The global economy has entered a new and complex phase of geopolitical and financial uncertainty, after US President Donald Trump detonated 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 attempts to negotiate or deal with the Iranian leadership as 'mere nonsense and a waste of time,' while warning that Washington may initiate serious and open military options to respond to attacks on commercial navigation.

This sudden dramatic shift, accompanied by Washington's threat to launch wide-ranging 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, breaking through the $79 per barrel barrier, threatening to freeze two years of gains in fighting inflation and undermining hopes for monetary policy easing.

In contrast, Wall Street indices and European and Asian markets turned red with a mass investor flight toward safe havens, placing the renewed Strait of Hormuz conflict on the edge 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 reduce global growth rates, which are already modestly fixed at 3 percent.

Traders working on the New York Stock Exchange (AP)

Oil market on fire

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 wildly. 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 nearly 7.3 percent to reach $75.58 per barrel.

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

Exacerbating oil concerns were official data released this week, which revealed that US inventories in the Strategic Petroleum Reserve have fallen to their lowest level since 1983, depriving the global economy of any maneuvering margins to absorb the inevitable upcoming shocks in the event of a full naval blockade.

Selling wave engulfs stocks

Global stock exchanges received 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 percent of its value (equivalent to 514 points), followed by the broader S&P 500 index by 0.46 percent, and the tech-heavy Nasdaq by 0.31 percent.

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

Airlines and cruise companies were the direct victims of the sudden spike in fuel prices; shares of United Airlines fell 3.2 percent and Delta by 1.9 percent. Shares of cruise operators such as Carnival also plunged 3 percent 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 percent in Seoul, despite announcing a huge 19-fold profit jump, amid real fears of slowing demand for memory chips in the second half of the year. In contrast, shares of US Broadcom survived with a 3 percent rise, supported by a massive $30 billion supply deal with Apple, partially mitigating the losses of the tech-heavy Nasdaq.

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

Yen wobbles, dollar seeks safety

Foreign exchange markets were not immune to this shock; the war rhetoric reordered 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 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 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 are now completely governed by sharp and violent volatility due to 'geopolitical uncertainty' resulting from the continuous tactical shifts in the current US administration's positions. Financial group analysts see that the biggest fear lies not in the current momentary decline in stock prices, but in the possibility that the cancellation of the truce could turn into a complete diplomatic rupture leading to a return of an open and comprehensive 'oil tanker war' that forces international powers to impose a mutual naval blockade.