The United States and Israel launched “Operation Epic Fury” against Iran over the weekend, in a move that has had immediate ramifications on global financial markets and could have significant implications for African economies.
Missile attacks on Iran began on Saturday, with the US and Israel assassinating the country’s Supreme Leader, Ayatollah Ali Khameini and other regime figures, and President Donald Trump calling for the Iranian people to “take over your government.” Iran has responded with missile attacks on Israel and in nine other countries across the Gulf and Middle East.
Oil prices spike as Iran war threatens supply
The impact of the escalation on geopolitical tensions was immediately felt on Monday morning in the first trading session since the outbreak of the Iran war.
Brent crude soared by 13% in early trading before later dropping to trade at 8.5% higher, which still represents its biggest daily jump in nearly three years.
The implications for oil markets of continuing hostilities could be significant. Operations have been halted at Saudi Arabia’s largest oil refinery at Ras Tanura on the Persian Gulf coast after a drone strike in the area. Further attacks on energy infrastructure across the Gulf could disrupt oil supply and lead to further prices increases.
Iran has also reportedly attacked ships near the Strait of Hormuz, a vital chokepoint through which roughly 30% of global seaborne oil passes. Hundreds of oil and gas tankers have dropped anchor in nearby waters.
Qatar’s state-owned energy company, QatarEnergy, says it has halted the production of liquefied natural gas after Iranian attacks on some of its facilities.
The steep increase in geopolitical tensions has also led to stronger demand for perceived “safe haven” assets, most notably the US dollar and gold.
The VIX index, a measure of implied volatility in options markets which is widely seen as a “fear gauge,” has surged by almost 17% since last week and is now up almost 60% since the start of the year.
Implications for Africa
Brendon Verster, senior economist at Oxford Economics, wrote that the market volatility of the Iran war will impact African economies.
“The immediate, near-term risks to African nations are mainly confined to upswings in global oil prices and weakening exchange rates amid heightened demand for safe-haven assets, potentially driving short-term inflationary risks higher and prompting more cautious approaches by monetary authorities across the continent.”
He notes that, while Iran is unlikely to block the Strait of Hormuz completely as this would require an unprecedented naval blockade, oil prices are likely to stay high.
“Despite uncertainty around the extent of Iran’s responses to the US-Israeli airstrikes, global oil prices are likely to carry a higher geopolitical risk premium as tensions persist,” he says.
While higher oil prices would potentially contribute to higher inflation in some African countries, they would also benefit oil exporters, such as Nigeria, which exports around 1.5m barrels of oil per day.
Verster points out that “Nigeria’s medium-term fiscal framework assumes global oil prices will trend between $64pb and $66pb until 2028,” however the current tensions have seen oil trade above $72bp – with some analysts suggesting a prolonged conflict could see the price go above $100.
Should these elevated prices be sustained, that would likely lead to a significant windfall for Africa’s oil exporters including Nigeria, Libya, Angola, Algeria, and Egypt.
With gold up 2% today and around 25% in 2026 so far, a windfall could also be in store for the continent’s major gold producers, such as Ghana, South Africa, Mali, and Burkina Faso.