Deepak Shenoy's stark warning for global economy amid growing geopolitical risks: 'It's going to get a lot more messy'

Iran-Israel conflict: Deepak Shenoy, founder and CEO of Capitalmind, warned investors against the rising risks that the increased geopolitical complexities pose for the world economy. 

His warning comes amid the latest flare-up in tensions in the Middle East that sparked a rally in crude oil prices, sending them past the $78 per barrel mark.

In a social media post on X, Deepak Shenoy said that geopolitical complexities have dramatically increased and will hurt the world economically. “It's going to get a lot more messy, it seems,” Shenoy warned.

The fresh rise in tensions in the Middle East comes on the heels of a prolonged war between Russia and Ukraine and adds a fresh layer of uncertainty for financial markets at a time of heightened pressure on the global economy from US President Donald Trump's aggressive and erratic trade policies.

Iran-Israel conflict raises geopolitical risks

Oil prices jumped more than 13% on Friday after Israel said it struck Iran, targeting its nuclear facilities and ballistic missile factories, to prevent Tehran from building an atomic weapon.

Amid fears of a disruption to crude oil supplies, the benchmark Brent crude contract hit $78.50 per barrel, its highest since January 27, and was last up 9% at $75.50 per barrel.

This dramatic crude oil price spike has immediate and far-reaching implications for the global economy. For India, which imports over 85% of its crude oil needs, higher crude oil prices could affect the inflation outlook. This price surge translates directly to widening trade deficits, and a squeeze on consumer spending not just for India but also oil-importing countries in Europe.

Globally, too, the markets reacted in a dramatic fashion, with indices from Wall Street to Dalal Street trading in the red. As the risk-off mood flared up amid concerns over the Israel-Iran conflict, the Sensex and Nifty crashed over 1.5% each.

U.S. S&P E-mini futures slumped 1.7% and Nasdaq futures skidded 1.8%. Pan-European STOXX 50 futures tumbled 1.6%, reported Reuters. Japan's Nikkei lost 1.3%, South Korea's KOSPI dropped 1.1% and Hong Kong's Hang Seng declined 0.8%.

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