Making sense of this crazy world
The unfolding conflicts around the world remind us of how small the world has become. Airlines have had to use different corridors of travel since the Russian invasion of Ukraine, and latterly, due to the conflict between Israel and Iran too. The war, and that’s what it is, between Israel and Iran, has further restricted the airlines, with many more flights significantly delayed.
I saw some photographs from a BA flight to Dubai the other day, which clearly showed missile traces in the sky on the horizon. No surprise really, because the distance by ferry from Dubai to Iran is 130km. Just for context, the distance from Bournemouth to London, as the crow flies, is 151km.
Tehran is nowhere near the coast of Iran (1,448km away by road), but Iran is a big country nonetheless and, strategically, this creates a challenge for air traffic. This may cause heightened issues for shipping freight too, specifically oil.
We’ll take a look this week at the implications of this conflict, economically and across markets – the price of oil in particular.
Trump, of course, wants to take centre stage as he does on most things and unhelpfully said on Wednesday he “may or may not” strike Iran. We’ll interpret what this is likely to mean.
I’ll try to balance everything that’s going on with the implications for markets as we see it. Interestingly, most equity markets across the developed world have proved to be fairly resilient.
This week’s content:
- Air travel hampered
- Why has the conflict with Iran escalated?
- Trump hesitates!
- What is the likely impact on trade and the oil price?
- Investment markets prove resilient
- Difficult to see markets pushing on from here in the short-term
- Summary
Air travel hampered
A number of airlines have suspended or cancelled flights in the Middle East, and some countries have closed their airspace.
Apparently, eastern Iraq, near the border with Iran, contains one of the world’s busiest air corridors. Iraq closed its airspace a week ago. Jordan also closed its airspace to all flights.
The knock-on effect is slower movement in the air by traffic passing near these regions as the corridors have become squeezed.
Continues…
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