Six Months of Middle East War Redraw the Map for Oil and Global Markets

Six months of conflict involving the United States, Israel and Iran have left a deep mark on energy, currencies and investment flows, even as global shares have continued to advance. Reuters’ review of the period shows a market that has absorbed repeated shocks, but not without higher fuel costs, pressure on Gulf economies and renewed concern about food inflation.

Brent crude briefly moved above $120 a barrel in April and has averaged about $90 in 2026, compared with roughly $70 last year. The impact has not been evenly spread across refined products. Diesel prices climbed more sharply, while stronger US refinery output helped ease jet-fuel costs. The disruption has also reached sectors that depend heavily on energy and transport, including fertiliser and food production.

That pressure was visible in the UN Food and Agriculture Organization’s July index, which reached a three-year high. JPMorgan estimated that a strong El Niño could add about 0.7 percentage points to global food inflation, adding another potential source of strain for households and policymakers.

Equities hold up, but safe havens wobble

Despite the conflict, the MSCI world equity index, with a market value of about $105 trillion, has gained roughly $7 trillion, or 9%, since the fighting began. Global equities are up around 14% over the year. The US dollar has risen about 1.4%, while US Treasuries have delivered a total return of about minus 3.5%.

Gold’s path has been less straightforward than its traditional safe-haven role might suggest. The metal fell by roughly a quarter between the start of the war and July before rebounding by more than 15% in August.

The Gulf has carried a heavier economic burden. Saudi exports fell 10% in the first two quarters, Dubai property sales dropped by an estimated 70% to 80%, and Qatar’s economic forecast was cut by 30%. Stock markets in Qatar and the United Arab Emirates have each fallen about 14%.

Oil premium begins to unwind

A more recent turn in the oil market suggests traders are now weighing diplomatic signals alongside the continuing physical risks. Rigzone reported that Brent was near $86 after a three-day decline of 8.7%, while West Texas Intermediate slipped below $80 after trading above $87 the previous week.

Attention had centred on restrictions around the Strait of Hormuz and Iran’s threat of a broader economic campaign. It has since shifted towards talks involving Iran and Oman over a temporary joint navigation corridor and mine-clearing work. Those discussions do not resolve the sanctions, nuclear and security disputes behind the conflict, but they have reduced the immediate fear of a further escalation.

The United States has also begun returning diplomatic staff to the region, while the latest expansion of sanctions was less severe than some traders expected. Even so, the physical market remains far from normal. The decisive test will be whether commercial vessels can move through Hormuz reliably. Until then, the retreat in oil’s war premium remains vulnerable to another disruption.