Introduction

On February 28, 2026, the world witnessed a dangerous escalation with the outbreak of war involving Iran, after the United States and Israel launched airstrikes on military sites and strategic facilities in Tehran, reportedly killing several senior Iranian commanders. Iran responded by firing missiles and deploying drones at targets inside Israel and at U.S. bases in the Gulf. Meanwhile, the naval arm of the Islamic Revolutionary Guard Corps notified vessels that the Strait of Hormuz was closed to navigation, although no official closure was announced by the Iranian government. This rapid escalation raises pressing questions about the potential repercussions for the Iranian and global economies—particularly energy markets and oil prices.

Iran’s Economic and Geostrategic Position

Iran remains one of the Middle East’s most significant economic players, not only due to the size of its economy but also because of its strategic geographic position at the crossroads of key maritime trade routes between the Persian Gulf and the Gulf of Oman Iran controls the northern shore of the Strait of Hormuz, one of the world’s most critical energy chokepoints.

Roughly 20% of globally traded seaborne oil passes through the strait, making any instability in the area an immediate concern for international markets. Iran holds approximately 11.8% of the world’s proven oil reserves and 17% of global natural gas reserves, underscoring its strategic weight in global energy markets. The Iranian economy relies heavily on the energy sector as its primary source of foreign currency and public revenue. Consequently, any military confrontation in the region extends far beyond its borders, affecting global financial and energy markets and spilling over into emerging economies, including Egypt.

Impact on the Global Economy

The conflict has already triggered a sharp rise in global energy prices. Brent crude futures climbed to between USD 78 and USD 82 per barrel in early trading following the outbreak of hostilities and heightened tensions around the Strait of Hormuz, compared with a pre-war annual low of approximately USD 58.40 per barrel.

Higher oil prices are expected to drive up transportation and production costs, adding inflationary pressures in major economies such as the United States and Europe.

Global financial markets also reacted negatively. European markets opened sharply lower in the aftermath of the escalation, with Germany’s DAX index falling by 2.2% and France’s CAC 40 declining by around 1.9%. U.S. S&P 500 futures dropped approximately 1.7%, reflecting weakened investor confidence. Meanwhile, gold rose by 1.8% to reach USD 5397 per ounce as investors flocked to safe-haven assets amid mounting uncertainty. These movements highlight the broader economic impact of the conflict, including rising insurance and shipping costs, disruptions to supply chains, and potential downward pressure on global growth should the conflict persist.

Impact on the Egyptian Economy

Egypt is directly exposed to escalating tensions in Iran through global energy markets, given its reliance on imported oil and gas to meet domestic demand. Imported fuel plays a critical role in powering electricity plants, industry, and transportation. , making any disruption in global energy markets a direct source of pressure on the domestic economy. With continued tensions in the Strait of Hormuz, one of the world’s most vital maritime routes for oil exports, any further increase in global oil prices is expected to raise fuel and energy costs. This, in turn, could drive up production, transportation, and consumer goods costs, intensify inflationary pressures on the economy, and place additional strain on the state budget.

Indeed, the geopolitical tensions have already been reflected in Egypt’s gold and Egyptian stock market. The price of 21K gold rose to approximately EGP 7510 per gram on the first Sunday of trading following the outbreak of the war, as investors shifted toward safe assets amid global uncertainty. On the first trading day after the escalation, the Egyptian Exchange recorded notable declines across its main indices. The benchmark EGX30 fell by 2.5%, the EGX Shariah index dropped by 2.9%, the EGX35-LV declined by 2.11%, and the broader EGX100 index lost 2.92%. Market capitalization losses exceeded EGP 73 bn, reflecting heightened investor caution and increased market risk.

Looking ahead, oil price forecasts and import costs remain highly sensitive to developments in the Strait of Hormuz. Any prolonged disruption could lead to sustained increases in import bills, affecting domestic prices of goods and services and further eroding consumers’ purchasing power. With the duration and trajectory of the conflict still uncertain, the Egyptian economy remains in a state of vigilance, closely monitoring shifts in global energy, gold, and financial markets.

Impact on the Real Estate Market

The effect of the current escalation on Egypt’s real estate market will largely depend on the duration of the conflict. A useful reference point is the brief confrontation between Iran and Israel in June 2025, which lasted around 12 days before a ceasefire was reached.

If the current escalation proves short-lived, its impact on demand and pricing is likely to remain limited, as real estate is generally viewed as a long-term investment less sensitive to short-term shocks. However, if the conflict drags on, rising energy and import costs—particularly for construction materials passing through the Strait of Hormuz—could drive up development expenses. In such a scenario, property prices may increase in certain segments as investors turn to real estate as a safe-haven asset, while demand in other segments could slow due to declining purchasing power and mounting economic pressures.