The Israel-Iran conflict increases the risks for the sovereign ratings of the countries of the region, said Alexander Perjessy, vice president and leading sovereign risk analyst at the international rating agency Moody's, APA-Economics reports.
He said that these attacks were the largest-scale and destructive military operation against Tehran since the Iran-Iraq war. As a result of the strikes, Iran's nuclear and military infrastructure, as well as a large gas processing plant in the south, and some civilian facilities were targeted. At the same time, high-ranking Iranian military commanders and several nuclear scientists were also killed. In response, Iran launched ballistic missile strikes on Israel, which caused local casualties and some destruction. However, strategic infrastructure was not seriously damaged.
The agency notes that Israel has already stopped production at two major gas fields and restricted gas exports to Egypt and Jordan. This threatens not only the regional energy market but also trade and macroeconomic stability. According to Moody’s research, the conflict is being transmitted to the countries of the region through financial and economic channels in three main directions:
1. Increased direct geopolitical and security risks - economic and infrastructure damage in the countries involved in the conflict, the risk of repeated attacks.
2. Disruption of trade and energy flows - in particular, as a result of increased tensions around the Strait of Hormuz, oil and LNG exports from the GCC (Gulf Cooperation Council) countries, as well as Israeli gas exports, could be affected.
3. Deterioration of macroeconomic and financial conditions, with factors such as weakening investor confidence, tightening financial conditions, and closure of airspace.
Moody’s notes that Iran’s main oil export infrastructure has not yet been targeted. Therefore, it seems unlikely that Tehran will close the Strait of Hormuz. This would also hit Iran’s own oil exports and could lead to the US being directly involved in the conflict.
Alexander Perjessy added that at this stage, Moody’s continues to closely monitor the situation in order to make changes to the sovereign ratings of the countries it assesses in the Middle East.
Moody’s believes that neither the GCC countries nor other regional actors deliberately want to be involved in this conflict. Because their main focus is on economic diversification, domestic reforms, and stability. The likelihood of direct US intervention is also assessed as low. An exception could be the closure of the Strait of Hormuz or an attack on American military bases in the region.
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