It also indicated that the war’s impact on inflation and economic activity will remain limited under the base scenario, expecting inflation to rise by about 0.1–0.2% to 2.6% in US and 2.1% in Europe, compared to previous forecasts of 2.5% and 1.9%, respectively.
Under the more pessimistic, but less likely, scenario, inflation could reach 3.8% in US and 3.1% in Europe.
The report also expects economic growth in US and Europe to slow down by 0.1% to 2.5% in US compared to 2.6% in pre-war forecasts, and 1.2% in Europe compared with 1.3% previously.
Allianz stressed the importance of securing the Strait of Hormuz — which carries about 30% of global hydrocarbon flows — noting that the oil market reaction was driven more by maritime transport disruptions than by oil scarcity. More than 200 oil and LNG vessels are currently anchored outside the strait, reflecting rising war-risk insurance concerns and precautionary operational suspensions.
Gold Could Reach $5,600 an Ounce Due to the Iran War
Fitch Solutions expects gold to reach $5,600 per ounce if there are no signs of a breakthrough in the Middle East. If the conflict continues for two to three weeks, gold could rise to around $5,850 per ounce and potentially reach $6,500 per ounce. The firm noted that investors are seeking safe-haven assets to hedge against the conflict’s impact.
Europe Most Exposed, Gas Could Reach €100
ING Group said the eurozone is the most exposed to the macroeconomic repercussions of the military turmoil in the Middle East, noting that the region had recently begun to eliminate recession despite a new state of uncertainty related to tariffs.
In a note, the bank said earlier projections by the European Central Bank (ECB) indicated that a 14% increase in oil prices would raise inflation by 0.5% and reduce gross domestic product (GDP) growth by 0.1%.
Goldman Sachs warned that a disruption to gas flows through the Strait of Hormuz for one month could push prices in Europe to €62–74 per megawatt-hour, with storage levels falling by 8%. If the disruption lasts more than two months, prices could exceed €100, placing pressure on global demand. Meanwhile, the impact on the US market would remain limited thanks to ample supplies.
Fitch: GCC Economies Can Withstand Short-Term Shocks
Fitch Ratings said sovereign ratings of the Middle Eastern countries have sufficient buffers to withstand a short-term regional conflict that does not escalate. However, the agency warned that the trajectory of the conflict remains uncertain, and that permanent damage to major energy infrastructure or a prolonged conflict could pose risks to regional sovereign ratings.
Fitch’s base scenario assumes the conflict will last less than a month, similar to the 2025 Iran–Israel 12-Day War. Yet, Fitch noted the current attacks have had a larger impact.
The extent of physical damage to GCC countries’ energy infrastructure will be the decisive factor in determining pressure on sovereign ratings.
Fitch expects the Strait of Hormuz to remain closed throughout the conflict, either due to a direct blockade, ships’ inability to obtain insurance, or other security threats.
Woth noting that Saudi Arabia and UAE possess pipelines that allow them to transport a large share of their production away from the strait. Additionally, major oil exporters store oil outside the region. However, the largest impact, according to Fitch, would fall on Bahrain, Kuwait, and Qatar — which lack alternative supply routes beyond the strait — as well as Iraq, whose exports rely heavily on the passage.
Higher energy prices would help offset the impact of any temporary disruption in export revenue, as long as shipments continue reaching markets.
Fitch expects the conflict’s impact on GCC economic growth to be temporary. However, long-term damage could occur in locations positioning themselves as safe havens for international companies and expatriates. Further, expatriate outflows could put pressure on housing markets across the GCC.
“Most GCC countries hold significant assets that provide a buffer in the event of a short-term disruption in energy revenue, while non-oil sectors face low taxation. Therefore, any disruption would have only a limited impact on public finances,” Fitch added.
Analysts at Citigroup expect a broad negative impact on regional equities as risk premiums are repriced. If escalation continues, sectors such as real estate, finance, transport, and retail could decline, while defensive sectors may remain more resilient.
Zilla Capital: Supplies Unlikely to Be Disrupted
Conversely, Zilla Capital said wars in their early stages do not typically impose significant economic costs, but risks arise from prolonged conflicts that generate rising costs and geopolitical consequences, similar to the scenario following the 2003 Iraq War. The firm warned that the repercussions of an Iranian war could be more severe.
Iran’s response is expected to be indirect and continue over a prolonged period, as the Iranian influence extends beyond missiles to what it described as the “geography of energy.”
Moreover, attacks on GCC infrastructure would not necessarily disrupt supplies as much as they would undermine the sense of security characterizing the region’s economic model, as “investment, insurance, shipping, and long-term contracts all depend on that sense of stability.”
US Federal Reserve Outlook for War’s Implications
Neel Kashkari, a member of the Federal Reserve, said the Middle East conflict increased uncertainty over the US economic outlook and made it more difficult to forecast the future course of monetary policy.
The Federal Reserve needs to monitor this new development in order to assess how long its impact will last and how significant it will be.
It also indicated that the war’s impact on inflation and economic activity will remain limited under the base scenario, expecting inflation to rise by about 0.1–0.2% to 2.6% in US and 2.1% in Europe, compared to previous forecasts of 2.5% and 1.9%, respectively.
Under the more pessimistic, but less likely, scenario, inflation could reach 3.8% in US and 3.1% in Europe.
The report also expects economic growth in US and Europe to slow down by 0.1% to 2.5% in US compared to 2.6% in pre-war forecasts, and 1.2% in Europe compared with 1.3% previously.
Allianz stressed the importance of securing the Strait of Hormuz — which carries about 30% of global hydrocarbon flows — noting that the oil market reaction was driven more by maritime transport disruptions than by oil scarcity. More than 200 oil and LNG vessels are currently anchored outside the strait, reflecting rising war-risk insurance concerns and precautionary operational suspensions.
Gold Could Reach $5,600 an Ounce Due to the Iran War
Fitch Solutions expects gold to reach $5,600 per ounce if there are no signs of a breakthrough in the Middle East. If the conflict continues for two to three weeks, gold could rise to around $5,850 per ounce and potentially reach $6,500 per ounce. The firm noted that investors are seeking safe-haven assets to hedge against the conflict’s impact.
Europe Most Exposed, Gas Could Reach €100
ING Group said the eurozone is the most exposed to the macroeconomic repercussions of the military turmoil in the Middle East, noting that the region had recently begun to eliminate recession despite a new state of uncertainty related to tariffs.
In a note, the bank said earlier projections by the European Central Bank (ECB) indicated that a 14% increase in oil prices would raise inflation by 0.5% and reduce gross domestic product (GDP) growth by 0.1%.
Goldman Sachs warned that a disruption to gas flows through the Strait of Hormuz for one month could push prices in Europe to €62–74 per megawatt-hour, with storage levels falling by 8%. If the disruption lasts more than two months, prices could exceed €100, placing pressure on global demand. Meanwhile, the impact on the US market would remain limited thanks to ample supplies.
Fitch: GCC Economies Can Withstand Short-Term Shocks
Fitch Ratings said sovereign ratings of the Middle Eastern countries have sufficient buffers to withstand a short-term regional conflict that does not escalate. However, the agency warned that the trajectory of the conflict remains uncertain, and that permanent damage to major energy infrastructure or a prolonged conflict could pose risks to regional sovereign ratings.
Fitch’s base scenario assumes the conflict will last less than a month, similar to the 2025 Iran–Israel 12-Day War. Yet, Fitch noted the current attacks have had a larger impact.
The extent of physical damage to GCC countries’ energy infrastructure will be the decisive factor in determining pressure on sovereign ratings.
Fitch expects the Strait of Hormuz to remain closed throughout the conflict, either due to a direct blockade, ships’ inability to obtain insurance, or other security threats.
Woth noting that Saudi Arabia and UAE possess pipelines that allow them to transport a large share of their production away from the strait. Additionally, major oil exporters store oil outside the region. However, the largest impact, according to Fitch, would fall on Bahrain, Kuwait, and Qatar — which lack alternative supply routes beyond the strait — as well as Iraq, whose exports rely heavily on the passage.
Higher energy prices would help offset the impact of any temporary disruption in export revenue, as long as shipments continue reaching markets.
Fitch expects the conflict’s impact on GCC economic growth to be temporary. However, long-term damage could occur in locations positioning themselves as safe havens for international companies and expatriates. Further, expatriate outflows could put pressure on housing markets across the GCC.
“Most GCC countries hold significant assets that provide a buffer in the event of a short-term disruption in energy revenue, while non-oil sectors face low taxation. Therefore, any disruption would have only a limited impact on public finances,” Fitch added.
Analysts at Citigroup expect a broad negative impact on regional equities as risk premiums are repriced. If escalation continues, sectors such as real estate, finance, transport, and retail could decline, while defensive sectors may remain more resilient.
Zilla Capital: Supplies Unlikely to Be Disrupted
Conversely, Zilla Capital said wars in their early stages do not typically impose significant economic costs, but risks arise from prolonged conflicts that generate rising costs and geopolitical consequences, similar to the scenario following the 2003 Iraq War. The firm warned that the repercussions of an Iranian war could be more severe.
Iran’s response is expected to be indirect and continue over a prolonged period, as the Iranian influence extends beyond missiles to what it described as the “geography of energy.”
Moreover, attacks on GCC infrastructure would not necessarily disrupt supplies as much as they would undermine the sense of security characterizing the region’s economic model, as “investment, insurance, shipping, and long-term contracts all depend on that sense of stability.”
US Federal Reserve Outlook for War’s Implications
Neel Kashkari, a member of the Federal Reserve, said the Middle East conflict increased uncertainty over the US economic outlook and made it more difficult to forecast the future course of monetary policy.
The Federal Reserve needs to monitor this new development in order to assess how long its impact will last and how significant it will be.
