Nicosia, Cyprus. Developments in the Middle East, particularly in the Persian Gulf, are adding fresh uncertainty to the global economy and making investors and businesses more hesitant, economist Tassos Yiasemides said. He said uncertainty over how talks between the United States and Iran will develop is discouraging new initiatives.
Investor caution amid volatility
Speaking to the Cyprus Agency News (CNA), Yiasemides said that, despite the ceasefire, volatility is a key factor holding back investment and business decisions. “It is the worst thing for an economy to have volatility,” he said, adding that investment decisions and new business initiatives require a stable economic and political environment.
Wider economic effects and rising costs
He said the repeated ups and downs, especially in an energy-sensitive region, are affecting decisions by governments and businesses and slowing economic activity internationally. He added that a more complex economic environment has formed, shaped by oil prices and growing pressure on transport costs, with fuel prices and insurance premiums rising while inflation continues to push prices upwards.
Energy supply outlook and infrastructure damage
Yiasemides said that even if the war ends quickly, oil and natural gas supplies may take time to return to normal due to damaged infrastructure. “We understand that even if the war ends tomorrow, it will take a period, possibly 8 – 12 months, for the supply of oil and natural gas to return to normal levels because infrastructure has been damaged,” he said, referring to estimates already announced by countries in the Persian Gulf region.
He said that if there are no further hostilities and infrastructure restoration proceeds, a return to normality would concern the following months of 2026. Otherwise, he warned, the effects will increase exponentially.
US-China rivalry and pressure on Europe
Yiasemides said China remains a key economic rival for the United States alongside Iran, and argued that within that broader competition, President Donald Trump will not hesitate to pressure Europe to limit trade with China. “Trump stated that he is disappointed with Europe militarily and may take revenge economically,” he said, adding that the US president has room, given the current state of the European economy, to win allies in this economic confrontation.
Perceived beneficiaries
He added that there are already some winners from the current situation, including US oil companies as well as Russia.
How do you think prolonged volatility in the Persian Gulf could affect prices and investment decisions where you live?