The economic impact of a US led attack against Iraq will be felt across the globe. With the use of supply and demand diagrams analyse the impact of war.

The demand for oil is exceptionally high, as the modern world needs a constant supply of oil especially industrialized countries such as Japan. As there consumption is met completely by imports from mainly the Middle East, Industrialized countries remain highly sensitive to oil price shocks. Disturbances to the supply of oil could easily trigger a new energy crisis with serious effects on the world economy.

As for the industry for budget (no-frills) airlines the war would be an advantage to them as the main direct flights would not be available across the globe through well known companies such as BAA (British Airways). Budget Airlines such as Easy jet and Ryanair already have a connecting flight system where the passenger has to change at several airports to arrive to its destination. Therefore it is cheaper for these no-frills airlines to do this and these airlines would not be affected during the war. The demand to fly across the globe before or during a war would not be a necessity. But this would mainly be a financial advantage to those who fly regularly such a business-associated persons.

The market for gas masks will be affected dramatically as the threat of an attack from Iraq with biological weapons. This increased the demand for gas masks and the production of them through companies who produced only a small number of gas masks. At the announcement of a set date for the war a boom in production and sales of gas masks followed. The delay of a month given to the world by president bush gave the time for people to become prepared. But the total number of people who wanted a gas mask was exceeding the production of them. Therefore there was a shortage of gas masks. People were willing to pay more to have the possession of one; a month for the companies was not enough as millions sought after a gas mask

        

An oil crisis would have a considerable negative impact on the global economic prospects. However economic mechanisms would gradually steer the economies back on to a growth path once the war is over. Although it would take a long period of time to restore previous levels of output. After the war the direct flights would begin to operate therefore the demand would stay the same but there would be an excess supply. As for the gas masks the production lines would not be operating and demand would dramatically fall, as the threat of an attack would decrease. Once all threats and the war is over all the demands and supplies would go through the equilibrium point.