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Oil prices have experienced a significant surge, rising more than 5%, in the wake of an Israeli strike on Iran's South Pars gasfield. This development comes as the United States-Israeli conflict with Iran continues to escalate.The international standard, Brent crude, rose 5 percent to $108.66 a barrel on Wednesday. Meanwhile, US West Texas Intermediate crude (CLc1), the price barometer for US oil, gained 2.5 percent to $98.65. This widened its discount to Brent to the largest since May 2019, driven by fears of a prolonged conflict.Iranian state media reported that natural gas facilities associated with its offshore South Pars field – the largest gasfield in the world, located off the coast of southern Iran's Bushehr province – were attacked. Iran's Revolutionary Guard threatened to attack oil and gas infrastructure in Qatar, Saudi Arabia, and the United Arab Emirates, heightening the risk of further disruptions to energy supplies in the region.Later on Wednesday, Qatari authorities reported a fire at the country's Ras Laffan gas facility after an Iranian ballistic missile attack. Qatar's Interior Ministry later confirmed that the fire had been brought under control.The US-Israeli war on Iran and Tehran's retaliatory attacks on Gulf neighbours have disrupted oil and natural gas exports from the Middle East and forced production stoppages. Experts warn that if these disruptions keep oil and gas prices elevated for an extended period, the global economy could experience a wave of inflation.Fighting has halted most shipments via the Strait of Hormuz, through which 20 percent of global oil and liquified natural gas supplies pass. Total oil output cuts in the Middle East are estimated at 7 million to 10 million barrels per day or 7 percent to 10 percent of global demand.

The economic fallout of the US and Israel's war with Iran is being felt across the globe, with Gulf economies suffering some of the worst damage. Iran has launched continuous attacks on Gulf states since the onset of the conflict on February 28, arguing that it is targeting military bases used by the US for the war.Gulf nations have rejected Tehran's claims, insisting the attacks on them are unjustified. The Iranian strikes have upended energy production and inflicted major disruptions to tourism and travel, putting the region at risk of some of the most severe economic harm since the 1990-1991 Gulf War.According to Khaled Almezaini, an associate professor of politics and international relations at Zayed University in Dubai, the region is likely losing hundreds of millions of dollars per day in economic activity due to disruptions to aviation, tourism, shipping routes, and energy exports.Middle Eastern oil producers' daily output declined from 21 million barrels to 14 million barrels after a little more than a week of conflict, according to Rystad Energy. Output is expected to drop substantially further if commercial shipping continues to avoid the Strait of Hormuz due to Tehran's threats.Goldman Sachs estimated that Qatar and Kuwait could see their GDPs plunge 14% if the war lasts until the end of April, with the UAE and Saudi Arabia facing contractions of 5% and 3%, respectively. Meanwhile, S&P; Global Ratings has affirmed a 'stable outlook' for Qatar, citing the country's large financial buffers.The war has also spilled over into other critical sectors, particularly tourism and travel, which accounts for about 11% of the GCC's GDP. Airspace closures and restrictions led to 37,000 flight cancellations from February 28 to March 8 alone.In an analysis published last week, the World Travel & Tourism Council estimated that the conflict was costing the region $600m in daily spending by international visitors. The economic fallout could be comparable to historic regional crises if the war drags on.

Asian stock markets experienced a significant downturn on Monday, with South Korea's KOSPI index plummeting 6.5% and Japan's Nikkei 225 falling 3.5%. The Hang Seng Index in Hong Kong tumbled more than 4%, while Australia's ASX 200 closed 0.75% lower and New Zealand's NZX 50 was down 0.7%.The turmoil was triggered by US President Donald Trump's ultimatum to Iran, warning the country to reopen the Strait of Hormuz or face the destruction of its energy infrastructure within 48 hours. The strait is a critical waterway through which about one-fifth of global oil and natural gas exports usually transit.Trump's threat has added to fears of a cascading global energy crisis as the US and Israel's war on Iran approaches its one-month mark with no clear end in sight. Oil prices have surged more than 50% since the start of the war, which began on February 28. Analysts warn that energy prices are likely to rise significantly further if the strait remains effectively closed, with some predicting oil to hit $150 or even $200 a barrel.In response to Trump's ultimatum, Tehran has warned it will completely close the waterway and launch retaliatory attacks on energy and water infrastructure across the region if Trump follows through on his threat. The deadline for Trump's ultimatum is set to expire at 23:44 GMT on Monday.European markets also saw significant losses, with London's FTSE 100 down 1.4% and the DAX 40 in Frankfurt falling about 2% in morning trading. On Wall Street, US stocks saw significant losses ahead of Monday's opening, with futures tied to the S&P; 500 down about 0.8% as of 07:00 GMT.

The conflict in the region has intensified, with Iraq becoming a two-way battlefield between armed factions and the United States during its war with Iran. The US carried out strikes against the Shia paramilitary umbrella group, also known locally as Hashed al-Shaabi, late on Sunday after attacks on a US diplomatic and logistics centre at Baghdad International Airport.The attack was carried out after Iraqi security officials said four explosions were heard near Camp Victory, a US logistics centre at the capital’s main airport. No casualties were reported as the positions were deserted.The PMF is part of Iraq’s regular armed forces and includes some pro-Iranian groups. Pro-Iran armed groups have claimed responsibility for attacks on US interests in Iraq and across the region while strikes have also targeted these groups.Economic worries also are weighing heavily after Iraq’s Ministry of Oil last week announced a case of force majeure on all oilfields developed by foreign oil companies, citing disruptions to navigation through the Strait of Hormuz, which have halted most of the country’s crude exports.“Iraq relies on that revenue,” said Nicolas Haque, a reporter from Iraq’s capital. “That’s 90 percent of its revenues, so that’s going to have an impact on people.”US President Donald Trump on Saturday threatened to attack Iran’s power plants if freedom of navigation through the Strait of Hormuz was not fully restored in 48 hours. On Monday, hours before his deadline was to expire, Trump ⁠ordered the US ⁠military to postpone ⁠strikes ⁠against the power plants for five days.