The Iran crisis is a shock to the global financial system – and it comes at a troubling time

We only learn the weaknesses of a system when it is under stress, and here is a new and unexpected stress

What damage does the killing of Iranian general Qassem Soleimani do to the world economy?

If that seems a mercenary reaction to a huge geopolitical event, it is. But the regional outcomes will take months, even years, to play out, while investors and companies have meanwhile to make swift decisions on what to do about it. There is already the immediate reaction of a rise in the price of oil and gold, and the fall in what are seen as risky assets. But beyond this, what?

Start with oil. Iran will need carry on producing and selling the stuff because it needs the revenues. US-led sanctions have little effect on that aspect of the Iranian economy as there are plenty of buyers in the rest of the world. It is not of itself a huge economy – its GDP is somewhere between that of Sweden and Norway – but the whole of the Middle East pulled together is. What Iran decides to do in retaliation does have an important knock-on impact on its neighbours.