Koppel added that a major impact may also be seen if Iran decides to block maritime traffic through the Strait of Hormuz.

Koppel gave an interview to ERR which follows.

Israel carried out a rather unprecedented military operation against Iran overnight from Thursday to Friday, targeting nuclear facilities and allegedly the country's leadership. What kind of impact do these large-scale attacks and subsequent tensions have on the global economy?

To put it very briefly, the impact could be twofold. First: no matter how you look at it, neither businesses, nor markets, nor investors like uncertainty. And conflicts in such regions tend to increase that uncertainty. Specifically, in the context of what will happen to the price of oil. The oil price already jumped by about 10 to 13 percent as a result.

Then we arrive at the second important factor: How it affects the global economy. If energy gets more expensive, everything gets more expensive, then soon we will be in a situation where we have to talk about inflation once again. We already talk about it a fair bit as it is. So additional price hikes like this are not going to be welcome to anyone.

Theoretically — and this is a bit more speculative — if we eventually come to talk again about the inflation issue, we might also have to talk about interest rate cuts, which have helped Europeans a bit and are increasingly being talked about in the U.S. But those cuts can't happen yet, as inflation is still a problem.

So uncertainty, oil prices, inflation, and interest rates — all of these can be affected in some way by the current events.

Should Europe already start preparing for a new energy crisis or inflationary pressure, or is the situation not quite that critical yet?

At present it is very hard to say how critical things are. If we consider how the oil market and markets in general are viewing all of this, there had already been some tension in the air for quite some time. Actually, those who remember their history a bit will know that, a little over 40 years ago, Israel carried out a similar operation against Iraq's nuclear facilities. So this is not entirely unprecedented.

The tension has been in the air for quite some time, and perhaps a part of that has already been factored into the market and the oil market — that a certain geopolitical risk premium has been priced into the price per barrel either way.

Another aspect, of course, is that if something escalates, the situation gets more dangerous. As when it comes to the Middle East and Iran, this has been talked about for over 15 years: Whereby if a regional conflict like this happens, Iran theoretically has the ability to at least temporarily shut off the Strait of Hormuz, which essentially means tankers can't exit the Persian Gulf, so that would reduce supply. And by now, I think most people know that when supply falls, prices rise.

This is probably the most closely observed aspect — how the escalation unfolds, if it does, and what happens in the Strait of Hormuz. This will generate additional tensions.

Global supply chains could come under threat. But the question arises: How much is it really in Iran's interest to obstruct traffic and trade in the Strait of Hormuz? How much does Iran actually earn and benefit from that traffic?

Earning and benefiting like this are relatively Western and rational arguments, but as soon as we move slightly to the south, people tend to get somewhat more passionate, and if I think of Iran as a somewhat horrific, theocratic regime, which remains relatively rigid, then they may forget for a time what is actually in their best interest.

If we now consider what would truly have been in their best interests, throughout the whole time this regime has been in place, it would have been much more beneficial to trade nicely with the whole world, rather than saber-rattling and shaking fists. To be a bit facetious — they could have lived like the Swiss do. In other words, theoretically it could have been a very rich country.

Although yes, those who have been there say Tehran today is a relatively modern city, but you can't operate based on such rational arguments there.

In this context, we are dealing with a small country which is armed to the teeth and has constantly had to fight for its existence, then a vaster, so-called theocratic regime, where rationality and profit motives might not be the leading drivers.

At the same time, security experts' assessment is that Iran currently lacks the military capacity for a massive counterattack, let alone for launching a larger war. Could this also exert a stabilizing effect in the context of global economic and market turbulence — that Iran's regime depends so heavily on survival that it holds them back from taking big risks?

I am no security expert. But when I look at what has been happening in the world lately, then yes, indeed — maybe Iran doesn't really have the massive capability to carry out traditional military actions. But nowadays, in my opinion, things don't tend to work like that in any case. Iran has a number of smaller, relatively fierce proxies — the Houthis, Hezbollah.

Yes, Israel has done a good job ensuring those small and fierce actors don't get much power, but the problem is that relatively large damage can be caused by them and with relatively little resources.

This doesn't necessarily mean planes and rockets flying and classic warfare. This is probably not what economic-minded people are worried about either; they tend to be more concerned about smaller-scale operations which still undermine trust and create additional instability.

And this threat of chaotic evil, of small actions with major consequences, and which are much more chaotic in nature than traditional warfare is — that is the threat we should be talking about most right now.

One paradoxical situation we have been seeing amid all this instability and rising oil prices is that the attack on one of Russia's strongest allies may, in terms of oil prices and income, actually benefit Russia to some extent.

That is so. Because if we're honest, Russia still is able to sell its oil. And those who don't particularly favor Russia because of its aggressive behavior still seem to be buying it via intermediaries, and with a relatively straight face.

So yes, unfortunately that is the reality. Oil prices unfortunately grease the wheels of quite a few nasty regimes.

In summary, would you say that for the citizens and economies of Estonia and Europe, the continuation or escalation of this conflict and its instability could manifest in higher prices, which we might start to see in the future?

Yes, that is something clearly measurable and something which will manifest relatively quickly. It is also usually the case that such global uncertainty affects consumption, affects investment confidence, and affects whether someone dares to take any risk and in what way.

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The BBC reported on Friday that Israel launched its Operation Rising Lion precision strikes on Iran's nuclear sites, targeting key military infrastructure and killing several top officials, including Revolutionary Guard chief Hossein Salami. The attacks also severely damaged Iran's air defense systems.

In retaliation, Iran fired about 100 drones at Israel, most intercepted by Israeli defenses. Supreme Leader Ali Khamenei vowed "severe punishment," escalating the conflict. Israel declared a state of emergency, with Prime Minister Netanyahu warning that Iran's nuclear ambitions threaten Israel's survival.

Israel struck several key locations in Iran, including the Natanz nuclear facility south of Tehran, military sites and underground missile bases in Piranshahr (north-western Iran), air defense systems in various locations, and Revolutionary Guard headquarters across the country, notably targeting facilities in the western province of Kermanshah.

Operation Rising Lion is a preemptive strike to stop Iran from developing nuclear weapons. The attacks have led to grounded flights over Israel, Iran, Jordan, and Iraq. The U.S. has so far distanced itself from the strikes, with Secretary of State Marco Rubio stating it had had no involvement. Israel is bracing for more retaliation and further military action in the coming days.

Israel has used pre-emptive strikes in the past against countries in the region which it feared were developing nuclear weapons, namely Iraq in 1981, and Syria in 2007.

One difference here is that in both these cases any nuclear capabilities were at a very early stage, whereas Iran is likely further down the road. Iran's size and its rugged terrain make locating and attacking potential nuclear weapons development facilities particularly challenging.

To make a nuclear weapon, a country needs fissile materials like enriched uranium (U-235) or plutonium (Pu-239). Uranium is enriched to increase U-235 levels, while plutonium gets synthesized in reactors. A lower degree of enrichment is needed to power nuclear energy plants.

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