A war can change the global economic landscape. In late February this year, the United States and Israel jointly attacked Iran, resulting in the deaths of several high-ranking Iranian military and political leaders, including Supreme Leader Ali Khamenei. However, with new personnel appointments, the Iranian regime's operations have not been significantly affected, and its Revolutionary Guard announced a blockade of energy and shipping routes: the Strait of Hormuz. This move forced several shipping companies, including COSCO, to halt operations in the Persian Gulf, directly impacting global energy supply and commodity trade.
As a result of this turmoil, oil prices surged to nearly $120 per barrel, casting a shadow over the global economic outlook.
Multiple industries in Hong Kong were also affected. To alleviate the cost pressures brought about by rising oil prices, several airlines, including Cathay Pacific, announced successive increases in fuel surcharges, with the cumulative increase exceeding 1.7 times.
At the same time, the government announced a 50% reduction in tunnel fees until June this year to ease the operational difficulties faced by public transportation sectors such as buses, and provided a cash subsidy of 3 HKD per liter of diesel to operators and drivers.
In terms of macroeconomics, the International Monetary Fund (IMF) has downgraded its global economic growth forecast to 3.1% due to the impact of this conflict; the Asian Development Bank also pointed out that economic growth in the Asia-Pacific region will slow to 5.1% this year, while inflation is expected to rise to 3.6%.
It is evident that this conflict has not only plunged the Middle East into turmoil with casualties but has also severely impacted the global economic outlook and even affected global financial markets. While many countries have become losers in this situation, there are always two sides to every story, and there are still two major &#34;winners&#34; in this conflict: one is the United States, and the other is China.
Since the outbreak of the conflict, the Strait of Hormuz has been on the brink of blockade, with only a few merchant ships able to pass through the route. As oil-producing countries located in the Persian Gulf, such as Iraq and Kuwait, need to transport their crude oil through the Strait of Hormuz to Japan and South Korea and other Asian countries, the difficulty for merchant ships to pass through the strait has stimulated a sharp rise in oil prices by 30% to over $100, directly impacting the economic development of related countries or regions.
As a result, the stock markets in Japan and South Korea experienced significant declines, with the South Korean stock market dropping 12% on March 3rd (shortly after the war began), triggering a circuit breaker, reflecting that energy supply issues directly undermined investor confidence. Additionally, investors are concerned about rising inflation, making it difficult for the U.S. Federal Reserve to restart interest rate cuts within the year; under the scenario where hopes for rate cuts may be dashed, the Hong Kong stock market was similarly affected, with the Hang Seng Index falling a total of 1,842 points or 6.9% throughout March. According to a Bloomberg report at the end of March, by the end of March this year, the war had caused a loss of $14 trillion in global stock market value.
In addition to the stock market, precious metals, the bond market, and the foreign exchange market were also impacted:
Precious metals: Gold prices briefly fell below $4,100 in early March.
Foreign exchange market: Investors shifted funds into the safe-haven U.S. dollar, pushing the U.S. Dollar Index back above 100. As a result, various currencies, including the South Korean won, faced selling pressure, with the won falling below the 1,500 mark against the U.S. dollar and reaching its lowest level since 2009
Bond Market: The yield on the 10-year U.S. Treasury bond, which serves as a market reference indicator, was below 4% before the outbreak of hostilities, but reached as high as 4.44% on the eve of U.S. President Donald Trump's announcement calling for an agreement with Iran, reflecting the pressure faced by U.S. Treasuries, which are typically seen as close to zero-risk investments, as they were also being sold off by investors. Statistics indicate that by the end of last month, the conflict had led to a $2.5 trillion evaporation in the bond market, creating significant ripples.
Subsequently, the U.S. and Iran announced a two-week ceasefire on the eve of the &#34;deadline&#34; for the agreement announced by Trump, allowing both sides time to negotiate. During this period, commercial ships were permitted to navigate the Strait of Hormuz, and after the news was announced, oil prices plummeted by over 10%, falling below $100. Global stock and currency markets immediately rose, with the South Korean stock market, which had seen deeper declines, surging 7% in a single day on April 8.
Although the U.S. and Iran have temporarily ceased hostilities, there are ongoing doubts about whether a final agreement can be reached. After approximately 21 hours of negotiations on April 11, U.S. Vice President Mike Pence, who was responsible for the talks, announced that no agreement had been reached and that he would return to the U.S.; the U.S. military also began blocking all Iranian ports starting Monday morning (the 13th). Further developments occurred when Trump indicated on Monday that he had received a call from the Iranian side expressing a desire to reach an agreement, and on Tuesday (the 14th), he hinted that both sides would return to the negotiating table, easing investor anxiety but reflecting the uncertainty of the situation.
Before the negotiations began, Dennis Kissler, Senior Vice President of Trading at BOK Financial Securities, pointed out that the situation was not yet resolved; he emphasized that the WTI crude oil price would only reach around $80 per barrel if the Strait was completely open, but he believed this situation would not occur within the next two weeks.
Analysts at another investment bank, Goldman Sachs, also indicated that they still expect oil prices to face upward risks. Goldman Sachs' baseline expectation is that energy transport through the Strait will gradually increase starting from last weekend, and subsequently, Persian Gulf crude oil exports will gradually return to pre-war levels within a month. In this scenario, the average price of Brent crude oil is expected to be $82 per barrel in the third quarter of this year, and $80 in the fourth quarter. However, Goldman Sachs also warned that if the Strait of Hormuz were to close again for more than a month, the average price of Brent crude oil this year would exceed $100 per barrel.
Carl Larry, an oil and gas analyst at Enverus, stated that every day is full of uncertainties, but before the illusion becomes reality, oil prices appear to have a solid floor at $90.
Since the outbreak of hostilities, many economies have suffered from the impact of high energy prices, undoubtedly making them the losers in this situation; however, several countries have benefited from the conflict, with Russia being one of them. Since its invasion of Ukraine in February 2022, Russia has faced sanctions from the U.S. and the European Union, among others. Trump has pointed out that any country purchasing oil from Russia would face &#34;secondary sanctions,&#34; meaning goods exported to the U.S. would face higher tariffs. However, the outbreak of hostilities in Iran led to a surge in oil prices, prompting the U.S. government to temporarily lift sanctions on Russian tankers that were already loaded with oil and at sea, allowing Russia to unexpectedly gain substantial oil revenues
Of course, Russia is not the biggest winner; the real winners are China and the United States. As a net energy exporter, the United States directly benefits from rising oil prices, with local energy stocks strengthening across the board; Japanese Prime Minister Fumio Kishida recently stated that Japan will increase its oil purchases from the United States.
According to Mohit Kumar, a global economist at Jefferies, the Middle East conflict has resulted in varying gains and losses for different parties, while the impact of rising oil and gas prices on the U.S. economy is minimal. At the same time, the conflict has triggered a demand for safe-haven assets, leading to a flow of funds into the U.S. dollar, stabilizing its exchange rate; on the other hand, countries in the Middle East, such as the UAE, have strengthened their ties with the United States after being attacked by Iran, further consolidating the relationship between the U.S. and its allies.
As for China, its influence is reflected in both diplomacy and energy structure. China plays a mediating role in the conflict, earning international respect; more importantly, as the world's largest producer of clean energy, China can help countries reduce their dependence on Middle Eastern oil. Deng Zhijie, the emerging markets investment director at Deutsche Bank's private banking division, pointed out that China is in a unique position to assist countries like Japan, South Korea, and India in seeking energy diversification by providing the necessary equipment for transformation.
Barclays' chief China economist, Chang Jian, also added that the renewable energy construction over the past decade has significantly reduced China's sensitivity to energy shocks, with oil and gas playing only a minor role in China's power generation.
On the other hand, the conflict may also help elevate the status of the renminbi. A report from Deutsche Bank noted that Middle Eastern oil has been key to the dominance of the &#34;petrodollar&#34; in global trade, but the war initiated by Trump against Iran may open the door for the rise of the renminbi, weakening the dollar's dominance that has lasted for decades, and even prompting the emergence of a &#34;petro-renminbi&#34; system.
The report concludes that if the situation in the Middle East leads to further deterioration of the petrodollar system, the dollar's status as the world's reserve currency will face significant impacts. A world that is more self-sufficient in defense and energy will also be a world with reduced dollar reserves. In fact, the current conflict may be a &#34;perfect storm&#34; for the petrodollar system

A war changes the global economic landscape. The United States and Israel attacked Iran, resulting in the deaths of several high-ranking officials. Iran blocked the Strait of Hormuz, affecting global energy supply, and oil prices briefly approached $120. Hong Kong airlines raised fuel surcharges, while the government reduced tunnel fees and provided diesel subsidies. The IMF lowered its global economic growth forecast to 3.1%, with economic growth in the Asia-Pacific region slowing to 5.1%. Despite the damage to several countries, the United States and China emerged as winners in this situation

Iran's war situation, oil prices soar, China smiles and becomes the winner