Marking six months since the initial U.S. and Israeli bombing of Iran, the ongoing Middle East conflict has driven global energy prices higher, pressured currency markets including the Philippine peso, and forced a reassessment of international trade, supply chains, and food inflation risks worldwide.
Energy Disruptions and Refined Fuel Pressures
Six months after the conflict began, global energy markets continue to grapple with curtailed shipments through the Strait of Hormuz and disrupted Gulf production. Brent crude briefly topped $120 in April and continues to average about $90 in 2026, marking a sharp increase from roughly $70 last year.
The fallout extends well beyond crude benchmarks. Refined fuels face acute shortages, driven by middle distillate deficits, Russian refinery outages resulting from Ukrainian attacks, and lost Gulf export flows. Jet fuel initially took a heavy hit given the region’s logistical importance, though a surge in U.S. refinery output and exports ultimately helped temper supply fears.
With the northern hemisphere winter approaching, analysts warn that additional disruptions to Hormuz shipments combined with ongoing vulnerabilities in Russia’s energy infrastructure could push up heating-oil and inflationary pressures.
Global Equities Cushioning Versus Gulf Underperformance
Despite the geopolitical shock, global equity markets have largely absorbed the fallout, supported by massive capital inflows into the artificial intelligence sector. MSCI’s 47-country world stocks index hit a $105 trillion record high, gaining almost $7 trillion, or 9%, since the war erupted. Equities are generally having a strong year, running up roughly 14% through August.
Fidelity analyst Pranav Aggarwal noted that the broader rally indicates investors are taking a relaxed view, adding and still expected the war to end this year
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“Equities are actually having a pretty good year. They’re up 14% or so (for the year). If we are expecting 8% to 9% in a standard year, 14% up till August is pretty good.”
Pranav Aggarwal, Fidelity analyst
Yet that resilience is far from universal. The direct hit to the Gulf region has been severe. Saudi Arabia experienced a 10% contraction in exports between the first and second quarters. JPMorgan estimates that Dubai property sales have plummeted 70%-80%, while Oxford Economics warns that Qatar’s economy will shrink almost 30% this year due to damage sustained at its Ras Laffan gas facility. Stock markets in both Qatar and the UAE have dropped approximately 14%, reflecting a more than 20 percentage point underperformance relative to broader world stocks.
Economic Pressures in the Philippines and Currency Markets
In the Philippines, the conflict’s economic ripples are hitting foreign exchange and domestic trade. BMI Research reports that the Philippine peso will likely stay under pressure in the coming months, weighed down by renewed U.S.-Iran tensions, a stronger dollar, and seasonal import demand. The Fitch Group unit expects the peso to trade between 61 and 63 per dollar this year.
Bangko Sentral ng Pilipinas Governor Eli Remolona Jr. acknowledged the difficult policy trade-offs. While a weaker peso can help boost exports and shrink the trade deficit, it simultaneously stokes imported inflation. The central bank recently raised its benchmark interest rate by a quarter percentage point to 4.75 percent, bringing total rate increases since April to 50 basis points.
Remolona has repeatedly emphasized that the central bank does not defend a specific exchange rate, preferring to let market forces dictate the peso’s value while intervening solely to curb excessive volatility. Meanwhile, remittances from overseas Filipino workers—18 percent of which come from the Middle East—face potential turbulence as migration routes and local employment conditions are tested.
Safe Havens, Food Supply Risks, and What Lies Ahead
Traditional safe-haven assets have behaved unpredictably throughout the crisis. U.S. Treasuries lost 3.5% on a total return basis as higher inflation dashed rate-cut expectations, while gold initially fell nearly 25% between the start of the war and July before rebounding more than 15% amid renewed concerns over dollar debasement.
At the same time, the closure of the Strait of Hormuz has disrupted global fertilizer shipments. Combined with a strong El Niño and ongoing grain transport hurdles linked to the war in Ukraine, agricultural output faces mounting threats. Food prices climbed in July to a more than three-year high according to the U.N. Food and Agriculture Organization, raising concerns of a renewed wave of global food inflation that will impact emerging markets most acutely.
