The ongoing conflict between Israel and Iran — triggered by Israel’s recent strikes on key Iranian military and nuclear facilities — has sent shockwaves through global trade and energy markets. Countries like the United States, Canada, India, Pakistan, and the UAE are already feeling the ripple effects as supply chains tighten and fears grow over regional escalation.
Flights Suspended, Oil Markets on Edge
Major international airlines have begun suspending flights to Tel Aviv, Tehran, and several key airports across the Middle East, impacting travel connectivity from Dubai, Toronto, New Delhi, Karachi, and New York. The disruptions come as global shipping companies and oil regulators scramble to assess risks to vital trade routes — particularly the Strait of Hormuz, through which around 20% of the world’s oil supply passes.
Though merchant shipping through the Strait continues for now, the heightened tensions and Iran’s past threats to close the route have raised red flags globally. Even the possibility of a shutdown has led to a sharp surge in oil prices, putting pressure on inflation worldwide — especially in North America and South Asia.
Oil Prices Surge; UAE and India Watch Closely
As of 4:00 p.m. New York time, Brent crude rose by over 5%, with oil futures briefly spiking more than 13% — reaching highs not seen since January. For India and Pakistan, which heavily depend on Gulf oil imports, this poses a serious concern for domestic fuel pricing and inflationary control.
In the United Arab Emirates, a key player in global energy markets and a major re-export hub, industry stakeholders are monitoring the developments closely. Any military escalation in the Gulf region could jeopardize shipping lanes critical for UAE-based oil companies and maritime logistics firms that serve clients in Canada, India, and beyond.
US Inflation Risk and Market Reaction
The conflict could reverse the recent economic relief seen in the United States, where consumer sentiment had recently rebounded. A Consumer Price Index (CPI) report earlier this week showed only a 0.1% price increase for the month, with petrol costs even declining by 2.6%. However, economists now warn that rising energy prices due to Middle East tensions could reignite inflationary pressure.
Analysts from JPMorgan Chase, including Natasha Kaneva and Prateek Kedia, issued a report highlighting the risk: “Sustained gains in oil could derail the months-long trend of cooling inflation in the US.” They also noted that such a shift might force a policy recalibration, especially with energy prices playing a central role in Donald Trump’s campaign promises of maintaining low fuel costs.
Pakistan and Canada Brace for Economic Impact
For Pakistan, already grappling with economic challenges, a spike in oil prices could worsen its fiscal deficit and further strain its foreign reserves. Canada, a major oil-producing nation, might benefit from higher prices in the short term, but global economic uncertainty could dampen long-term gains. Canadian stock markets also mirrored the dip seen in the US, with the Toronto Stock Exchange experiencing volatility.
Markets Await Further Escalation
The S&P 500 dropped 1.1%, the Dow Jones slipped 1.7%, and the Nasdaq declined 1.3% following the developments. Meanwhile, Bitcoin remained relatively flat, as investors adopted a cautious, “wait-and-see” stance.
Independent geopolitical analyst Taufiq Rahim explained to Al Jazeera: “Iran is a significant contributor to global oil supply, so markets react immediately. But so far, Israel has avoided targeting Iran’s oil infrastructure directly. If that changes, the global impact — including in the USA, UAE, Canada, India, and Pakistan — would be far more dramatic.”
As the situation unfolds, the world — especially energy-dependent nations and trading hubs — remains on high alert, bracing for potential fallout from a conflict that has already extended far beyond the borders of Israel and Iran.
