Six months of war: How the Middle East conflict has shaped financial markets

• Brent crude briefly topped $120 in April and now averages around $90 in 2026, up from roughly $70 last year, with diesel prices rising sharply due to Gulf export disruptions and Russian refinery outages
• Global stocks gained $7 trillion (9%) since the war began, reaching a $105 trillion record high, as AI sector investment cushioned geopolitical concerns, though Gulf markets underperformed with Qatar and UAE stocks down 14%
• Gulf economies face severe damage: Saudi exports shrank 10% quarter-over-quarter, Dubai property sales plummeted 70%-80%, and Qatar's economy is expected to shrink nearly 30% this year due to damage at its Ras Laffan gas facility

Summary: Six Months of Middle East Conflict Impact on Markets

Key Event: Six months after U.S. and Israeli bombing of Iran in February 2026 triggered regional conflict, global financial markets continue experiencing significant disruption.

Energy Markets

• Brent crude oil spiked to $120/barrel in April, currently averaging $90 in 2026 versus $70 in 2025
• Gulf production disrupted; Strait of Hormuz shipments curtailed
• Diesel prices rose sharply due to shortages, Russian refinery outages, and lost Gulf exports
• Approaching winter raises concerns about heating oil availability and inflation

Equity Markets

• Global stocks resilient, supported by AI sector investment boom
• MSCI 47-country index reached $105 trillion record high, gaining $7 trillion (9%) since conflict began
• Year-to-date returns of 14% exceed typical 8-9% annual expectations
• Gulf regional stocks significantly underperformed

Safe-Haven Assets

• Traditional safe havens showed inconsistent performance
• U.S. dollar up 1.4% against major currencies
• U.S. Treasuries lost 3.5% on total return basis due to inflation concerns
• Gold initially dropped 25% (February-July) but rebounded 15% in August

Food Security

• Fertilizer shipments disrupted through Strait of Hormuz
• Food prices hit three-year high per UN FAO
• El Niño effects could add 0.7% to global food inflation (JPMorgan estimate)
• Asia and Africa face most severe impact

Gulf Region Impact

• Saudi exports declined 10% (Q1-Q2)
• Dubai property sales plummeted 70-80%
• Qatar economy projected to contract 30% in 2026
• Qatar and UAE stocks down 14%, underperforming global markets by 20+ percentage points
• Regional credit default swap prices elevated, especially Bahrain (up 40%)