliation Fuels Crisis
Iran’s reaction to the US crisis came quickly and defiantly. Foreign Minister Abbas Araghchi labeled the strikes a “grave violation,” launching missiles targeting Israel, with sirens blaring in Tel Aviv, per The Hindu.
General Mohsen Rezaei’s threat to strike US bases intensified the crisis, raising fears of a multi-front war. Iranian media, via IRNA, claimed minimal damage at Fordow, but the crisis deepened as Iran vowed to continue its nuclear program.
This retaliatory crisis, together with Hezbollah’s proxy attacks (50 rockets against Israel) and Houthi threats on the Red Sea, has increased international nervousness.
Oil Price Crisis Shakes Economies
The economic effect of the crisis was instantaneous, with Brent crude spiking to $92 per barrel and West Texas Intermediate reaching $88, according to Reuters.
Iran’s threat to shut the Strait of Hormuz, through which 20% of world oil passes, was what propelled this oil price crisis. JPMorgan cautioned that a shutdown would drive prices to $130, a situation that would surge US gasoline prices above $4 per gallon, according to Lipow Oil Associates.
X posts point out fear among traders, the crisis looming to bring higher fuel costs for consumers in Europe and Asia, which are highly dependent on Middle Eastern oil.
Stock Market Crisis Deepens
World equities fell in the aftermath of the crisis. The S&P 500 dropped 2% and Nasdaq fell 2.3% on June 21, while Europe’s DAX and CAC 40 dropped 1.6% and 1.4%, according to The Guardian.
Asian markets such as Japan’s Nikkei 225 (down 1.3%) and Hong Kong’s Hang Seng (down 1%) mirrored the global extent of the crisis. Airline shares such as Delta (down 4.5%) and Lufthansa (down 3.7%) were hit hardest, worrying about fuel price jumps.
Gold spiked to $3,460 an ounce as investors fled to havens, indicating a deepening crisis in markets that may kick off a wider economic slump.
Cyber and Proxy Crisis Escalates
The crisis goes beyond traditional warfare. US-Israeli cyberattacks disrupted Iran’s nuclear capabilities, leading Iran’s IRGC-affiliated “Cyber Avengers” to strike US financial institutions, according to NBC News.
The cyber crisis threatens digital infrastructure around the world, with losses seen in the billions. Proxy actors deepened the crisis, with Yemen’s Houthis menacing shipping in the Red Sea, increasing the cost of trade 15%, according to Al Jazeera.
Hezbollah rocket fire and Hamas West Bank calls for resistance further complicate the crisis, as it is a combustible mix of state and non-state violence.
Diplomatic Efforts to Defuse Crisis
Diplomatic efforts to ease the crisis are a thin hope. China, Iran’s largest oil purchaser, called for caution to safeguard its 47% imports of oil through the Strait of Hormuz, according to CNN. Russia’s intervention proposal, obtaining Israel’s agreement not to target its staff at Iran’s Bushehr nuclear power plant, is intended to keep the crisis under control, according to The New York Times.
The UN Security Council’s extraordinary session, convened by Iran, was stuck and took no decision, further entrenching the diplomatic crisis.
French President Emmanuel Macron’s telephone call to Iran’s Masoud Pezeshkian to discuss talks is at odds with Trump’s threat of more crisis, leaving peace hopes fading.
Read More: Iran Says No Damage to Fordow After U.S. Attack — Saudi Arabia Agrees
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