Global financial markets have seen significant shifts in energy, food, and equities six months after the U.S. and Israeli bombing of Iran. The conflict, which began in February 2026, has led to restricted shipping through the Strait of Hormuz and disruptions to Gulf energy production. While global stock markets have reached record highs during this period, regional economies in the Middle East have experienced sharp contractions.
The conflict followed a period of existing volatility in global markets. Prior to the February escalation, oil prices averaged approximately $70 per barrel in 2025. Additionally, the Russian invasion of Ukraine in 2022 had already impacted global commodity prices, leading to a tripling of gold prices and ongoing disruptions to grain shipments.
Energy prices have risen as a result of the fighting and shipping constraints. Brent crude oil briefly exceeded $120 per barrel in April and has averaged $90 throughout 2026. Refined fuels, particularly diesel, have seen sharper price increases due to a combination of lost Gulf exports and Russian refinery outages caused by Ukrainian attacks. While jet fuel supplies initially tightened, a surge in U.S. refinery output has since mitigated those shortages.
Global equities have largely remained resilient, with the MSCI world stocks index hitting a record $105 trillion this month. The index has gained approximately $7 trillion, or 9%, since the conflict began, supported by investment in the artificial intelligence sector. However, the impact on Gulf nations is more severe. Saudi Arabian exports fell by 10% between the first and second quarters, and Oxford Economics projected that Qatar’s economy will shrink by nearly 30% this year following damage to its Ras Laffan gas facility.
Investors and retirement account holders will notice that traditional "safe-haven" assets have behaved unexpectedly. U.S. Treasuries, often considered a stable investment, have lost 3.5% on a total return basis as inflation reduced expectations for Federal Reserve interest rate cuts. Gold prices, which fell 25% between the start of the war and July, rebounded by more than 15% in August due to concerns regarding dollar debasement. A person monitoring their 401(k) would see that while global tech-heavy indexes are at record highs, regional Gulf stocks in Qatar and the UAE have underperformed the world market by more than 20 percentage points.
The scale of the economic shift involves trillions of dollars and impacts entire national infrastructures. In Dubai, property sales have plummeted by 70% to 80%, while the cost of insuring Bahrain's debt against default has risen by nearly 40%. The next phase of economic impact will likely depend on the upcoming northern hemisphere winter, as further disruptions to heating oil and Russian energy infrastructure could sustain inflationary pressures. While some analysts, such as Pranav Aggarwal of Fidelity, suggest investors hope the war will end this year, the FAO warns that the full impact of food inflation is yet to be felt. Monitoring of shipping traffic through the Strait of Hormuz continues as a primary indicator for market stability.