Six months after the US-Israel strikes on Iran, almost half of the world's oil, about 43% of global supply or 45 million barrels per day based on 2025 output, now originates from conflict-affected countries. The war has led to significant disruptions in the Gulf region, with an estimated 5 million to 7 million barrels per day of Gulf oil production currently disrupted, and global refining capacity cut by about 10%. Brent crude briefly surpassed $120 in April and currently averages around $90 in 2026, up from $70 last year, and diesel prices have risen sharply due to shortages and refinery outages.
The conflict has drastically impacted shipping through the Strait of Hormuz, a critical chokepoint for over a third of global seaborne crude oil. Traffic has plummeted by 95%, from over 100 vessels daily to just five, effectively closing the strait. Crude exports from the Gulf region have fallen by nearly half to about 9 million barrels per day from 17 million barrels per day in 2025. This has rerouted global shipping, with countries like Kuwait seeing an 86% drop in daily port calls, and Singapore and Malaysia emerging as hubs for redirected energy flows, as seen by Russia's fuel oil shipments to these regions increasing 2.5 times month-on-month in July.
Despite the significant energy market disruptions, global stock markets have shown unexpected resilience. MSCI's 47-country world stocks index reached a record high of $105 trillion this month, gaining almost $7 trillion, or 9%, since the war began. This rally is largely attributed to the robust investment in the AI sector and investor expectations for the war to conclude this year. However, Gulf region stocks have underperformed, with Qatar and UAE stocks dropping around 14%, and Dubai's property sales plummeting by 70%-80%. Additionally, traditional safe-haven assets like highly rated government bonds and gold have not consistently played their usual role; US Treasuries lost 3.5%, and gold fell nearly 25% between the start of the war and July.
The war has also had severe humanitarian and economic consequences beyond energy. The closure of the Strait of Hormuz has disrupted fertilizer shipments, contributing to food price increases to a three-year high in July, with warnings of further food inflation from the UN Food and Agriculture Organization (FAO). The International Monetary Fund (IMF) has cut its global growth forecast twice since the war began, now expecting 3% growth this year, down from 3.3%. JPMorgan estimates Qatar's economy will shrink by almost 30% this year due to damage to its Ras Laffan gas facility, and the cost of insuring debt for Gulf countries like Bahrain has risen significantly.
