RTSun, 05 Jan 2020 15:05 UTC
© AFP/Fayez NureldineThe exchange board at the Stock Exchange Market (Tadawul) bourse in Riyadh.
Tehran could block a key shipping route in the Gulf region after US attack, thus causing a terrible headache to global oil markets and the world's economy in general, former Pentagon official Michael Maloof told RT's
Boom Bust.
Crude prices rose on Friday - with both Brent and West Texas intermediate (WTI) gaining more than three percent - on the news of the US drone strike that killed Qassem Soleimani, the most powerful Iranian general and the commander of the Revolutionary Guards' elite Quds Force.
However, that could be only the beginning of the economic consequences of the attack, according to Maloof.
"If the Iranians take retaliatory actions of some kind, let's say in the Persian Gulf or the Strait of Hormuz, basically blocking through mining or sinking ships...it will bring virtually overnight economic depression because 40 percent of the oil comes through there for other countries."
While the US could feel less impact in this case as it produces its own crude,
China could be one of those countries "dramatically" hit by such a scenario, Maloof believes. However, Iran may also
target oil refineries in Gulf countries, which house US personnel, to hit the Americans indirectly, the former Pentagon official added.
"The Iranians could do things without directly confronting the US, but attack the economic basis for the world. If they can't survive economically no one else is going to," Maloof warned.
Comment: Financial repercussions from the US attack are having a negative rippling effect - boding a major miscalculation in the making and a costly price to pay. Onus USA.
Fallout: US-Iran tensions affect US and ME
stock markets
Saudi Arabia's Tadawul All Share Index (TASI) as well as other key Middle East stock exchanges were down on Sunday after the killing of Iran's top general triggered a new round of tensions between the US and Iran.
The TASI slumped around 2 percent and was below 8,230 points on Sunday morning. Shares of energy giant Saudi Aramco fell to the lowest level since its record IPO last month, trading at 34.55 riyals per share.
Other key equity markets in the region also fell sharply. The major stocks of the Dubai Financial Market were down more than three percent after losing nearly 85 points, while the Qatar Exchange Index slid nearly 2.1 percent and shares included in Kuwait's premier index fell more than four percent. The overall index of the 30 most highly capitalized and liquid stocks traded on the Egyptian Exchange also slumped, falling nearly 2.5 percent.
The drop comes as Washington and Tehran continued to exchange threats on Sunday.
Earlier, the US stock market was shaken by the consequences of the attack, finishing the first trading days of 2020 with the biggest losses in a month. On Friday, the Dow Jones Industrial Average dropped 233.92 points or 0.8 percent, while the S&P 500 and the Nasdaq Composite fell more than 0.7 percent and nearly 0.8 percent respectively.
Comment: Financial repercussions from the US attack are having a negative rippling effect - boding a major miscalculation in the making and a costly price to pay. Onus USA.
Fallout: US-Iran tensions affect US and ME stock markets