The global economy entered a new and complex phase of geopolitical and financial uncertainty after US President Donald Trump dropped a heavy political bombshell from the Turkish capital Ankara during his participation in the NATO summit. This came with his official and final declaration ending the war and canceling the memorandum of understanding and temporary de-escalation signed with Tehran to end the Gulf conflict, describing any new attempts to negotiate or deal with the Iranian leadership as 'mere nonsense and waste of time,' while warning that Washington might initiate serious and open military options in response to targeting commercial navigation.

This sudden dramatic shift, accompanied by Washington's threat to launch new and broad military strikes, caused a violent logistical and financial shock to 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 and European and Asian indices turned red as investors fled en masse to safe havens, putting the renewed conflict in the Strait of Hormuz on the brink of erupting for the entire global economy. Meanwhile, the International Monetary Fund again warned that continued bleeding would force it to further cut global growth rates, which are timidly fixed at 3 percent.

Traders work on the floor of the New York Stock Exchange (AP)

Oil market on fire

Trump's harsh remarks reignited 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 drove prices up 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 a gain of nearly 7.3 percent to reach $75.58 per barrel.

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

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

Selling wave sweeps stocks

Global stock markets reacted to US military threats of night-time land and sea strikes against Iran with immediate trembling, triggering a broad sell-off of high-risk assets. New York opened sharply lower, with the Dow Jones Industrial Average losing about 1 percent of its value (equivalent to 514 points), followed by the broader S&P 500 down 0.46 percent, and the Nasdaq technology index down 0.31 percent.

In Europe, Paris and Frankfurt markets fell sharply by 1.8 percent, while London dropped 1.2 percent. In Asia, Seoul's KOSPI index led 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 fell 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; Samsung Electronics shares continued their decline for the second consecutive day, falling 6 percent in Seoul despite reporting a huge 19-fold profit jump, amid real concerns about slowing demand for memory chips in the second half of the year. In contrast, US-based Broadcom shares survived with a 3 percent gain, supported by a massive $30 billion supply deal with Apple, which partially offset the Nasdaq's tech losses.

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

Yen wobbles, dollar seeks safety

Foreign exchange markets were not isolated from this shock; the warlike tone reordered traders' priorities towards holding the US dollar as a safe haven in times of crisis.

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

In contrast, the Japanese currency continued its wobble; the yen hovered around 162.49 yen per dollar, affected by the vast 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 dominated by sharp and violent volatility due to 'geopolitical blindness' resulting from continuous tactical swings in the positions of the current US administration. Analysts at financial groups believe the greatest fear lies not in the current momentary decline in stock prices, but in the possibility of the cancelation of the de-escalation turning into a complete diplomatic rupture, leading to a return of an open and comprehensive 'oil tanker war' that would force international powers to impose mutual naval blockades.