{"id":192498,"date":"2020-01-04T08:45:46","date_gmt":"2020-01-04T05:45:46","guid":{"rendered":"http:\/\/ww-vb.mine.nu\/w108\/what-a-us-iran-war-could-mean-for-the-economy\/"},"modified":"2020-01-04T08:45:46","modified_gmt":"2020-01-04T05:45:46","slug":"what-a-us-iran-war-could-mean-for-the-economy","status":"publish","type":"post","link":"https:\/\/hameed.nwar.uk\/sa\/what-a-us-iran-war-could-mean-for-the-economy\/","title":{"rendered":"What a US-Iran war could mean for the economy"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div data-reactid=\"10\">\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"An escalation of hostilities after a U.S. airstrike killed a top Iranian military commander could send shockwaves through the global economy, according to analysts.&amp;nbsp;\" data-reactid=\"15\">An escalation of hostilities after a U.S. airstrike killed a top Iranian military commander could send shockwaves through the global economy, according to analysts.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cThe assassination of Qassem Soleimani, a major figure in the Iranian regime, in a U.S. airstrike last night has significantly raised the chances of an outright conflict between the U.S. and Iran,\u201d Jason Tuvey, senior emerging markets economist for Capital Economics, wrote in a note Friday.&amp;nbsp;\" data-reactid=\"16\">\u201cThe assassination of Qassem Soleimani, a major figure in the Iranian regime, in a U.S. airstrike last night has significantly raised the chances of an outright conflict between the U.S. and Iran,\u201d Jason Tuvey, senior emerging markets economist for Capital Economics, wrote in a note Friday.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cOur central scenario is that the global economy will bottom out in the early part of this year and recover thereafter,\u201d he added. \u201cBut the outbreak of war between the U.S. and Iran would put the recovery on ice.\u201d&amp;nbsp;\" data-reactid=\"17\">\u201cOur central scenario is that the global economy will bottom out in the early part of this year and recover thereafter,\u201d he added. \u201cBut the outbreak of war between the U.S. and Iran would put the recovery on ice.\u201d\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"Qassem Soleimani, head of Iran\u2019s Islamic Revolution Guard Corps\u2019 Quds Force, was killed by an airstrike in Baghdad ordered by President Donald Trump, the&amp;nbsp;&lt;a href=&quot;https:\/\/www.defense.gov\/Newsroom\/Releases\/Release\/Article\/2049534\/statement-by-the-department-of-defense\/&quot; rel=&quot;nofollow noopener&quot; target=&quot;_blank&quot;&gt;Department of Defense said in a statement Thursday.&amp;nbsp;&lt;\/a&gt;&amp;nbsp;The Defense Department said that Soleimani was actively planning to attack American personnel in the region.\" data-reactid=\"18\">Qassem Soleimani, head of Iran\u2019s Islamic Revolution Guard Corps\u2019 Quds Force, was killed by an airstrike in Baghdad ordered by President Donald Trump, the\u00a0Department of Defense said in a statement Thursday.\u00a0\u00a0The Defense Department said that Soleimani was actively planning to attack American personnel in the region.<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"Iran\u2019s Supreme Leader Ayatollah Ali Khamenei&amp;nbsp;&lt;a href=&quot;https:\/\/finance.yahoo.com\/news\/khamenei-says-severe-retaliation-awaits-051950084.html&quot;&gt;vowed to inflict \u201csevere retaliation\u201d&lt;\/a&gt;&amp;nbsp;on those involved in Soleimani\u2019s death, according to a statement cited by media.\" data-reactid=\"19\">Iran\u2019s Supreme Leader Ayatollah Ali Khamenei\u00a0vowed to inflict \u201csevere retaliation\u201d\u00a0on those involved in Soleimani\u2019s death, according to a statement cited by media.<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cClearly, the major concern for the world economy is that events spiral out of control and the U.S. launches a full-blown military assault on Iran,\u201d Tuvey said. \u201cThe resulting collapse in Iran\u2019s economy could knock as much as 0.3%-pts off global GDP \u2013 equal to our estimate of the damage from the US-China trade war.\u201d&amp;nbsp;\" data-reactid=\"20\">\u201cClearly, the major concern for the world economy is that events spiral out of control and the U.S. launches a full-blown military assault on Iran,\u201d Tuvey said. \u201cThe resulting collapse in Iran\u2019s economy could knock as much as 0.3%-pts off global GDP \u2013 equal to our estimate of the damage from the US-China trade war.\u201d\u00a0<\/p>\n<figure class=\"canvas-image Mx(a) canvas-atom My(24px) My(20px)--sm\" style=\"max-width:100%;\" data-type=\"image\" itemscope=\"\" itemprop=\"associatedMedia image\" itemtype=\"http:\/\/schema.org\/ImageObject\" data-reactid=\"21\"><meta itemprop=\"height\" content=\"450\" data-reactid=\"22\"\/><meta itemprop=\"width\" content=\"800\" data-reactid=\"23\"\/><\/p>\n<div style=\"padding-bottom:56.3%;\" class=\"Maw(100%) Pos(r) H(0)\" data-reactid=\"24\"><img decoding=\"async\" alt=\"The Iranian-owned Sabiti oil tanker is seen sailing in the Red Sea, October 11, 2019. Picture taken October 11, 2019. National Iranian Oil Tanker Company via WANA (West Asia News Agency) via REUTERS. ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY\" class=\"JsEnabled_Op(0) JsEnabled_Bg(n) Trsdu(.42s) Bgr(nr) Bgz(cv) StretchedBox W(100%) H(100%) ie-7_H(a)\" itemprop=\"url\" style=\"background-image:url(http:\/\/ww-vb.mine.nu\/w108\/wp-content\/uploads\/2020\/01\/c554f2f0-2e33-11ea-aebb-2305174dd264.jpeg);\" src=\"http:\/\/ww-vb.mine.nu\/w108\/wp-content\/uploads\/2019\/09\/spaceball.gif\" data-reactid=\"25\"\/><noscript data-reactid=\"26\"><img decoding=\"async\" alt=\"The Iranian-owned Sabiti oil tanker is seen sailing in the Red Sea, October 11, 2019. Picture taken October 11, 2019. National Iranian Oil Tanker Company via WANA (West Asia News Agency) via REUTERS. ATTENTION EDITORS - THIS IMAGE HAS BEEN SUPPLIED BY A THIRD PARTY\" class=\"StretchedBox W(100%) H(100%) ie-7_H(a)\" src=\"http:\/\/ww-vb.mine.nu\/w108\/wp-content\/uploads\/2020\/01\/c554f2f0-2e33-11ea-aebb-2305174dd264.jpeg\" itemprop=\"url\"\/><\/noscript><\/div>\n<div itemprop=\"caption description\" class=\"Ov(h) Pos(r) Ff(ss) Mah(80px)\" data-reactid=\"27\"><figcaption class=\"C($c-fuji-grey-h) Fz(13px) Py(5px) Lh(1.5)\" title=\"The Iranian-owned Sabiti oil tanker is seen sailing in the Red Sea, October 11, 2019. Picture taken October 11, 2019. National Iranian Oil Tanker Company via WANA (West Asia News Agency) via REUTERS.\" data-reactid=\"28\">\n<p>The Iranian-owned Sabiti oil tanker is seen sailing in the Red Sea, October 11, 2019. Picture taken October 11, 2019. National Iranian Oil Tanker Company via WANA (West Asia News Agency) via REUTERS.<\/p>\n<\/figcaption><button class=\"C($c-fuji-blue-1-b) Cur(p) W(100%) T(63px) Bgc(#fff) Ta(start) Fz(13px) P(0) Bd(0) O(0) Lh(1.5) Pos(a)\" data-reactid=\"30\"><span data-reactid=\"31\">More<\/span><\/button><\/div>\n<\/figure>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"The developments rattled global markets, sending Brent crude oil futures (&lt;a href=&quot;https:\/\/uk.finance.yahoo.com\/quote\/BZ=F?p=BZ=F&amp;amp;.tsrc=fin-srch&quot;&gt;BZ=F&lt;\/a&gt;) about 4% higher in the immediate aftermath. Haven assets including gold and Treasuries surged, while U.S. stock futures tumbled in early trading.\" data-reactid=\"32\">The developments rattled global markets, sending Brent crude oil futures (BZ=F) about 4% higher in the immediate aftermath. Haven assets including gold and Treasuries surged, while U.S. stock futures tumbled in early trading.<\/p>\n<h2 class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"&lt;strong&gt;Rising oil prices is a consumption tax&amp;nbsp;&lt;\/strong&gt;\" data-reactid=\"33\"><strong>Rising oil prices is a consumption tax\u00a0<\/strong><\/h2>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"The more important impact for the rest of the world, however, would be a protracted spike in oil prices.&amp;nbsp;\" data-reactid=\"34\">The more important impact for the rest of the world, however, would be a protracted spike in oil prices.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cOur base case here is that a full-blown war between the U.S. and Iran is unlikely,\u201d Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Friday. \u201cThe infrastructure of the oil sector, though, is a likely target in the event of tit-for-tat escalation.\u201d&amp;nbsp;\" data-reactid=\"35\">\u201cOur base case here is that a full-blown war between the U.S. and Iran is unlikely,\u201d Ian Shepherdson, chief economist for Pantheon Macroeconomics, wrote in a note Friday. \u201cThe infrastructure of the oil sector, though, is a likely target in the event of tit-for-tat escalation.\u201d\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"In one possible method of retaliation, Iran could try to close off the Strait of Hormuz, a key passageway for more than a fifth of the world\u2019s global petroleum liquids consumption and a region the&amp;nbsp;&lt;a href=&quot;https:\/\/www.eia.gov\/todayinenergy\/detail.php?id=39932&quot; rel=&quot;nofollow noopener&quot; target=&quot;_blank&quot;&gt;U.S. Energy Information Administration has called &lt;\/a&gt;\u201cthe world\u2019s most important chokepoint.\u201d The country has&amp;nbsp;&lt;a href=&quot;https:\/\/www.reuters.com\/article\/us-mideast-iran-tanker-factbox\/strait-of-hormuz-the-worlds-most-important-oil-artery-idUSKCN1UG0FI&quot; rel=&quot;nofollow noopener&quot; target=&quot;_blank&quot;&gt;previously threatened to disrupt shipments &lt;\/a&gt;in the Strait of Hormuz in response to U.S. attempts to choke the Iranian economy.&amp;nbsp;\" data-reactid=\"36\">In one possible method of retaliation, Iran could try to close off the Strait of Hormuz, a key passageway for more than a fifth of the world\u2019s global petroleum liquids consumption and a region the\u00a0U.S. Energy Information Administration has called \u201cthe world\u2019s most important chokepoint.\u201d The country has\u00a0previously threatened to disrupt shipments in the Strait of Hormuz in response to U.S. attempts to choke the Iranian economy.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"In that scenario, Tuvey expects Brent crude prices would rally to $150 per barrel \u2013&amp;nbsp;pushing inflation up by some 3.5-4.0 percentage points in OECD countries, Tuvey said.\" data-reactid=\"37\">In that scenario, Tuvey expects Brent crude prices would rally to $150 per barrel \u2013\u00a0pushing inflation up by some 3.5-4.0 percentage points in OECD countries, Tuvey said.<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"And as Shepherdson noted, higher oil prices create \u201ca tax on oil consumers and a windfall for producers.\u201d&amp;nbsp;\" data-reactid=\"38\">And as Shepherdson noted, higher oil prices create \u201ca tax on oil consumers and a windfall for producers.\u201d\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cWorld oil consumption is about 100M barrels per day, so each five dollars on the prices is equivalent to an annualized tax of about $183B per year, or 0.1% of global GDP,\u201d he said.&amp;nbsp;\" data-reactid=\"39\">\u201cWorld oil consumption is about 100M barrels per day, so each five dollars on the prices is equivalent to an annualized tax of about $183B per year, or 0.1% of global GDP,\u201d he said.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"However, the likelihood that the Federal Reserve would respond to&amp;nbsp;&lt;a href=&quot;https:\/\/fredblog.stlouisfed.org\/2018\/11\/does-oil-drive-inflation\/&quot; rel=&quot;nofollow noopener&quot; target=&quot;_blank&quot;&gt;oil price-driven inflationary increases&lt;\/a&gt;&amp;nbsp;with higher rates remains slim, he said, \u201cgiven their understanding of the impact of higher oil prices, the tightness of the labor market and the coming increase in core inflation from tariff pass-through and a run of adverse base effects.\u201d&amp;nbsp;\" data-reactid=\"40\">However, the likelihood that the Federal Reserve would respond to\u00a0oil price-driven inflationary increases\u00a0with higher rates remains slim, he said, \u201cgiven their understanding of the impact of higher oil prices, the tightness of the labor market and the coming increase in core inflation from tariff pass-through and a run of adverse base effects.\u201d\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u201cThe wild card is whether turmoil in the Middle East triggers a sustained sell-off in equities, depressing business and consumer confidence to the point where labor market and inflation concerns become secondary,\u201d Shepherdson said.&amp;nbsp;\" data-reactid=\"41\">\u201cThe wild card is whether turmoil in the Middle East triggers a sustained sell-off in equities, depressing business and consumer confidence to the point where labor market and inflation concerns become secondary,\u201d Shepherdson said.\u00a0<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"\u2014\" data-reactid=\"42\">\u2014<\/p>\n<p class=\"canvas-atom canvas-text Mb(1.0em) Mb(0)--sm Mt(0.8em)--sm\" type=\"text\" content=\"&lt;strong&gt;Emily McCormick is a reporter for Yahoo Finance.&amp;nbsp;&lt;\/strong&gt;&lt;a href=&quot;https:\/\/twitter.com\/emily_mcck&quot; 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