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The Long-Term Economic Damage From the Iran War
TrumponomicsA ship passing through the Strait of Hormuz.Photographer: Giuseppe Cacace/AFPApril 9, 2026 at 4:01 AM UTCSubscribe to Trumponomics on Apple PodcastsSubscribe to Trumponomics on SpotifyOn this episode of Trumponomics, host Stephanie Flanders examines how the US-Israel war with Iran has choked one of the world’s most vital shipping routes and tested the foundations of global trade. With traffic through the Strait of Hormuz severely constrained and hundreds of vessels backed up, the disruption is pushing up energy prices and raising fresh concerns about the reliability of supply chains. More broadly, President Donald Trump’s threat to leave securing the Persian Gulf to others could have far-reaching consequences for the world—and US power.
Managing the economic consequences of the Iran war
Our publications Insight paper How should the government respond to the crisis in the Middle East? 08 APR 2026 IntroductionOn 28 February the US, alongside Israel, launched a surprise attack on Iran, plunging the Middle East into chaos. The conflict involving attacks on energy infrastructure and shipping in the region – particularly in the crucial Strait of Hormuz – sent shockwaves across the global economy. The announcement of a temporary ceasefire, in the early hours of 8 April, has allowed a brief respite – but even if that lasts, the economic ripples will continue to be felt for months across the world. If hostilities resume, the impacts will be far greater. Although the prime minister has assured the nation that the government has a plan, his announcements at his Downing Street press conference before Easter were long on measures the government had decided on well before the war started, but short on how the government was responding to the emerging economic fallout. That lies in contrast with the reactions of other governments across the world. In this short paper we look at how the UK government should respond, drawing both on lessons from recent crises and from forthcoming Institute for Government research on policy making in a crisis.This is not a repeat of 2022Though there are echoes of the energy crisis that followed Russia’s invasion of Ukraine in 2022, the current situation is different in important ways. This crisis currently primarily surrounds the supply of oil and related products (though gas supplies have been affected too). That brings with it much wider impacts on global trade, disrupting the flow of crude oil, jet fuel and other goods like agricultural fertilizer and petrochemicals from the Middle East.Some Asian countries are already facing shortages and their governments are responding by taking measures to reduce energy use. Others, including the UK, are so far seeing higher prices, but haven’t experienced immediate supply disruptions – though there could be a crunch coming on jet fuel. But the global economic impact of the crisis is dire: a proportion of the global supply of oil, gas and other important products has disappeared overnight. The crisis is far from overEven if the ceasefire leads to a permanent cessation in hostilities, the damage already done to energy infrastructure in the region, and the difficulty in restoring supply chains after weeks of disruption, means that oil and gas supply will still be affected for some...
How the Iran War Will Upend the Global Economy - Foreign Affairs
In late March, both Israel and Iran attacked gas fields in the Persian Gulf, the most dramatic escalation yet in the Iran war. By striking upstream energy infrastructure, the belligerents have ensured that the war will have global ramifications lasting beyond the end of the conflict. Even if the ...
Iran's shattered economy means any success in war may be fleeting
One Iranian official said the scale of damage meant the biggest industrial facilities driving the economy would take months or years to repair and the country "will face a disaster" if sanctions ...
