The Iran-Israel war casts a long shadow over global markets, with the ceasefire offering only a temporary pause in hostilities rather than a path to resolution. Strategic uncertainty continues to loom large, raising critical questions about the motivations behind Israel’s military actions and the future of Iran-Israel relations.
From disrupted oil flows and rising inflation to shaken investor confidence, the economic and geopolitical repercussions are already being felt across regions and sectors, says GlobalData, a leading data and analytics company.
Ramnivas Mundada, Director of Economic Research and Companies at GlobalData, comments: “While Israel framed its offensive as a pre-emptive strike against a perceived existential danger posed by Iran’s nuclear ambitions, this justification is contested.
The region now faces a period of strategic uncertainty, with multiple potential outcomes. For Israel to translate its military successes into lasting strategic gains, it must effectively curtail Iran’s nuclear ambitions, long-range ballistic missile arsenal, and regional influence. Given its aggressive strategy and low risk tolerance, it is unlikely to settle for anything less than ensuring that Iran poses no long-term challenge to its security.”
The war has severely impacted Iran’s oil and gas sector, with airstrikes causing significant damage to critical facilities, including the South Pars gas field and various refineries. This destruction has disrupted production and exacerbated existing energy shortages, raising concerns about long-term economic stability.
Against this backdrop, GlobalData has lowered Iran’s economic growth forecast for 2025 from 3.1% in March to a mere 0.3% in June. Additionally, the inflation rate projection has been revised upward from 32.3% to 47.5%, highlighting the increasing instability in the region and its detrimental effects on Iran’s economic outlook.
The war has also led to increased volatility in the Iranian stock market, with the TEDPIX index contracting by 2.1% year-to-date as of 2 July 2025. Investor uncertainty has been fueled by rising oil prices, which surged from $59.2 per barrel on 5 June to a high of $74.4 per barrel by 22 June.
The Iran-Israel war has significantly affected multiple sectors, particularly the ready-made garment (RMG) industry, which faces challenges from rising oil prices and loss of competitiveness. Fast-moving consumer goods (FMCG) companies are bracing for increased costs due to oil price volatility impacting packaging and raw materials.
Moreover, the war has highlighted the interconnectedness of global supply chains, with key chokepoints like the Strait of Hormuz at risk. Disruptions in shipping routes and increased military activity have led to extended transit times and rising fuel costs, affecting global trade and logistics. The broader implications of the war underscore the urgent need for stability in the region, as the ripple effects extend far beyond the immediate combatants.
Mundada concludes: “Israel’s military actions, framed as a response to an imminent nuclear threat, appear to be more complex and reflect a desire to assert military dominance in the region.
As both nations navigate this precarious situation, the potential for renewed war looms large, underscoring the need for vigilance and adaptability from stakeholders in the region and beyond. The economic repercussions for Iran, coupled with the ongoing geopolitical uncertainties, suggest that the path to lasting peace will be fraught with challenges.”
