The global economy has entered a new and complex phase of geopolitical and financial uncertainty, after US President Donald Trump set off a heavy political bomb from the Turkish capital Ankara during his participation in the NATO summit. This came with his official and final announcement of ending the war and canceling the memorandum of understanding and temporary truce signed with Tehran to end the Gulf conflict, describing any new efforts to negotiate or deal with the Iranian leadership as "mere nonsense and a waste of time," while warning that Washington may embark on serious and open military options to respond to attacks on commercial navigation.

This sudden dramatic shift, accompanied by Washington's threat to launch broad and new military strikes, caused a violent logistical and financial shock to the joints of the global economy; oil prices immediately jumped more than 7 percent, breaching the $79 per barrel barrier, threatening to freeze two years of anti-inflation gains and undermining hopes for monetary policy easing.

In contrast, Wall Street indices and European and Asian markets turned red as investors fled en masse to safe havens, placing the renewed conflict in the Strait of Hormuz on the brink of a volcano for the entire global economy, at a time when the International Monetary Fund again warned that continued bleeding would force it to further trim global growth rates, which remain timidly at 3 percent.

Traders working at the New York Stock Exchange (AP)

Oil Market Ignites

Trump's sharp remarks rekindled fears of a complete and prolonged blockage of the global energy artery in the Strait of Hormuz, which traders immediately translated into panic buying that raised prices frenziedly. Brent crude strengthened its gains, rising 7.4 percent to settle at $79.64 per barrel, while US West Texas Intermediate crude followed with an increase of about 7.3 percent to reach $75.58 per barrel.

Although these levels remain below the peak of $120 recorded at the beginning of the conflict, their rapid jump of between 25 and 32 percent compared to pre-war levels has reintroduced inflation risks into bond markets.

Adding to the sensitivity of oil concerns were official data released this week, which revealed that US inventories in the Strategic Petroleum Reserve fell to their lowest levels since 1983, depriving the global economy of any room for maneuver to absorb the inevitable shocks ahead in the event of a full naval blockade.

Wave of Selling Sweeps Stocks

Global stock exchanges greeted the US military threats of overnight ground and naval strikes against Iran with immediate trembling, triggering a broad sell-off of high-risk assets. New York opened trading sharply lower; the Dow Jones Industrial Average lost about 1% of its value (equivalent to 514 points), followed by the broader S&P 500 Index by 0.46%, and the tech-heavy Nasdaq by 0.31%.

In Europe, the Paris and Frankfurt markets fell by steep rates of 1.8%, while London dropped 1.2%. In Asia, Seoul's KOSPI index led declines, recording a violent drop exceeding 5%.

Airlines and cruise lines were the direct victims of the sudden spike in fuel prices; shares of United Airlines fell 3.2% and Delta 1.9%. Shares of cruise operators such as Carnival also plunged 3% due to fears of evaporating profit margins and rising operating costs.

The energy crisis coincided with increased investor skepticism about the high valuations of the semiconductor and artificial intelligence sector; shares of Samsung Electronics continued their decline for the second consecutive day by 6% in Seoul, despite announcing a huge profit jump of 19 times, amid real concerns about slowing demand for memory chips in the second half of the year. In contrast, US shares of Broadcom managed to rise 3%, supported by a massive $30 billion supply deal with Apple, partially mitigating the tech-heavy Nasdaq's losses.

Traders talk near screens displaying foreign exchange rates in a trading room at Hana Bank in Seoul (AP)

Yen Wobbles, Dollar Seeks Safe Haven

Foreign exchange markets were not immune to this shock; the war rhetoric rearranged traders' priorities toward holding the US currency as a safe haven in times of crisis.

The US dollar index maintained its relative stability against a basket of major currencies, moving at the level of 101.1 points, supported by expectations of keeping interest rates higher for longer to curb potential oil-driven inflation.

In contrast, the Japanese currency continued to wobble; the yen hovered around the level of 162.49 yen per dollar, affected by the wide gap in bond yields between Washington and Tokyo, approaching its lowest levels in about 40 years, putting additional pressure on the Bank of Japan to intervene in the markets.

Experts and strategic analysts agreed that international markets have become completely dominated by sharp and violent fluctuations due to "geopolitical blindness," resulting from the continuous tactical shifts in the current US administration's positions. Analysts from financial groups see that the greatest fear lies not in the current momentary decline in stock prices, but in the possibility of the cancellation of the truce turning into a complete diplomatic rupture leading to the return of an open and comprehensive "oil tanker war" that forces international powers to impose a mutual naval blockade.