Since the military strikes by the United States and Israel against Iran on February 28, 2026, the Middle East—the heartland of global energy—has once again been engulfed by conflict. As of March 28, the confrontation has persisted for one month, showing no signs of abating and instead exhibiting dangerous trends toward prolongation and escalation.
The Strait of Hormuz, a strategic waterway linking the Persian Gulf with the Arabian Sea, serves as a critical energy chokepoint. It handles nearly 20% of global oil exports and 25% of liquefied natural gas shipments, with key exporters including Saudi Arabia, Iran, Iraq, Kuwait, Qatar, and the United Arab Emirates.
From halted tanker traffic in the Strait of Hormuz to soaring prices at U.S. gas stations, and from suspended operations at Indian tile factories to helium supply anxieties in South Korea’s semiconductor industry—this conflict, described by Nobel laureate Joseph Stiglitz as “like throwing a hand grenade”—is subjecting the global economy to a severe stress test. The turmoil underscores the economic logic and human costs behind geopolitical instability.
**A New Phase of Conflict: From Military Strikes to Energy Strangulation**
On March 19, Iran’s Islamic Revolutionary Guard Corps declared that the conflict had “effectively entered a new phase,” signaling a fundamental shift in its nature.
Although hostilities had persisted, both sides had previously respected certain “red lines.” However, on March 7, the Israeli military targeted multiple fuel storage facilities in Tehran, marking the first time civilian energy infrastructure was attacked and indicating a significant escalation. In retaliation, the Revolutionary Guard launched “True Promise-4,” explicitly aiming to destroy U.S.-linked oil installations.
In a letter to the UN Secretary-General on March 24, Iranian Oil Minister Mohsen Paknejad accused the U.S. and Israel of waging “a comprehensive war on Iran’s energy security and economy.” This “war on energy infrastructure” quickly produced catastrophic spillover effects. The Strait of Hormuz, a vital global energy artery, has effectively come to a standstill. Data indicates that this channel transports about one-fifth of the world’s oil and one-fifth of its natural gas. Its obstruction has sent shockwaves through global gas stations and household budgets.
**Oil Price Volatility: American Public Anger and White House Damage Control**
The most immediate impact of the conflict has been on international oil prices. By March 19, Brent crude futures had surged to $108.34 per barrel, with a single-day increase of 5.27%. Analysts at Citigroup warned that if energy infrastructure suffers widespread attacks and the Strait of Hormuz remains closed for an extended period, Brent crude could average $130 per barrel in the second and third quarters. Iran’s earlier assertion of “$200 per barrel oil” no longer seems far-fetched.
Soaring oil prices triggered a political crisis in the United States. Data released by the American Automobile Association on March 18 showed that the national average price for regular gasoline had risen by 28.8% since the conflict began. For a nation dependent on automobiles, this translated directly into public outrage. Under domestic pressure, the U.S. government implemented emergency measures. On March 18, President Trump announced a 60-day suspension of the Jones Act, lifting domestic shipping restrictions to boost supply. In a striking reversal, the U.S. also eased sanctions on Venezuela’s oil sector. The Treasury Department issued a general license authorizing transactions with Venezuela’s state oil company to increase global oil supply.
U.S. Treasury Secretary Besant explicitly stated that conditional relief on Iranian oil sanctions aimed to curb prices, remarking, “We are using Iran’s oil against Iran.” Meanwhile, U.S. oil producers emerged as unexpected beneficiaries of the crisis. According to the Financial Times, American producers could see an increase of approximately $5 billion in cash flow in March alone. If oil prices remain elevated throughout the year, they could gain over $60 billion in additional revenue.
**Global Supply Chain Ripple Effects: From Korean Semiconductors to Indian Tiles**
The conflict’s impact extends far beyond gas station price signs. The Strait of Hormuz carries not only crude oil but also the lifeblood of global manufacturing.
Industrial raw material prices have risen across the board. Supply disruptions of Qatari natural gas caused helium prices to double, triggering inventory concerns among South Korean chipmakers, for whom helium is a critical material in semiconductor production. Prices of sulfur, naphtha, polyethylene, and other basic chemical raw materials have also surged due to shipping interruptions, leading to production cuts and shutdowns at downstream chemical plants. Rising energy and transportation costs have driven up prices of basic metals like aluminum, directly affecting the automotive, aerospace, and renewable energy equipment industries. Analysts note that the central issue for industrial production is no longer “how high costs are” but “whether raw materials are available at all.”
**Looming Global Food Crisis**
The conflict threatens not only energy supplies but also global food security. The Strait of Hormuz facilitates the transport of essential food products from Gulf states and a significant portion of the world’s nitrogen-based fertilizers. With the Northern Hemisphere’s spring planting season underway, delays in fertilizer shipments could severely impact agricultural output. A prolonged conflict risks triggering a “global food crisis.”
**Regional Shortages and Chain Reactions**
In India, the world’s second-largest liquefied petroleum gas (LPG) buyer, approximately 60% of LPG is imported, with 90% of that volume transiting the Strait of Hormuz. The Indian Hotel Association estimates that about 30% of the country’s hotels and restaurants have suspended operations due to LPG shortages. In Morbi, Gujarat—a major tile production hub—nearly 450 out of 670 tile factories have halted production.
In Europe, already strained by the Russia-Ukraine conflict, energy security concerns have intensified. The European Union relies on imports for about 58% of its fossil fuel needs. A senior fellow at the Bruegel think tank warned that Europe may be “at the starting line of another energy crisis.” The EU has begun advising member states to lower natural gas storage targets and adopt staggered refilling schedules.
**Uncertain Future Amid Diplomatic Efforts**
As the crisis intensifies, international mediation and geopolitical maneuvering have accelerated.
On March 23, the 24th day of the conflict, the U.S. unexpectedly signaled diplomatic outreach. President Trump stated on social media that the U.S. and Iran had held “very good and productive” talks over the preceding two days and announced a five-day postponement of military actions targeting Iran’s power and energy infrastructure. However, Iran’s Foreign Ministry promptly denied any dialogue with the U.S., accusing Washington of spreading false information to manipulate financial and oil markets.
UN Secretary-General Guterres addressed the media on March 25, calling on the U.S. and Israel to end the war against Iran and urging Iran to cease attacks on neighboring countries. He emphasized that humanitarian suffering is intensifying, civilian casualties are rising, and the economic impact is becoming increasingly devastating. He reiterated that Iran’s neighbors are not parties to the conflict.
Market sentiment remains pessimistic. Even if the Strait of Hormuz reopens immediately, it would not bring swift relief from high oil prices. Since the military strikes began, approximately 10 million barrels per day of Middle Eastern production have been shut in, and restoring this supply could take weeks or months. The supply shock is real and potentially prolonged.
Deeper structural shifts are also underway, as capital risk preferences undergo systemic contraction. Markets are no longer pricing assets based solely on economic growth and corporate profits but are instead reassessing risks related to conflict, energy, and inflation. With warfare, energy security, and supply chains becoming core variables influencing asset prices, the global economy may be entering a new phase of heightened uncertainty.
From negotiating tables in Washington to the ruins in Tehran, from gas stations in Mumbai to chip factories in Seoul—an “economic tsunami” triggered by the U.S.-Israel strikes on Iran is sweeping across the globe. For ordinary people, whether it’s American truck drivers dipping into emergency savings to afford fuel or Indian shopowners facing closure due to gas shortages, the distant conflict in the Middle East has translated into tangible burdens in daily life.
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