Shares are falling in price in Europe and the price of oil is rising significantly

Stocks became cheaper on Monday in Europe after noon by almost two percent in the Middle East because of the war

The depreciation is primarily due to the fact that the war increases uncertainty, which is probably the worst poison for financial markets. The general index of the Helsinki stock exchange weakened by one percent in the morning.

Uncertainty has also been reflected in the price of oil.

North Sea Brent crude oil rose more than six percent to 77 dollars per barrel on Monday at 12 o’clock Finnish time. A barrel is a unit of measure in the oil trade, which corresponds to 159 liters.

Crude oil is becoming more expensive, as the war has interrupted sea traffic in the Strait of Hormuz, which is a hub for global oil trade.

About a fifth of the world’s oil and gas trade is transported in the Strait of Hormuz. According to the news agency Bloomberg, 38 percent of the oil transported through the strait goes to China, 15 percent to India and 12 percent to South Korea.

On Sunday, Iran announced that it had struck three tankers in the Strait of Hormuz.

The world economy point of view, the key question is how long the war will last. Iran announced early on Monday Finnish time that it is not ready to negotiate with the United States.

With these prospects, we cannot expect particularly big changes in, for example, share prices. There were hints of an attack on Iran for a long time, which is why the financial markets are at least somewhat prepared for them.

The increase in the price of crude oil always affects Finnish consumers’ energy prices with a delay due to moderately tight taxation.

German Chief Economist of Commerzbank Jörg Kramer assessed on Monday morning in his review that the weeks-long war would not cause significant dents to the economy of Germany or the euro area.

According to Krämer, if the war were to last for several months, it might accelerate inflation in the euro area, i.e. the increase in consumer prices by a percentage point, and slow down economic growth.

“In general, geopolitical risks, especially in the Middle East, affect the stock market to a limited extent and for a relatively short period of time. The risks are mainly related to the price of oil and specifically to the Strait of Hormuz,” says the chief strategist of asset management company Evli Valtteri Ahti.

According to him, the United States has no interest in a long conflict that would keep oil prices high for a longer time.

“The uncertainty is exceptionally high this time, because the United States can interpret that it has a genuine opportunity to oust the Iranian regime,” says Ahti.

Based on the futures predicting stock prices, the main stock indices are expected to weaken by more than a percent in the United States.

Correction March 2 at 9:17 a.m.: Iran said early on Monday Finnish time that it is not ready to negotiate with the United States. Earlier, the article talked about Sunday.