Some form of U.S.-led military action against the regime of Syrian President Bashar al-Assad seems all but certain, thrusting the region into a period of geopolitical uncertainty.
The possibility of an imminent military campaign has also rattled markets worldwide. Here, three ways the looming threat is affecting the global economy:
The price of oil is rising:
Subscribe to The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Syria is not a major oil producer, nor does it fall on any major transit routes for major oil-producing nations. Yet oil prices touched an 18-month high yesterday, to $109 a barrel of crude, as concerns that the U.S. would take military action intensified.
"[T]he concern is the risk that Western intervention in Syria could prompt a wider regional conflict, given the support that Iran has provided to the regime of Assad," Julian Jessop, head of commodities research at Capital Economics, told Reuters.
Indeed, the conflict in Syria involves a lot of oil-rich nations. Russia, a major producer, has provided support for Assad's forces. Saudi Arabia and Kuwait, meanwhile, have been funneling arms and money to Assad's Sunni opponents. And the Shiite-Sunni schism in Syria could very well spill over into Iraq, now OPEC's second-largest producer.
Investors are turning to gold:
Investors tend to like gold in times of crisis — it's tangible and shiny, a safe haven investment when markets get the jitters. As a result, gold prices rose to $1,430 an ounce Wednesday, a three-and-a-half-month high.
Referring to gold bugs, Paul R. La Monica at CNN wrote, "It definitely seems like worries about the Middle East have awoken them from their uh, golden slumbers. (Smiles await them when they rise.)" In addition, "Gold prices rose earlier this month, following the deadly protests in Egypt."
Other safe assets are rising as well. The U.S. 10-year Treasury note, for example, climbed this week after a long slump.
Stock markets are slumping:
Dubai's stock market, usually resistant to global sell-offs, has plummeted a total of 8.2 percent in the last two days.
Meanwhile, emerging markets, which are already having a crummy time lately, fell as well. The MSCI Emerging Markets Index dropped 1.9 percent — the biggest drop in eight weeks, says Bloomberg.
And Wall Street certainly isn't immune. The S&P 500 was down 1.6 percent on Tuesday, while the CBOE Volatility Index, which reflects the prices investors are willing to spend on options on the exchange, has risen 20 percent, a sign investors are uncertain.
Continue reading for free
We hope you're enjoying The Week's refreshingly open-minded journalism.
Subscribed to The Week? Register your account with the same email as your subscription.