The War That Shook the Energy Order: How the U.S.–Israel Confrontation with Iran Is Reshaping the Global Economy

Baba Yunus Muhammad

The eruption of war involving the United States, Israel, and Iran has rapidly evolved from a regional military confrontation into one of the most consequential economic shocks of the early twenty-first century. Within days of the first strikes, global financial markets reacted with visible alarm. Energy prices surged, supply chains fractured, and governments from Asia to Europe began activating emergency energy reserves. Yet the epicentre of the shock lies not only on the battlefield itself but in the arteries of global energy that run through the Persian Gulf. The war has exposed once again a structural truth of the international economy: the stability of the modern world remains intimately tied to the uninterrupted flow of Gulf hydrocarbons.

At the heart of this crisis is the vulnerability of the Strait of Hormuz, the narrow maritime corridor through which roughly one-fifth of the world’s oil supply normally passes each day. Any disruption to this passage instantly reverberates across the global economy. Even temporary threats to tanker traffic are enough to trigger panic in energy markets, as shipping insurers withdraw coverage and vessels divert routes to avoid the danger zone. The strategic centrality of this chokepoint has long been acknowledged by energy analysts, yet the current conflict has demonstrated how quickly the global economy can feel its effects when geopolitical tensions escalate. Read more>>