June, 2025 | AfricaHeadline – International Economy Desk
LAGOS — Heightened tensions between Israel and Iran sent fresh shockwaves across global financial markets on Friday. A confirmed Israeli airstrike on key Iranian targets sparked a sharp rise in crude oil prices and a widespread sell-off in equity markets.
AfricaHeadline Reports Team
editorial@africaheadline.com
Experts are warning of prolonged volatility in energy supply and the growing risk of a broader economic slowdown should the conflict escalate further.
U.S. benchmark crude (WTI) surged 6.4% to $72.39 per barrel, its highest one-day increase in five months, while Brent crude, the global benchmark, jumped 6.6% to $73.94. The sharp rise reflects deepening fears that Iran’s oil exports could be disrupted, especially if military retaliation spreads to the Strait of Hormuz, through which roughly 20% of global oil supply is shipped.
Iran remains one of OPEC’s largest producers, with daily output of approximately 3.2 million barrels, much of which is purchased by China. Despite long-standing Western sanctions, Iran has maintained steady exports through alternate routes and bilateral agreements.
A forced disruption could create a supply shock that pushes global crude prices beyond $80 per barrel, inflating costs in sectors like transportation, food, and heavy manufacturing.
According to analysts at Goldman Sachs and Rystad Energy, an escalation that draws in other regional actors could have systemic consequences. A supply reduction of just 1 million barrels per day from Iran could push global crude prices up by at least 12%, further feeding inflationary pressure worldwide. While oil-producing nations like Angola may see higher revenues, they could also face domestic inflation due to increased import costs for refined fuel and essential goods.
Equity markets turned sharply lower. On Wall Street, the Dow Jones Industrial Average dropped 1.4% at opening, while the S&P 500 and Nasdaq each declined by 0.9%. Investors scrambled for safer assets, sending U.S. Treasury yields lower and pushing gold and the dollar higher as havens regained favor.
European markets mirrored the trend, with France’s CAC 40 down 1.1%, Germany’s DAX off by 1.2%, and the FTSE MIB (Italy) and IBEX 35 (Spain) each falling by 1.3%. London’s FTSE 100 slid 0.4%, halting a five-day rally that had taken the index to a new record high just one day earlier.
The sell-off reflects a broad risk-off sentiment amid growing uncertainty over the trajectory of the conflict. Analysts caution that further retaliation, particularly if Iranian-aligned militias or proxies such as Hezbollah enter the fray, could cause a widespread re-pricing of assets.
The VIX volatility index, known as Wall Street’s “fear gauge,” spiked by 17% over the last 24 hours, signaling heightened anxiety among investors.
One of the most immediate casualties of the crisis was the aviation sector. Several Middle Eastern countries, including Iran, Iraq, and Syria, partially closed their airspace to commercial traffic, forcing major airlines to reroute or cancel flights. The result: sharp stock declines across the industry.
Turkish Airlines fell 6%, Air France-KLM dropped 4.2%, British Airways parent IAG slid 4.1%, while U.S. carriers United Airlines and Delta dropped 4.4% and 4% respectively.
The International Air Transport Association (IATA) estimates that the disruption could cost airlines over $150 million per week, factoring in rerouting expenses, fuel surcharges, refund claims, and revenue losses. Extended flight times and detours will not only increase operational costs but also raise the carbon footprint of long-haul travel, adding pressure on carriers already struggling to meet environmental targets.
This blow comes at a critical time for global aviation, just as the industry was recovering from pandemic-era losses. If conflict spreads to key aviation hubs like the UAE, Saudi Arabia, or Turkey, it could severely depress tourism and business travel across the region.
Moreover, war risk insurance premiums are expected to spike, compounding the financial burden on airlines operating in or over Middle Eastern airspace.
Friday’s developments highlight the global economy’s fragile dependence on geopolitical stability. Rising oil prices threaten to undo recent gains in inflation control, especially in oil-importing nations. Central banks that had considered rate cuts may now have to maintain tight monetary policies for longer to curb inflationary pressure.
For Africa, the impact will be mixed. Oil exporters such as Angola, Nigeria, and Algeria may benefit from rising prices through higher export revenues and stronger fiscal positions. However, increased import costs, particularly for refined fuel, transportation, and food, may offset these gains. For countries with weaker fiscal buffers, such as Ghana and Senegal, economic vulnerability is likely to increase.
In the medium term, much will depend on diplomatic efforts to de-escalate tensions. The international community, including the UN, EU, and African Union, must act swiftly to mediate and prevent a broader war. According to the IMF, should the conflict persist, global GDP growth could slow by 0.3% by year’s end, and oil prices could breach the $80–85 range, with widespread consequences for living costs, energy access, and fiscal stability across the developing world.
