New footage has emerged showing an Iranian drone strike on Kuwait International Airport, a development that British intelligence has assessed as a significant escalation in regional tensions. The attack, which targeted the airport's runway and control tower, has raised alarms in London and across the Gulf. Alastair Thorne here: if you are an investor, you should be watching the ripple effects on oil prices and the flight of capital from emerging markets.
The strike, carried out by a Shahed-136 drone, damaged civilian infrastructure and forced the closure of the airport. Kuwaiti authorities have declared a state of emergency. British intelligence sources confirm that the attack was deliberate and likely intended to disrupt Western supply chains.
The market has already reacted: Brent crude surged past $80 a barrel, and the FTSE 100 dipped on fears of a broader conflict. The pound sterling is under pressure as investors seek safe havens. This is not just a geopolitical event; it is a balance sheet event.
The cost of insuring Kuwaiti sovereign debt has spiked, and gilt yields are fluctuating as the Bank of England monitors the situation. Fiscal responsibility now demands that the government reassess its defence spending commitments. The era of low inflation and stable markets is over.
Central banks will be forced to respond, but the question is whether they will act with the discipline required. Expect volatility in the coming days. This is the bottom line: when drones strike airports, markets fall and taxpayers pay.
