The world is facing a shock
Published 20.17
That the war is not over soon could be an unpleasant insight on the stock market. Photo: Michael Probst /AP/TT
The war in the Middle East is rapidly heading in a very dangerous direction.
So far, the financial market seems to have counted on the danger soon blowing over.
It now appears to be naive daydreams.
The awakening could be brutal.
"The forecast is very uncertain". This is what the Riksbank writes in connection with its decision to leave the key interest rate unchanged on Thursday morning.
Inflation is likely to rise and growth will decline due to the war in Iran, but how much is written in the stars is the message from the authority.
But if the war continues, there could be talk of several interest rate hikes, warns the Riksbank in one of its so-called alternative scenarios.
The Riksbank is not alone in scratching its head about the future.
Perhaps the most relevant question about the war in Iran right now is this: Who is in charge?
Israel's attack on Iran's South Pars gas fiel has escalated the war and brought it into a completely new and more dangerous phase.
Iran has responded with several attacks on the Ras Laffan gas facility in Qatar, the world's largest producer of liquefied natural gas, LNG.
Den kanske mest relevanta frågan om kriget i Iran just nu är den här: Vem är det som bestämmer?
Who is behind the escalation? In a post on Truth Social, Donald Trump claimed that it was Israel that carried out the attack and that the US had no idea that it was coming.
But according to several American media outlets, this is not true at all, Trump was both informed and approved the attack.
At the same time, Donald Trump writes that Israel will not carry out any more attacks, but if Iran retaliates, the United States will blow up the entire South Pars, with or without Israel's approval.
So whoever claims to have nothing to do with the attack promises that those responsible will not repeat it, but at the same time threatens to launch an even worse attack on their own.
Crystal clear.
The world's most powerful nation to be controlled by a random generator.
The consequences could be enormous.
So far, the financial market's reaction to the war has been relatively subdued.
Sure, the price of oil has risen and the stock markets have retreated, but the movements have not come close to reflecting how big the problems actually are.
From the start of the war, the market seems to have assumed that Trump will soon declare victory and that everything will return to normal.
That scenario looks increasingly unlikely with each passing hour. Even if Trump were to withdraw, it does not mean that the problems will disappear.
On the one hand, Iran can continue to control traffic in Hormuz and thus continue to hold the world economy in a stranglehold.
But above all: after the events of the past 24 hours, there is no longer the option of everything going back to the situation before the war.
Oil analyst Rory Johnston writes on X that a stop in the Strait of Hormuz is like a water hose that has become kinked – you can get the flow going pretty quickly. Attacks on infrastructure are like taking out a shotgun and shooting away the water tap to which the hose is attached.
It will take a long time to rebuild everything. Qatar warns that it may be forced to tear up contracts for gas deliveries to Europe that are as far away as five years in the future.
This insight is starting to sink in. On Thursday morning, the price of natural gas in Europe rose by almost 30 percent and has now more than doubled since the war began. The price of North Sea oil (Brent) was quoted at $119 per barrel. Experts are talking about it could go to $200.
Gas prices will hit Europe hard and an already weak economy.
But it could get much worse.
Europe has gone from being dependent on Russian gas to importing 60 percent of its natural gas from the United States. The question is, is it a reliable supplier? Already, there are reports of ships that were on their way from the United States to Europe but have been diverted to Asia.
China and South Korea have imposed restrictions on oil and gas exports to protect their own countries' access to energy. This could lead to even higher prices and shortages in other countries.
A deepening oil crisis is pulling the rug ut from under the economies of several countries in Asia, not to mention the Gulf states. Since nations like Saudi Arabia, the United Arab Emirates, and Qatar supply the rest of the world with large amounts of capital, it will be felt in many places.
The US economy is also vulnerable.
EJ Antoni, an economist who was previously close to Trump, tells the Financial Times that it is simply not strong enough to withstand an oil price of over $100 per barrel.
On Thursday, US Treasury Secretary Scott Bessent announced that the US will lift sanctions on oil from Iran in order to get more volumes onto the world market and thereby slow down the price rise.
Yes, you read that right. The same country that the US is bombing now has the opportunity to earn an extra hoe. Brilliant.
But why these efforts to calm the oil market?
High oil prices are pure winnings for the US. Donald Trump explained that as recently as Thursday on Truth Social.
This after boasting in his speech to the nation, three days before the war began, that gasoline prices were so low.
That's where we are good people.
It's not hard to agree with the Riksbank. The forecast is very uncertain.
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