PARIS — The head of the European Stability Mechanism (ESM) warned Thursday that escalating tensions between Israel and Iran have already begun destabilizing global markets, with oil prices surging and investors flocking to safe-haven assets.
ESM Managing Director Pierre Gramegna told reporters at a Paris financial forum that “we’re seeing the first economic shockwaves” from the conflict, citing a 6% spike in Brent crude prices and falling European stock indices since Iran’s missile attack on Israel last weekend. Analysts note this marks the first official acknowledgment by a major international financial institution of the crisis’ economic repercussions.
The warning comes as G7 nations prepare emergency talks to prevent further escalation. Treasury yields and the U.S. dollar have strengthened as capital flees emerging markets, while shipping insurers are reportedly raising premiums for vessels transiting the Persian Gulf by 30-50%.
“Every regional conflict since 1973 has triggered an oil shock,” said ING chief economist Carsten Brzeski, referencing the Yom Kippur War’s impact. “The difference now is we’re seeing these effects manifest within 72 hours due to algorithmic trading and just-in-time supply chains.”
Forward-looking analysis suggests prolonged tensions could derail central banks’ inflation fight, with JPMorgan estimating a 0.7% global GDP drag if oil remains above $100/barrel for six months.