The problem facing consumers and investors trying to work out what the conflict in the Middle East means for their pockets is that we really don’t know very much at all. If you want to know what the stock market will look like in six months time, or what oil prices will be, it’s probably better to ask a military analyst than an economic one. Here are the five key things to watch.

1. Spread and duration

These are the two obvious points. The wider the conflict spreads and the longer it lasts, the higher the economic cost. Duration is particularly key. A three-week interruption of energy shipping through the Strait of Hormuz is inconvenient; a three-month one becomes a serious economic problem. The prospect of the conflict spreading, meanwhile, threatens unpredictable impacts to shipping and air transit and thus to global supply chains. Shades of Covid here.

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2. Energy uncertainty

We have seen oil and gas markets swinging. Both are essentially global markets so problems in the Gulf knock on worldwide. Ireland gets most of its gas from Norway and the UK – with the Corrib field running down – but a hit to international liquefied natural gas (LNG) stocks coming out of Qatar – the biggest Gulf producer – pushes up the price for everyone by cutting supply. The world energy market does not operate as a perfect single unit, but upheaval in one area still knocks on elsewhere. A LNG tanker destined for France this week rerouted to Asia because it got a higher bid. And as LNG is a substitute for natural gas, the wholesale price reacts to this. That is the market in action.

3. Gas and oil

So far, energy markets are betting on a shorter conflict. “For now, commodity markets see disruption to Middle East energy supply to likely be temporary, futures contracts for oil and natural gas falling back through 2026″, according to Conall Mac Coille, chief economist at Bank of Ireland.

Prices have risen but Brent crude – at $85 a barrel after a late rise on Thursday – remains below the $100-plus levels that it could reach if things get really difficult. Wholesale gas prices in Europe – at €50 a megawatt hour – are above the early €30s, where they had been trading, but below the €100-plus they traded at for much of 2022, when they actually peaked at more than €300.

How the conflict in the Middle East is already affecting Irish consumers

As the US-Israel attacks on Iran intensify and the conflict spreads in the Middle East, the impact on the world economy is already being felt. Ireland is already seeing motor fuel prices creep upwards, and the cost of home-heating oil soar in recent days. Do those price increases reflect reality or are Irish consumers getting taken advantage of? Will prices continue to rise? And how soon before Donald Trump can claim victory and find a resolution? Host Ciarán Hancock is joined in studio by Cliff Taylor of the Irish Times, professor in energy economics at UCD, Lisa Ryan, and Head of Global Equities at Davy, Aidan Donnelly.Produced by John Casey with JJ Vernon on sound.

The initial hit this time differs from what happened following the Russian invasion of Ukraine, Muireann Lynch, senior research officer at the Economic and Social Research Institute (ESRI), pointed out. Then, gas was in the spotlight as wholesale prices shot up, eventually feeding through to consumer prices. Now, oil has taken the first hit, with impacts on home heating oil and prices at the pumps, which typically feed through quickly. In the background, wholesale gas prices have risen sharply too, which is important as this is the main fuel used to produce Irish electricity.

“The real question is how long this will last,” said Lynch. A shorter timescale would not feed seriously through to gas bills – and nor to wholesale electricity costs and thus household bills in this area. Power providers have hedged, so while oil costs feed through quickly, household gas and electricity bills should not. If the increases in wholesale gas prices run into a longer term and serious rises, then, of course, bills will go up.

In the short term all the focus is on oil. Annoyance at the scale of hikes in the price of heating oil is understandable. There is little the Competition and Consumer Protection Commission (CCPC) can do about them, unless the various parties are colluding among themselves to rip off consumers. One issue for consumers is that the market is opaque and there is no central way to check what prices are on offer from various providers, unlike household gas and electricity bills where switcher sites give this information.

4. Asset swings

There have been some interesting swings in financial markets – not all of them predictable. The generally downward trend in shares has been limited. Goldman Sachs chief executive David Solomon said the initial move in markets was “more benign, given the magnitude of this” than he would have expected, saying investors may take several weeks to really digest the implications.

Share markets had generally survived the 12-day Israel-Iran conflict of 2025 without much harm, but this time swings have been more pronounced. According to Mac Coille, “part of the story here may be that strong gains in AI-technology stocks seen in 2025, are no longer compensating for elevated trade and geopolitical uncertainties, giving way to concerns on stretched valuations”.

The US market, so far, has done relatively better than Europe – this may be in part because the US is not as reliant as Europe on energy imports. Investors have also gone back into the US dollar as a safe haven, reversing the “sell America” trend seen for parts of last year. And despite the big US budget deficit. Nerves seem to have persuaded investors to cash in on recent gains in EU markets and other investments and return some cash to the US. It can be hard to explain these kind of moves, or predict now long they will last, but investors short US dollars and hoping it would fall farther have definitely been squeezed this week.

These trends are well worth monitoring. In terms of sectors, energy and defence stocks have benefited while those producing consumer goods have lost ground. Highly leveraged markets could also be exposed if this drags on – there are already rumbles in private credit markets, also driven in part by AI concerns. The South Korean market, which had experienced a strong, speculative run, fell sharply.

In summary, investors remain hopeful the conflict will be contained and not too long. They may be right, but if not there could be trouble.

5. Inflation and growth

The bottom line concerns are that inflation will be higher and economic growth lower. When this gets bad, economists call it “stagflation” and those with grey hairs will remember the impact of the oil shocks in the 1970s.

Now, Mac Coille points to some concern in bond markets about future inflation and an expectation that central bank interest rates could be affected.

Notably, according to Mac Coille, options prices now imply the ECB’s next move in interest rates will most likely be upward, with roughly a one-third likelihood of a hike of 0.25 of a percentage point to 2.25 per cent by the end of 2026. “However, with markets in flux these views may quickly change as events unfold.”

Energy prices are not the only inflationary concerns. “Many firms could be affected by supply-chain issues, or higher costs, especially if Asian imports are affected by disruption to the Strait of Hormuz,” according to Mac Coille.

Bank of Ireland may nudge up its Irish inflation forecast for this year, he said, hitting real earning power. Yet high household savings should provide a buffer and help to underpin consumer spending, he said.

The Irish economy has proved resilient over recent years, bouncing back from Covid and the inflationary shock with total employment at a new record of more than 2.8 million. The key question is whether the conflict persists long enough to lead to a sustained rise in energy costs, wider disruption and a hit to business and consumer confidence. If the Gulf conflict does persist, Ireland’s economic resilience may be about to face another test.