Market Update: Could Israel and Iran war affect the economy? – Full Analysis

By Amos SAFO

The ongoing war between USA-Israel and Iran has been building over the last 20 years. In fact, in 2012, the late Prophet T. B. Joshua predicted that Israel could attack Iran in future. According to him many allies in the global geopolitics could join the exchanges, and that could spark a third world war. “This scenario is not like other attacks between the two enemies”, Prophet Joshua prophesied in a video that is circulating on social media.

Iran is a major player on the global oil market, which is strategically located in the disputed Persian or Arabian Gulf. The Guld facilitates the transportation of millions of tons of oil to major oil consumers across the world. Already there are indications that Iran has blocked the Strait of Hormuz. The Strait of Hormuz is the narrow, strategic waterway that acts as the entrance to the much larger Persian/Arabian Gulf. It connects the Gulf to the Gulf of Oman and the Arabian Sea. The Gulf is surrounded by countries like Iran, Iraq, and Saudi Arabia, while the Strait is located between Iran and Oman/UAE.

The underlying concern of many people, including the late Prophet Joshua, is that a clash between Israel and Iran could spell doom for both developed and developing countries. So, the reality of global occurrences affecting weaker economies is not an illusion, it is a fact. Yet, for the sake of gaining power our politicians (mostly when in opposition) often delude people that what happens on the global scene has nothing to do with the economic situation at home. It is a fact that as an import-driven economy the slightest shocks on the global economy often trickle down to Ghana’s economy.

Covid 19 and Russia’s invasion

In 2019 when Covid 19 devastated the global economy, including Ghana’s some of our leaders from the opposition National Democratic Congress (NDC) proclaimed from the rooftop that the pandemic had nothing to do with the difficulties facing the economy at the time. They blamed the past government for failing to address the economic fundamentals as it promised. Later in 2022 when Russia attacked Ukraine, which resulted to further economic hardships, NDC still claimed that the invasion had nothing to do with the prevailing economic hardships; they simply described the New Patriotic Party (NPP) government as “incompetent” and “insensitive” to the plight of many poor Ghanaians.

Fast forward, in 2026 President John Mahama has raised serious concerns regarding the escalating US-Israel-Iran conflict, warning that it could have severe economic consequences for Africa due to rising oil prices.  President Mahama described the Middle East as the “epicenter of global oil supplies,” and warned that the conflict could negatively impact vulnerable African economies. He then instructed the finance and energy ministers to develop strategies to protect Ghana’s economy and energy sector from potential shocks, such as rising crude oil prices. Many people have described President Mahama’s posture as “double standards.”

The question many people are asking is that if Covid 19 and the Russia-Ukraine war had nothing to do with Ghana’s economic struggles at the time, then all things being equal, the current USA/Israeli and Iran war should not affect Ghana’s economy in anyway. The economy should continue functioning normally with the government honouring its obligations to workers, employing new teachers and nurses and maintaining the current utility prices. Above all the government should pay cocoa farmers the previous prices GHS3650 per bag of cocoa. Many workers are reminding the government that they would not accept the government using the Israel- Iran clashes to abdicate its social contract with the people who gave it power.

The notion is that in life whatever goes round often comes round. Therefore, no matter which party is holding political office, economic issues should not be sacrificed on the altar of seeking political power. Politicians must learn to speak the truth and be sincere with economic issues that affect all Ghanaians, irrespective of which political party colours or lenses one is wearing. With the power of hindsight politicians must treat economic issues with candor devoid of double speak and political sophistry and propaganda.

Economic consequences

To be honest, like Covid 19 and Russia’s invasion of Ukraine, the ongoing conflict between the US/Israel and Iran will have a major negative impact on the wellbeing of the global economy, which will ultimately affect Ghana’s economy. Already, the war has triggered a significant global energy supply shock, driving oil prices towards $100–$150 a barrel. Key impacts include the closure of the Strait of Hormuz, which is a strategic oil route (cutting off 20 million barrels of oil daily). Ultimately oil shortage could have a rippling effect on our struggling economy, which cannot even pay cocoa farmers and new teachers.

To start with, Israel and USA have targeted Iran’s oil fields, perhaps to weaken its economy which thrives on oil exports. In reprisal attacks, Iran is bombing oil fields of Saudi Arabia, Kuwait, UAE and Qatar, which are strategic allies of the USA. The reprisal attacks will further have a significant negative impact on the global economy, including a poor country like Ghana, which imports the bulk of its oil.  For Ghana, our government could use the war as an excuse to further increase energy prices from the 30 percent already slapped on Ghanaians within one year. In addition, the cost of energy and transportation could affect the cost of manufacturing and finished products.

Anticipated shocks

Energy Market Crisis: The conflict has caused the largest energy supply shock in decades, with, for example, the Strait of Hormuz disrupted, impacting 20% of global liquefied natural gas and oil shipments.

Oil Price Volatility: Oil prices could hit $150 a barrel, a level not seen since the 1970s/80s, driving global inflation and reducing growth.

Supply Chain Disruptions: Beyond energy, the conflict threatens global logistics and increases, for example the cost of fertilizers and aluminum.

Specific Country Impacts

Israel: The war is costing approximately $3 billion per week due to business shutdowns, mobilized reservists, and closed schools.

Iran: With oil exports accounting for up to 70% of government revenue, the regime faces severe fiscal constraints, imminent sanctions and economic isolation if China for example reduces its purchasing of Iranian oil.

United States: While a net energy exporter, the US faces inflationary and monetary pressure due to the rising cost of fuel and decrease in consumer confidence.

Israeli ambition

Some analysts say Israel has always nursed the ambition to become the “third ruling state” of the world with the support of the USA.  Israel’s ambition has fed into Donald Trump’s hegemonic attempt to put his footprint on the Middle Rast and the Global South. The recent capture and exile of Nicholas Maduro, a sitting President of Venezuela is a classic example of Trump’s unilateral policies to distabilise small countries. Perhaps, the USA and Israel miscalculated the resolve of the people of Iran to fight back attempts to impose regime change on other as happened in Venezuela. Unlike the Venezuelan military generals to sold betrayed their president and sold the sovereignty of their country, Iranian generals remained resolutely behind their assassinated Supreme Leader, Ali Khameni. In fact, one cannot help but to admire the fighting spirit of the Iranian military. This has humbled Israel and USA who consider retreating, at least for the sake of the surviving women and children who are being pommeled by bombs and drones.

Both the USA and Israel know that attacks on Iran will have dire economic consequences for the global economy, especially on small and weak economies like Ghana. A significant rise in the price of oil might correspond to the high cost of living around the world. Transportation costs will also escalate and obviously affect the cost of food (high food inflation). The average Ghanaian is already suffering from high food inflation due to lack of effective purchasing power.

Agriculture is the key

As the cost of living gets worse, it is suggested that boosting agricultural productivity, especially small-scale farming will strengthen the local economies. Small scale farming through irrigation will enable poor people to farm all-year round to sustain their livelihoods.   Sadly, farming has become a disincentive in Ghana due to risks of unpredictable rains, cost of farm implements, post-harvest losses,  high interest rates and inadequate market for farm produce.

This is especially the case with local rice farmers. Currently there are tons of local rice stuck at homes and warehouses for lack of market, while Ghanaians consume foreign rice. With the Israel-USA and Iran war escalating the cost of imports, especially rice will rise astronomically. This will affect the already vulnerable sections of Ghana’s population. In fact, with the abundant land water resources bequeathed to Ghana, we have no reason to be hungry, we have no reason to be importing foreign rice. In a country where illegal mining and the destruction of our environment is receiving better policy attention, it is not surprising that more than 30 percent of our population is facing food insecurity.

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