Fitch Solutions’ BMI is now expecting the war to shave 0.2-0.3 percentage points off of global economic growth if the war lasts longer than four weeks and persists through April, which is longer than its initial baseline, it said in a recent note. This is due to the “direct impact of high energy prices on importing economies, as well as a hit to domestic consumption more generally amid rising inflationary pressures,” BMI explained.

Much of it boils down to oil and gas prices: Brent crude has hovered at USD 90-110 / bbl this month, but an extended conflict could push it to USD 110-130 / bbl in April or USD 150 / bbl in a worst-case scenario, according to BMI. Worst-case outcomes could add up to 0.7 percentage points to headline inflation for major economies in 2026, it said, with importers in Europe and Asia the hardest hit while exporters in North America could get a windfall. Higher oil prices would also push inflation in most countries beyond targets. If the conflict abates, we’re looking at prices normalizing closer to USD 70 / bbl later in the year.

Some of the damage is already done: “Even if the current conflict ends soon, inflation risks may remain high if expectations drift higher, while lingering security risks and global uncertainty could be a more persistent drag on activity,” it added.

It would take around a month for trade flows to normalize around the Strait of Hormuz, meaning that disruptions to LNG and oil shipments would continue through to 2Q 2026, which could have a severe impact on GCC economies.

Fiscal conditions would tighten around the world, as an uptick in interest rates and borrowing costs would weigh on investment growth and government spending plans. Currencies from energy-importing markets like Egypt and South Africa are also set to see declines against the greenback amid a more risk-averse backdrop.

The security and infrastructure risks are particularly stark for our region. A continued war would likely entail more damage to key energy infrastructure in the region, and ongoing attacks would keep much-needed, deep-pocketed tourists at bay. The hit to regional tourism would spill over into countries with remittance ties to the area.

MARKETS THIS MORNING-

Asia-Pacific markets are mixed in early trading this morning following contradicting updates on the regional war, with the Trump administration saying that talks with Iran are underway and Iran denying the news. In Japan, the Nikkei is basically unchanged, while South Korea’s Kospi is down over 2.7%.

TASI

11,080

+1.2% (YTD: +5.6%)

MSCI Tadawul 30

1,495

+1.0% (YTD: +7.7%)

NomuC

22,552

+0.3% (YTD: -3.2%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.25% repo

3.75% reverse repo

EGX30

47,498

+1.2% (YTD: +13.6%)

ADX

9,778

+2.7% (YTD: -2.2%)

DFM

5,698

+5.2% (YTD: -5.8%)

S&P 500

6,592

+0.5% (YTD: -3.7%)

FTSE 100

10,107

+1.4% (YTD: +1.6%)

Euro Stoxx 50

5,649

+1.2% (YTD: -2.5%)

Brent crude

USD 103.39

+1.1%

Natural gas (Nymex)

USD 2.97

+0.6%

Gold

USD 4,534

-1.1%

BTC

USD 71,298

+1.1% (YTD: -18.6%)

Sukuk/bond market index

911.98

-0.1% (YTD: -0.8%)

S&P MENA Bond & Sukuk

148.73

+0.2% (YTD: -2.1%)

VIX (Volatility Index)

25.38

-5.8% (YTD: +69.8%)

THE CLOSING BELL: TADAWUL-

The TASI surged 1.2% yesterday on turnover of SAR 5.6 bn. The index is up 5.6% YTD.

In the green: Sidc (+8.2%), Rasan (+7.5%), and Cherry (+6.9%).

In the red: Yansab (-2.8%), Makkah Construction (-2.6%), and Saudi Ground Services (-1.7%).

THE CLOSING BELL: NOMU-

The NomuC inched up 0.3% yesterday on turnover of SAR 18.1 mn. The index is down 3.2% YTD.

In the green: Mulkia (+20.9%), Riyadh Steel (+15.1%), and Paper Home (+9.5%).

In the red: Twareat (-9.3%), Academy of Learning (-6.7%), and Digital Research (-4.7%).

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