Iran has demonstrated its capacity to disrupt regional energy flows since the Iran-Iraq War of the 1980s; however, it remains uncertain whether this influence will impact the outcome of the current conflict. Recent missile attacks by Iran have targeted oil tankers and facilities, resulting in temporary interruptions in the Strait of Hormuz. Consequently Brent crude prices briefly increased by over 8% to $79 per barrel, which remains below forecasts for a complete closure of the strait. Like in the 1980s, it is doubtful that Iran would be able to engineer a scenario where they could force peace table talks based solely on oil /natural gas availability pressure alone!
Prolonged Conflict Risk and Iran’s own reliance on the Straits of Hormuz
Military engagement with Iran could extend over several weeks, casting uncertainty on Tehran’s capacity to sustain a prolonged conflict. Approximately 70% of Iran’s non-oil trade relies on port access through the Strait of Hormuz; any disruption to this passage would significantly impact the nation’s economy. While the United States and Israel have so far refrained from targeting Iran’s oil infrastructure, this stance may shift should Iran intensify its attacks or obstruct traffic through the Strait. Escalation remains a considerable threat to Iran’s vulnerable economy. The involvement of an international coalition to secure Hormuz could diminish Tehran’s control over energy transit. Additionally, Iran faces ongoing challenges regarding domestic legitimacy, which heightens the risk of social unrest and possible internal instability. While Iran leverages oil for strategic purposes, its ability to create lasting advantage is limited, potentially resulting in temporary instability rather than decisive outcomes.
Cost Escalations and impact on Procurement & Logistics
Marine insurers are withdrawing war risk coverage for vessels because of ongoing regional conflict. Insurance for shipping passing thru the Persian and Arabian Gulf and adjacent waters was to be discontinued 72 hours after 1 March 2026., Reports that recent U.S.-Israel military actions against Iran and the subsequent Iranian response have led to significant logistics disruptions, with potential cost escalations should hostilities persist. Air freight operations have also been impacted, as FedEx has suspended all flights to and from several Middle Eastern nations.
Cost of living impact
For the US, even though the trade exposure to the Straits of Hormuz is limited, higher global oil prices would fuel the current cost-of-living crisis on a global level. This would impact on most countries across most all commodities and business disciplines.
A supply-side inflation shock, combined with ongoing tariff impacts, may make further rate cuts difficult. If the conflict continues and uncertainty slows investment and consumer confidence, economic growth prospects could worsen.