Iran-Israel war shakes global economy; oil may hit $90, gold surges toward THB65,000

In response to the escalating conflict, the Israel Defence Forces (IDF) declared a nationwide state of emergency and reinforced its air defence systems.

Prime Minister Benjamin Netanyahu warned that Iran may carry out further waves of attacks and urged the Israeli public to remain vigilant.

The situation remains highly volatile and poses a growing threat to Middle East stability and the global economy.

Gold prices soar amid geopolitical fears

Assoc Prof Ath Pisalvanich, an expert in international and ASEAN economic affairs, told Thansettakij that the conflict has directly impacted global gold prices, which have surged steadily.

As of June 14, the Gold Traders Association of Thailand reported domestic gold selling prices at THB52,550–53,350 per baht-weight, with a buy-back rate of THB52,450. The international spot price, based on the London market, reached US$3,435 per ounce.

Ath warned that if the conflict prolongs or intensifies, gold prices could spike to THB60,000–65,000 per baht-weight, in line with global rates possibly surging to US$4,000 per ounce.

As geopolitical tensions rise, financial markets are expected to remain volatile, with gold acting as a safe-haven asset amid the deepening uncertainty in the region.

Ath stated that the current global uncertainty stems not only from the escalating Israel-Iran military confrontation but also from domestic unrest in the United States, particularly immigration-related protests in major cities like Los Angeles and New York.

These simultaneous disruptions are rattling global markets, weakening the US dollar, while giving the Chinese yuan and Thai baht potential room to strengthen.

“This time, Israel’s attack is significant. Although Iran may respond, from a strategic and military standpoint, it is likely to be symbolic — aimed more at morale than escalation,” said Ath. “Iran is facing both Israel and the US without support from any major global power.”

Worst-case scenario: prolonged war, oil shock, and GDP slumps

If the Israel-Iran war drags on, Ath predicts the crisis could extend for 1–2 months. A worst-case scenario would involve Iran closing the Strait of Hormuz, which handles over 20% of global oil shipments. Such a move could drive oil prices to US$90 per barrel.

As of now, Brent crude has risen to US$74.23 per barrel, up by US$4.87, while West Texas Intermediate (WTI) climbed to US$72.98, up by US$4.94, following the latest exchange of attacks.

Compounding the crisis, Houthi militant attacks in the Red Sea could disrupt major shipping routes to Europe, pushing global logistics costs up by more than 20%.

“If that happens, global economic growth may decline to just 2.1% this year — below the World Bank’s latest forecast of 2.3%. Thailand’s GDP growth could drop to 1%, down from the earlier projection of 1.8%,” Ath warned.

He added that Thai exporters will face rising costs from oil and shipping, while also grappling with new US trade tariffs. Domestically, the Thai-Cambodian border tensions could further strain the outlook.

Optimistic scenario: limited conflict, moderate impact

In a more hopeful scenario — if the conflict eases within a month — oil prices may average US$80 per barrel, and logistics costs could increase by only 10%, a manageable level but still a risk worth monitoring closely.

Global sell-offs and gold rush

Ath also warned of persistent sell-offs in global stock markets, especially in the US. US government bonds, traditionally seen as safe investments, are now viewed as higher-risk assets. In contrast, China has accelerated its gold purchases, reinforcing gold’s role as a safe-haven asset.

“If this war drags on, we will see gold, oil, shipping costs, and inflation — both global and domestic — rise further. Every new escalation will shake the global economy even harder,” he concluded.