The spillover effects of Middle East conflicts continue to transmit to global markets. On Wednesday evening, U.S. stock indices opened lower and extended losses amid escalating tensions involving Iran. At the time of writing, the Dow Jones Industrial Average was down 0.89%, the Nasdaq Composite fell 0.66%, and the S&P 500 declined 0.67%.

According to a report from Iran's Mehr News Agency on the 18th, a spokesperson for the Central Headquarters of the Iranian Armed Forces stated that severe retaliation will be taken for attacks on Iran's energy infrastructure. In a related development, Iraq's Ministry of Electricity announced that Iran has completely halted natural gas supplies to Iraq. This follows earlier reports on the 18th that certain petrochemical facilities in Iran's Bushehr Province, including South Pars and Asaluyeh, were attacked by the United States and Israel. Subsequent information indicated that gas refineries in phases 3 to 6 of South Pars were targeted by U.S. and Israeli drones.

In other news, global chemical giant BASF announced on March 18 that it will raise prices for home care, industrial and public facility cleaning, and industrial formulation products in Europe by up to 30% or more. The primary reasons for the price increase include rising raw material costs, higher energy expenses, and increased logistics costs.

European and U.S. markets experienced broad declines during Wednesday's trading session. Major technology stocks were mostly lower, with Amazon, Microsoft, Oracle, Broadcom, and Western Digital each falling more than 1%. Meta, Apple, and Qualcomm dropped over 0.70%, while Google declined 0.25%. Nvidia saw a slight gain of 0.16%.

European stock markets also turned lower during the session. Germany's DAX 30 index fell 0.82% after earlier gaining nearly 1%, while the UK's FTSE 100 index dropped 1.08% following an initial 0.40% increase. The Euro Stoxx 50 index declined 0.76%, Denmark's OMX Copenhagen 20 index fell 1.76%, and Switzerland's SMI index decreased 1.59%.

Cryptocurrencies similarly faced selling pressure, with Bitcoin falling nearly 3% to below $72,000 and Ethereum dropping over 4% to $2,230. Cardano, XRP, and Solana all declined more than 4%. According to data from CoinGlass, approximately 108,900 traders were liquidated globally within the past 24 hours, with total liquidations reaching $292 million, over 70% of which were long positions.

The attack by the U.S. and Israel on a significant Iranian gas facility has further escalated already tense Middle Eastern conditions. Iran's Islamic Revolutionary Guard Corps issued an urgent warning, identifying oil facilities in Saudi Arabia, the United Arab Emirates, and Qatar as legitimate targets.

A spokesperson for Qatar's Ministry of Foreign Affairs stated on social media on the 18th that Israel's strike on facilities related to Iran's South Pars gas field represents a "dangerous and irresponsible act" amid current regional military escalation. The spokesperson emphasized that targeting energy infrastructure threatens global energy security and endangers regional populations and their ecological environment.

Brent crude oil has risen over 70% this year, with most gains occurring following U.S.-Israeli attacks on Iran and Tehran's retaliatory strikes on regional energy and shipping assets. The conflict has driven energy prices sharply higher, sparked fuel shortages, and raised concerns about accelerating global inflation.

"The immediate impact of a potential closure of the Strait of Hormuz would be higher energy prices, which U.S. authorities may be seriously underestimating," said Tamas Varga, an analyst at brokerage PVM. He added that U.S. objectives in Iran remain unclear, with no end to the conflict in sight.

As Federal Reserve officials guide monetary policy, central bankers worldwide will closely examine rising fuel prices—U.S. diesel retail prices exceeded $5 per gallon this week. Although the Fed is not expected to change rates at its meeting later Wednesday, oil market attention remains focused on the effectively closed bottleneck of the Strait of Hormuz. Traffic through the strait is now determined by political considerations, with Iran potentially allowing only very limited vessel passage based on country of origin while blocking or impeding most others.

Robert Rennie, head of commodity research at Westpac, stated, "With no end to hostilities in sight, daily production shutdowns increasing, and the strait technically closed, we maintain that Brent crude will sustain a new, higher range of $95 to $110 per barrel. Should attacks on major refineries be confirmed or further mining of the strait occur, we anticipate the range could expand by another $10 to $20."

The Middle East conflict is impacting Europe's already struggling industrial sector. German chemical group BASF announced on the 18th that it will increase prices in Europe for home care, industrial and public facility cleaning, and industrial formulation products by up to 30%, with even higher increases for some items. The new prices take effect immediately or as permitted by existing contracts.

BASF attributed the move primarily to significant fluctuations in key raw material prices and availability, continuously rising domestic and international logistics costs, and soaring packaging and energy prices. Earlier on March 4, BASF had announced global price increases of up to 20% for antioxidants, processing aids, and light stabilizers in plastic applications, citing substantial rises in key raw material costs and freight expenses. These products are essential additives in plastic production, with downstream applications spanning packaging, construction materials, automotive components, and other sectors.

Last week, Germany's Chemical Industry Association warned that initial signs indicate the Middle East war is affecting the sector's supply chains, with immediate increases in oil and gas prices beginning to spread to other raw materials. A key economic sentiment indicator from Germany's ZEW Institute declined this month, with sharp deteriorations in sentiment across chemical, pharmaceutical, and automotive industries in Germany, Europe's most important industrial nation. The institute's president noted that Middle East escalation is driving energy prices higher and increasing inflationary pressures.