IMPACT OF THE GULF WAR IN 2026 ON GLOBAL FINANCIAL MARKETS

Abstract

The article examines the impact of the military conflict in the Persian Gulf in February-April 2026 on global financial markets. The aim of the article is to comprehensively analyze the impact of the Gulf War in 2026 on global financial markets and identify the main trends in their development in conditions of geopolitical instability. The main channels of influence transmission are analyzed - energy, stock, inflation, currency and debt. As a result of the analysis of the dynamics of the main stock indices of the USA, Europe and Asia, it was determined that the war in the Persian Gulf and the subsequent blockade of the Strait of Hormuz caused their short-term fall from 8 to 14%. The consequences of military actions were an increase in interest rates in credit markets, a strengthening of the dollar and an outflow of capital from risky assets in currency markets. The war in the Persian Gulf changed the expectations of governments and investors regarding monetary policy. Instead of reducing rates, central banks faced new inflationary pressure and were forced to increase interest rates on government securities. The rise in government bond yields was due to governments’ response to higher inflation expectations in their countries and high fiscal risks. The latter are related to increased government spending on both social and military spending (primarily for the United States). The Gulf War and the blockade of the Strait of Hormuz forced the European Central Bank (ECB) and the Federal Reserve (FRS) to postpone their quantitative easing plans. Against the backdrop of falling stock indices and rising bond prices, investors increasingly began to prefer gold as a safe haven, and its value has been rising after an initial price drop. The specifics of the consequences for the markets of developed and developing countries are determined. The growing role of military conflicts and geopolitical uncertainty in shaping the volatility of global financial markets is substantiated. The 2026 Gulf War confirmed the high sensitivity of global financial markets to geopolitical conflicts and the need to strengthen international financial stability mechanisms.