Investors have fled from leading luxury stocks like Hermès and Gucci this week after they revealed tumbling sales as a result of the Iran war, according to major media reports. US-listed Kering – which owns Gucci, Yves Saint Laurent and Balenciaga – has seen its shares slump more than 11 per cent in the last five days, according to major media. Kering reported a six per cent year-on-year revenue decline to €3.5bn, according to major media, while Paris-listed Hermès saw revenue fall one per cent year on year to €4.07bn in the first quarter of this year, according to major media. Hermès' share price has fallen by nearly eight per cent in the last five days, bringing the stock to a 22 per cent drop this year, according to major media.
LVMH reported worse-than-expected revenues of €19.1bn, according to major media, and the company said the war has hit its growth by one per cent. Shares in LVMH have fallen nearly one per cent in the last five days, leaving the stock down more than 24 per cent this year, according to major media.
The escalating conflict in the Middle East is transforming into a global economic crisis, disrupting energy supplies and financial markets, according to research from three sources. The conflict escalated following US and Israeli strikes on Iran on Feb. 28, with Tehran responding with attacks on Israel and Gulf countries, according to research from three sources.
The Strait of Hormuz is a critical maritime corridor through which nearly one-fifth of the world's oil supply flows, according to research from two sources. Energy shipments from the Middle East have been at a standstill following Iran's threats to attack vessels in this critical trade waterway, according to research from three sources.
Oil prices have fluctuated dramatically due to fears of supply disruptions from the Middle East conflict, according to research from three sources. Brent crude traded at $98.74 per barrel, up around 3% from the previous close of $95.92, and WTI increased 3.6% to $91.30 per barrel, according to research from three sources. Emergency oil reserves have been tapped to stabilize markets, but these measures are temporary, according to energy analysts and insights from organizations such as the International Energy Agency.
Disruptions in the Middle East are affecting global supply chains, including petrochemicals, fertilizers, and specialty gases, according to research from three sources. The aviation industry is cutting routes and increasing ticket prices due to rising fuel costs, according to research from three sources.
Saudi Arabia's patience with Iranian attacks is not unlimited and that Gulf countries are capable of responding.
Governments worldwide are implementing emergency measures like fuel subsidies and tax cuts in response to the crisis, according to research from three sources. The Philippines has mandated four-day work weeks to save fuel, and Indonesia is seeking ways to avoid burning through reserves that will last just weeks, according to research from three sources.
China is the world's largest buyer of oil and uses an estimated 15 to 16 million barrels daily, mainly for transportation and factories, according to various market analysts. Gulf countries are a major source of oil for China, with Saudi Arabia and Iran accounting for over 10% of its imports each, according to the US Energy Information Administration. China's north is mainly powered by domestic oil and pipeline imports from Russia, which are not disrupted by the Middle East war, according to research from three sources.
Russian oil accounts for nearly a fifth of China's energy imports, making Moscow its biggest oil supplier, according to research from three sources. China is the world's largest coal producer, accounting for over half of global production, and coal is its dominant power source, according to research from three sources.
Oil prices dropped earlier after US President Donald Trump announced a five-day pause in planned strikes on Iran's energy infrastructure, according to research from three sources. Saudi Arabia and the UAE may move closer to aligning with US and Israeli forces, adding to uncertainty in the region, according to research from three sources. Strikes on Iran's energy infrastructure have intensified, with damage reported to gas facilities in Isfahan and Khorramshahr, according to Iranian media. Trump warned that Washington could still target Iran's energy sector if Tehran fails to reopen the Strait of Hormuz, while Iran denied any talks are underway, according to research from three sources.
Huge malls in Middle Eastern cities like Dubai and Riyadh had previously been a centrepoint of these firms’ markets, according to major media. The presence of luxury brands in airports makes tourism a central route of income for luxury brands, according to major media.
Analysts said luxury brands have suffered from a drop-off in the reverse trend too, suffering from a cliff-edge in wealthy Middle Eastern residents visiting Europe, according to major media.
The implications of this crisis extend beyond immediate financial losses, with luxury brands facing structural challenges. Amid these economic strains, diplomatic efforts continue, with Saudi Foreign Minister Faisal bin Farhan stating that Saudi Arabia's patience with Iranian attacks is not unlimited and that Gulf countries are capable of responding. The effectiveness of government measures and the potential for further escalation add layers of uncertainty to an already volatile situation.