Overview:

Oil prices rose above 1.5 percent on Thursday to reach their highest level in more than six weeks, driven by renewed military confrontation between the United States and Iran. The World Bank warned that prolonged escalation could reduce global economic growth to 1.3 percent, representing one of the worst-case scenarios for the year ahead. Currency markets responded with dollar strength, as investors sought safe-haven assets amid geopolitical uncertainty.

Details:

Crude oil benchmarks climbed following a new round of US strikes on Iranian targets. The price movement reflects broader concerns about supply disruptions in one of the world's most critical energy corridors. Analysts note that sustained tensions could further pressure energy markets already sensitive to geopolitical risk.

The World Bank's assessment signals acute concern about spillover effects. A prolonged US-Iran military conflict could trigger cascading economic damage across global supply chains, inflation dynamics, and investment behavior. The institution's warning carries particular weight for developing economies dependent on energy imports and tourism revenue.

Currency markets reflected risk-off sentiment, with the dollar stabilizing on Thursday as geopolitical premium supported demand for the reserve currency. The Japanese yen approached 40-year lows despite traditional safe-haven status, indicating the complexity of current market positioning. Fixed-income and equity investors face widening uncertainty over inflation paths and central bank policy responses.

In Lebanon's domestic context, energy price volatility compounds existing fiscal pressures. Fuel-dependent sectors face margin compression, while transport costs threaten agricultural export competitiveness to Gulf markets. The government's stated commitment to fuel taxation intersects with union resistance and inflation dynamics driven by external shocks.

Outlook:

Investors are monitoring US-Iran communication channels and the trajectory of oil prices above the USD 85 per barrel threshold, which historically triggers broader economic slowdown signals. Central banks worldwide face a delicate balancing act: maintaining credibility against inflation while avoiding demand destruction from energy-driven stagflation risks.