With Operation Epic Fury, Washington's name for coordinated joint airstrikes with Israel on Iran, rapidly spiralling out of control into a wider war in the Middle East, the global economy has been seeing significant shocks, said to be the worst since the 1970s.
Amid Iran's closure of the Hormuz Strait—one of the highlights of the one-week-old war—which has affected the roughly 20 per cent of global oil supply that passed through it daily, attacks on critical oil infrastructure over the past few days have also caused problems with energy production and export.
Global oil prices have surged by more than 25 per cent over the week, exponentially driving up fuel prices for consumers worldwide.
Benchmark Brent crude shot dangerously close to $120 on Monday, even as roughly 200 non-sanctioned tankers—that are compliant with international maritime trade norms—have been brought to a halt due to the Hormuz Strait closure.
The war has effectively fractured the world into distinct zones of economic pain, defined by how much "black gold" or liquified gas they have in reserve, and how much they can acquire.
Impact on Asia
Countries like India and the Philippines, which import the vast majority of their oil via the now-blocked Persian Gulf, are seeing their currencies crumble. The Indian Rupee hit an all-time low of 92.35 against the dollar today, as the cost of energy imports threatens to drain foreign exchange reserves. For these nations, the war is not just an inflationary pressure; it is a threat to the very stability of their developing economies.
Impact on the US and the West
In the G7 nations, the crisis is a domestic political nightmare. In the United States, crude oil has surged to $114 per barrel, a 25 per cent spike in just ten days.
For American and British consumers, this has translated into immediate pain at the pump, with gasoline prices clearing the $4 per gallon mark. While the US leans on its Strategic Petroleum Reserve (SPR), the sheer scale of the Hormuz Strait disruption—roughly 20 million barrels per day trapped in the Gulf—suggests that government intervention may only offer a temporary ceiling on costs.
Impact on Europe
The European Union (EU) faces a more specialized threat: the loss of Qatari LNG. Following strikes on the Ras Laffan industrial hub, Dutch TTF natural gas prices have skyrocketed by 70 per cent.
While Brussels maintains that member states hold 90-day emergency stocks, the reactivation of coal plants and talks of mandatory rationing suggest a continent bracing for a prolonged industrial winter.