Why the Israel-Iran Conflict Is Now a Global Energy and Security Shock

It Is Time to Take the Israel-Iran War out of the Shadows

What used to be a low profile war where proxy and under-the-table battles are waged has become a full-fledged war. In Iran, Israel has just finished a series of assaults, targeting military bases in Tehran and Isfahan. Iran claims it is considering a ceasefire proposal by the US but is not open to face-to-face discussions.

What Continues to Spiral in This War

The real problem is the Iranian nuclear programme. The IAEA is unable to state what is happening with a new enrichment plant in Isfahan. 

As it sits on almost 10,000 kg of enriched uranium, Iran has blocked inspectors to declared sites. Such a combination maintains Israeli threat perception very high and any peace agreement very shaky.

What It Means to the Other Part of the World

The impact is much farther. The Strait of Hormuz, through which about a fifth of the world oil and gas passes, is already pressurized. The price of energy has already soared and investor confidence is wobbly.

What Comes Next

Two paths seem most likely by 2030. The conflict either develops into occasional air and missile exchanges, or the two parties enter into a bargain along the lines of enrichment cuts and fundamental deconfliction. Neither option is clean.

To businesses, the message is easy. Prepare in advance that energy prices will rise, and shipping will be disrupted, and sanctions will be imposed in shocks. This war has come out of the shadows into the economy of everybody.