Three months into the most reckless military adventure of the twenty-first century, the architects of the 2026 Iran war — the Trump administration in Washington and the IRGC-dominated government in Tehran — have achieved something remarkable: they have turned a regional conflict into a genuine threat to the global economic order. Congratulations to both.
Let us dispense with the euphemisms. On February 28, the United States and Israel launched Operation Epic Fury — a coordinated air campaign against Iran conducted, astonishingly, while nuclear negotiations were ongoing. The Joint Chiefs of Staff had warned President Trump that striking Iran could prompt the closure of the Strait of Hormuz. Trump dismissed those warnings, telling advisers that Iran would simply capitulate. It did not. Within days, Iran sealed the strait, choking off roughly 20 percent of the world's seaborne oil trade and 25 percent of its LNG exports. The International Energy Agency has since called it 'the greatest global energy security challenge in history.' One could be forgiven for asking: was no one in the Situation Room paying attention to history?
Iran's response was equally catastrophic in its disregard for civilian consequence. Rather than limiting retaliation to military targets, Tehran launched hundreds of ballistic missiles and drones at Gulf neighbors — Bahrain, Kuwait, Saudi Arabia, the UAE — striking energy infrastructure, ports, and desalination plants. QatarEnergy declared force majeure on all exports. Brent crude surged from $72 to over $112 a barrel within a month. The IEA reports that cumulative supply losses now exceed one billion barrels, an unprecedented shock. The Dallas Federal Reserve estimates the closure of the Strait has already lowered global real GDP growth by an annualized 2.9 percentage points. Nitrogen fertilizer prices are projected to double. Wheat, rice, and maize yields face downward pressure going into the Northern Hemisphere's planting season. The Philippines declared a national energy emergency. Bangladesh faces recession-like conditions. A fragile ceasefire agreed in April has been punctuated daily by fresh skirmishes, with the IRGC firing on commercial vessels as recently as this week and U.S. forces conducting 'self-defense strikes' around the strait — inside the ceasefire zone.
Meanwhile, the diplomacy has been a theatre of the absurd. Trump declared a deal 'largely negotiated' on May 23, then said days later he 'won't be rushed.' Iran's negotiators in Doha describe talks as 'generally positive' while the IRGC fires on ships transiting the strait. The White House dismisses Iranian state media reports of a memorandum of understanding. Oil markets lurch on each social media post from Mar-a-Lago. Analysts at CNBC warn that investors are 'sleepwalking into a pretty big recession,' while benchmark prices have swung nearly $50 per barrel in a single month — the widest range ever recorded.
The human and economic toll is staggering, and it was foreseeable. Intelligence services on both sides knew what a war over the strait would cost. The willingness of Washington to launch a war of choice — framed variously as regime change, nuclear prevention, and 'seizing oil resources,' depending on which official was speaking — and of Tehran to weaponize a global chokepoint against civilians and trading partners alike, represents a joint failure of governance so profound it borders on criminal negligence toward their own populations, let alone the world's.
Three months on, oil inventories are at historic lows, inflation is climbing, and the Fed faces impossible choices. The world did not vote for this war. It is paying for it anyway.