Within hours of the first strikes on Iran, the global economy began to absorb what analysts described as the most significant supply-side energy shock since the 1973 oil crisis. The combination of attacks near the Strait of Hormuz, QatarEnergy’s halt of LNG production, and the broader disruption to Gulf shipping lanes sent energy prices surging and financial markets into turmoil.
The Energy Chokepoint
The Strait of Hormuz, through which approximately 20 percent of the world’s daily oil consumption passes, lies at the center of the conflict zone. Iran’s southern coastline directly borders the strait, and any military operations in the region inherently threatened the passage of oil tankers and LNG carriers.
Iran had long warned that any attack on its territory would result in disruption to the strait. While a full closure had not materialized by March 13, the threat alone was sufficient to drive prices sharply higher as shipping companies assessed risk premiums and insurance costs.
QatarEnergy: The LNG Shock
The most consequential early economic development was QatarEnergy’s announcement that it was halting liquefied natural gas production following an Iranian drone attack near its facilities. Qatar supplies approximately 25 percent of global LNG exports, making it the single largest player in the international gas market.
The halt immediately affected import-dependent economies in Europe and Asia. European nations, which had shifted heavily toward LNG imports after reducing dependence on Russian pipeline gas following the 2022 invasion of Ukraine, faced the prospect of a second major supply disruption in four years.
Asian markets — particularly Japan, South Korea, and China — also faced significant exposure, as Qatari LNG forms a substantial component of their energy imports.
Stock Markets in Free Fall
UAE stock exchanges closed on March 1, a step that reflected both immediate security concerns and an effort to prevent panic selling. Markets across the Gulf region experienced significant volatility, with energy companies facing contradictory pressures: higher commodity prices but severe operational disruption.
Global stock indices fell sharply in the days following the strikes. The Dow Jones, FTSE, and Nikkei all recorded substantial losses as investors assessed the scope of the conflict and its duration.
Gas Prices and Consumer Impact
The downstream effects reached consumers rapidly. Gas prices surged at pumps across the United States, Europe, and Asia as the prospect of sustained supply disruption became apparent.
President Trump had estimated the war would last “4 to 5 weeks, could go far longer” — a timeline that, if accurate, suggested weeks of continued disruption to Gulf energy production and shipping.
Force Majeure: Legal and Commercial Fallout
By March 10, multiple energy companies had declared force majeure on existing supply contracts — the legal mechanism for suspending obligations due to extraordinary circumstances beyond a party’s control. These declarations affected LNG delivery contracts, oil shipments, and related financial instruments.
The force majeure declarations cascaded through global supply chains, affecting not only energy but also petrochemical products, fertilizers, and other commodities derived from Gulf oil and gas production.
The Philippines Effect
The war’s economic reach extended to countries far removed from the conflict zone. The Philippines, heavily dependent on Gulf remittances and sensitive to energy price fluctuations, announced a four-day work week and restrictions on car travel to reduce fuel consumption. The policy affected millions of workers and illustrated how a conflict in the Persian Gulf could reshape daily life in Southeast Asia.
Iran’s Economic Warfare Declaration
On March 10, Iran escalated the economic dimension of the conflict by formally declaring US and Israeli economic and banking interests as legitimate targets. This declaration raised concerns about potential attacks on financial infrastructure, shipping, and commercial facilities associated with the two countries and their allies.
The declaration also hinted at the possibility of Iranian attacks on undersea cables, telecommunications infrastructure, or digital financial systems — though no confirmed strikes on such targets had been reported by March 13.
Cost of War: $11.3 Billion in Six Days
The Trump administration estimated that the US had spent $11.3 billion in the first six days of the conflict alone. This figure included the cost of munitions, aircraft carrier deployment, refueling operations, and the deployment of 10,000 Merops interceptor drones at approximately $14,000-$15,000 each.
The Structural Problem
The economic crisis exposed a structural vulnerability in the global energy system. Despite years of rhetoric about energy independence and renewable transitions, the world economy remained critically dependent on oil and gas flowing through a narrow waterway bordered by a country now at war with the world’s largest military power.
As the conflict entered its third week with no ceasefire in sight, the economic costs — measured in trillions of dollars of market value lost, supply contracts broken, and consumer prices elevated — continued to mount. The war’s economic toll extended far beyond the countries doing the fighting, reaching every economy connected to global energy markets.