One Week In: Assessing the Economic Fallout of the Iran-Israel Conflict

Updated 6/22/2025 9:54:00 AM

The war between Iran and Israel erupted approximately a week ago, leading to significant losses on both sides. However, the impact of the conflict has not been extended far beyond the two countries, sending shockwaves through the global economy. It is particularly affecting countries in the region, with Egypt at the forefront.

Already under strain since 2019 due to the COVID-19 pandemic, the Russia-Ukraine war, and the ongoing Gaza conflict, Egypt now faces added pressure from this new escalation. The overlapping crises threaten to derail government efforts to stabilize the economy.

In this Factsheet, we outline the key global economic shifts during the first week of the conflict and their specific repercussions on Egypt.

Iran controls the Strait of Hormuz, a critical chokepoint for one-third of the world’s oil trade. The outbreak of war and Iran’s threat to blockade the strait triggered a surge in global oil and gas prices. Between June 12^th and 20^th, Brent crude rose by 11%, West Texas Intermediate (WTI) by 10%, and natural gas prices also increased by 10%.
As a traditional safe haven asset, gold prices rose sharply on the first day of the war, reaching a historic high of $3,435.35 per ounce. However, prices quickly began to retreat, falling below pre-war levels to $3,368.25 per ounce.
Key global stock market indices fell during the first week of the war. NASDAQ fell by 1.1%, Dow Jones declined by 3%, and S&P 500 index dropped by 1.3%.
In Egypt, a major development was the suspension of Israeli natural gas imports from the Leviathan field. This disruption came at a critical time, as electricity consumption typically peaks during the summer, adding further pressure to the Egyptian energy system.
With around 82% of Egypt’s electricity generated from natural gas, the halt in Israeli supplies prompted swift government action. Measures included rationing gas to some industries, such as fertilizers, securing mazut (fuel oil) reserves, and enforcing electricity-saving policies across public and government entities to prevent power disruptions. By the end of the week, Israel announced that natural gas exports to Egypt might resume soon.
A key concern for the Egyptian government was maintaining adequate reserves of strategic commodities like meat, poultry, and sugar. In response, the Cabinet confirmed that Egypt holds a safe level of reserves, sufficient to cover more than six months.
Local uncertainty drove gold prices higher during this week, rising from EGP 4,735 to EGP 4,798 per gram of 21-karat.
Regional uncertainty also affected Egypt’s tourism sector. Shortly after announcing the official opening of the Grand Egyptian Museum (GEM) on July 3^rd, 2025, the government postponed the event to the last quarter of the year.