The escalating conflict has blocked major air and sea transport corridors through the Middle East. The Strait of Hormuz, a route for a fifth of the world’s oil, has been disrupted by Iranian drone strikes in response to US and Israeli strikes. Busy air transit routes in the Gulf have been disrupted.
Rising oil and gas prices have raised costs for companies, threatened their margins, and raised fears among policymakers and investors of a new bout of deflation.
“If these effects continue long-term, everyone will feel them,” Young Liu, chairman of Foxconn, the world’s largest electronics maker and a key partner of Nvidia, said on Friday.
A knock-on effect on any company
Even before last Saturday’s attacks, companies were struggling with US President Donald Trump’s trade war, after US import tariffs raised costs, stretched supply chains and damaged consumer confidence. The increase in gas pump prices is another blow to US consumers: The price of a gallon of regular gasoline nationwide on Friday averaged $3.32, up from $2.98 a week ago. Brent crude futures rose to $90 a barrel but remain below the 2022 level when Russia invaded Ukraine.
“Any time you see oil prices or gas prices go up, it has a significant impact on every company and every industry,” Simon Hunt, chief executive of Italian drinks maker Campari, told Reuters after this week’s results.
Pain in Europe is still recovering from the 2022 crisis
In Europe, still recovering from the 2022 energy crisis, the pain is acute for energy-intensive industries like chemicals.
Oil at $100 a barrel could cost the German economy 0.3% of GDP this year and 0.6% next year – about 40 billion euros ($46 billion) in lost economic output over two years, the IW German Economic Institute said on Thursday.
Campari’s Hunt said the company has some long-term contracts to protect against big energy price hikes. Reckitt Benckiser CFO Shannon Eisenhard told analysts that the consumer goods company has hedged about 55% of its oil and gas prices for 2026.
But Uniden, which represents energy-intensive French industries including chemicals, cars and agriculture, warned that some companies were already on the back foot.
“There has been an immediate impact on gas prices in Europe, with an 80% increase in the spot price and considerable uncertainty about its future,” it said in a statement. “That’s why some production has been stopped or slowed down.”
Airline stocks have also been battered. European budget carrier Wizz Air, which is on hold, warned that the war would reduce its net profit by around 50 million euros ($58 million) for the 2026 financial year.
Aluminum, helium and sulfur
The disruption of sea shipping affected certain industrial commodities such as sulfur and led major aluminum producers to request force majeure clauses. Carriers and insurers have raised some rates dramatically in response to the dispute.
Qatari oil carrier Qatalam halted operations this week, while aluminum miner Bahrain said it halted shipments and announced a power outage because it could not move metal through the Strait of Hormuz. The Gulf region accounts for about 8% of the world’s aluminum supply.
Aluminum prices on the London Metal Exchange rose sharply on the news, while physical premiums in Europe and the United States hit multi-year highs.
South Korean officials have warned that a prolonged conflict could disrupt supplies of key semiconductor manufacturing materials originating from the Middle East, including helium, which is essential for chip production and has no viable substitute.
Drone attacks that damaged some of Amazon’s data centers in the United Arab Emirates and Bahrain have raised questions about technology supply chains in the region and the speed of big tech’s expansion.
Review Playbook
Morgan Stanley warned that a prolonged energy shock could call for an “exploitation playbook”, while Goldman Sachs analysts said a temporary rise in oil prices to $100 per barrel could slow global growth by 0.4 percentage points.
Much depends on the length of the conflict, very uncertain even if many think that Trump does not want a long and expensive war before the US midterm elections.
“You really don’t want this to go on for too long,” said Emmanuel Cao, head of European equity strategy at Barclays. “If it’s been a few weeks or months, of course you’d expect revenue to start declining.”
British auto distributor Inchcap said the dispute could delay some Japan-Europe shipments for weeks, while online travel agent Leo Holidays is preparing to delay its London IPO due to market turmoil and travel disruptions.
Markus Kerber, chief executive of Germany’s biggest power producer RWE, said energy was “once again dominating the headlines around the world”.
“Gas and oil prices are volatile, key shipping routes are under geopolitical pressure, and policymakers are concerned about supply risks,” Kerber said.
“The new uncertainty is a reminder of an uncomfortable reality: if not the next energy crisis – it’s a time and it’s a question of how prepared we are.”
($1 = 0.8638 euros)
