Rizky Amelia
The conflict between the United States and Israel against Iran, which began six months ago, has sent shockwaves through global energy markets and has had a profound impact on various sectors of the global economy. While the war has caused turmoil in many areas, it has also bolstered certain industries.
One of the significant winners of the conflict has been the oil industry. The closure of the Strait of Hormuz, coupled with Iranian strikes on energy infrastructure in Gulf countries, has led to a surge in oil prices. This has resulted in substantial profits for some of the world's largest energy companies. ExxonMobil, the largest oil company in the US, reported a $14.5bn profit in the second quarter of this year, its best quarterly earnings in four years. Chevron, the second-largest US producer, also saw a $12bn profit, the highest in six years. French energy giant TotalEnergies reported a $6bn profit in the April-June period, up from $3.6bn last year. British energy companies Shell and BP more than doubled their earnings year-on-year, with quarterly profits of $9.8bn and $5.73bn, respectively.
European energy companies have performed even better than their US counterparts, as they trade oil and have been able to leverage the situation to boost their revenues. Despite the turmoil in the Middle East, some of the region's top producers, such as Saudi Aramco, have also seen significant profits. However, some regional producers, like Abu Dhabi National Oil Company (ADNOC), have been harder hit by the closure of the Strait of Hormuz, reporting a 52 percent drop in second-quarter profit to $665m.
On the flip side, US taxpayers have emerged as significant losers in this conflict. In late July, US Defense Secretary Pete Hegseth provided Congress with an estimate putting the cost of the war up to that point at $37.5bn. However, experts suggest that the true cost is likely to be much higher, potentially reaching $1 trillion. This estimate does not include medium- and long-term costs, such as repairs to damaged military installations and disability payments for wounded soldiers, which could last for decades.
Defence firms have also seen an uptick in business due to the conflict. Reports suggest that the US may be running low on essential weapons in the Middle East, particularly Patriot and Terminal High Altitude Area Defense (THAAD) interceptors. The Pentagon has responded by sealing a $22.9bn agreement with RTX Corporation to increase production of Tomahawk cruise missiles used for strikes. The US military has also partnered with arms manufacturers on contracts worth tens of billions of dollars since the start of the war, including a $59bn deal with Lockheed Martin to triple production of Patriot interceptor missiles.
Despite the increased demand for armaments, some of the biggest defence firms have performed poorly on the stock market over the course of the war. Shares of Northrop Grumman are down about 25 percent since the start of the conflict, while Boeing has dropped about 8 percent.
The conflict has also highlighted the importance of affordable drone interceptors, layered missile defence, persistent ISR, and the ability to manufacture large quantities of expendable munitions quickly. This is a lesson that the US and Israel are learning the hard way, as Iran has shown its proficiency in asymmetric warfare.
In conclusion, the US-Israel war on Iran has had a complex impact on the global economy, with winners and losers emerging in various sectors. While oil companies and defence firms have seen significant profits, US taxpayers and some regional oil producers have been hit hard. The long-term economic implications of this conflict remain to be seen.
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