The war in Iran that began over the weekend is spiralling into a deadly regional conflict.
Catch up: The U.S. and Israel launched a wave of intensive attacks against Iran beginning on Saturday, striking targets across the country and killing the country’s supreme leader, Ayatollah Ali Khamenei.
Iran retaliated by launching drone and missile attacks against Israel and U.S. allies in the region, including Bahrain, Qatar, the United Arab Emirates, and Kuwait.
Hezbollah joined the fight yesterday, firing rockets at Israel, which responded by striking Beirut.
The death toll is climbing: more than 550 have been killed in Iran, 31 in Lebanon, at least 10 in Israel, three in the UAE, and one in Kuwait. Three American service members have also been killed.
The economic impact: The price of oil rose as much as 13% yesterday before giving back some of its gains. Natural gas prices in Europe were up nearly 25%. Meanwhile, stocks fell as markets opened in Asia and Europe.
Tanker traffic through the Strait of Hormuz off Iran’s coast — a vital artery that carries around 20% of the global oil trade — ground to a halt and Iran targeted energy infrastructure in the region.
Analysts predict that the price of a barrel of oil could eventually rise to anywhere from $80 to more than $100, depending on how long the strait remains effectively closed.
For Canada: While higher oil prices may be positive for Canada’s energy sector in the short term, this sort of disruption to the supply of oil could do serious damage to the global economy — and Canada wouldn’t be immune.
More expensive oil will likely strengthen the loonie while slowing growth, particularly in Asia, which depends heavily on Gulf crude. Both dynamics would reduce demand for Canadian exports.
Inflation could also re-emerge, as higher energy prices make it more expensive to produce and transport just about everything.
What’s next: Donald Trump said he is prepared to open talks with Iranian officials, but added in a separate interview that he expected the war to continue for another “four to five weeks.”