The War at the World’s Jugular

The war that began on February 28, 2026 did not begin on February 28. Its roots run through the entirety of the Islamic Republic’s existence — through the hostage crisis of 1979, through eight years of war with Iraq, through decades of sanctions, through the tortured history of the JCPOA and its collapse, through the June 2025 strikes that American and Israeli planners called Operation Midnight Hammer. By the time the first missiles fell on Tehran, the confrontation had been building for forty-five years.

The immediate trigger was the failure of three rounds of negotiations held throughout February 2026, each in a different city, each ending closer to the precipice than the last. The first round took place on February 6 in Muscat, Oman — the same city whose diplomats had quietly facilitated the original JCPOA backchannel in 2013. US Special Envoy Steve Witkoff and Jared Kushner represented Washington. Iranian Foreign Minister Abbas Araghchi represented Tehran. CENTCOM commander Admiral Brad Cooper attended in person — a visual reminder that the USS Abraham Lincoln was offshore.

Araghchi drew a hard line: the talks should cover only the nuclear issue. Trump had made clear any deal must cover nuclear weapons, ballistic missiles, and proxies. The gap was not merely procedural. It reflected irreconcilable visions of what a deal was supposed to achieve. The second round, on February 17 in Geneva, ended with both sides agreeing to draft proposals. The United States set a deadline — Iran must submit its final position before the end of the month. Araghchi claimed the US had not demanded zero enrichment in Geneva. Days later, Witkoff stated Iran had crossed Trump’s zero-enrichment red line.

The third and final round convened on February 26, again in Geneva. Oman claimed a breakthrough — Iran had agreed to never stockpile enriched uranium. But the parties meant different things. Iran proposed only to dilute its 460-kilogram stockpile of uranium enriched to 60 percent in-country. Washington required it be shipped abroad. On February 27, Trump said: ‘I say no enrichment. Not 20 percent, 30 percent.’ Araghchi said Iran ‘will not give up’ its right to enrich. Oman claimed both sides had agreed to send technical teams to the IAEA the following Monday. On Saturday, February 28, the strikes began.

The nuclear file was the ostensible cause. But the deeper cause was older. Since 1979, the Islamic Republic and the United States had existed in a state of perpetual hostility — punctuated by occasional diplomacy, never resolved. Each attempt to manage the relationship had eventually collapsed. The JCPOA, the most ambitious of them, had been unilaterally abandoned by the United States in 2018. Iran had responded by systematically rebuilding every nuclear capability the deal had constrained. By early 2026, CSIS analysts estimated it was two weeks from weapons-grade uranium for five or six bombs. The ten-day ultimatum that preceded the strikes was Trump’s final attempt to force a diplomatic outcome. Iran did not yield. The ultimatum expired. The bombs fell.

They came before dawn. At 2:00 AM Eastern Time on February 28, 2026, President Donald Trump appeared on Truth Social in an eight-minute video, speaking directly to the American people and the Iranian people simultaneously. To the former he announced that the United States military had begun ‘major combat operations in Iran.’ To the latter he said: ‘The hour of your freedom is at hand.’ There was no address to Congress. No prime-time Oval Office speech. No coalition press conference. The most significant American military operation in the Middle East since the 2003 invasion of Iraq was announced on a social media platform, in a pre-recorded video, in the middle of the night.

Shortly afterward, US Central Command confirmed that strikes had commenced. The operation, designated Operation Epic Fury by the United States and Operation Roaring Lion by Israel, would deliver nearly 900 strikes in its first twelve hours alone. The division of labour between the two allies was not publicly announced but quickly became apparent. Israel concentrated on decapitation strikes, targeting Iran’s political and military leadership with intelligence-driven precision. The United States focused primarily on capability degradation — missiles, drones, naval assets, command-and-control infrastructure, and the remnants of Iran’s nuclear programme.

Trump’s stated objectives were fourfold: prevent Iran from acquiring a nuclear weapon; destroy its ballistic missile arsenal; degrade its proxy networks; annihilate its navy. Regime change was the unspoken fifth objective — signalled in Trump’s address to Iranians but never formally articulated as a war aim. The United States brought to this operation the full weight of its conventional military superiority: B-2 stealth bombers, Tomahawk cruise missiles, HIMARS rocket systems, carrier strike groups, and the GBU-57 Massive Ordnance Penetrator — the only weapon in the US arsenal capable of breaching Iran’s deepest hardened facilities.

The opening strikes killed Supreme Leader Ali Khamenei along with dozens of senior Iranian officials. In a single morning, the Islamic Republic lost the apex of its command structure. Iran’s response came within hours — designated Operation True Promise 4. Hundreds of ballistic missiles and thousands of drones were directed at Israel, at US military bases across the Gulf, and at civilian infrastructure in neighbouring states. The UAE, Bahrain, Qatar, Kuwait, Saudi Arabia, and Jordan all absorbed strikes on the first day.

CSIS analysts Joseph Rodgers and Bailey Schiff, writing on the day of the strikes, noted the critical unknown that would define the weeks ahead: Iran still possessed 400 kilograms of 60 percent enriched uranium, and ‘the exact location of that nuclear material remains unknown.’ Furthermore, if Iran’s Atomic Energy Organisation collapsed under the pressure of war, dispersed nuclear scientists could pose proliferation risks to non-state actors or outside countries. The war had begun with an act of overwhelming conventional force. Its most dangerous consequence might be invisible.

Twenty-one miles. At its narrowest point, the Strait of Hormuz is twenty-one miles wide. Within that passage, two navigable shipping lanes each measure two miles across, separated by a two-mile buffer zone. Through this sliver of water, in normal times, passes approximately twenty million barrels of oil every day — roughly twenty percent of all oil consumed globally. On March 2, 2026, Iran closed them.

The IRGC transmitted warnings via VHF radio to every vessel in the strait: passage was ‘not allowed.’ On March 4, the IRGC declared it had achieved ‘complete control’ of the waterway. What followed was the largest supply disruption in the history of the global oil market — a designation the International Energy Agency applied itself. The mechanics of the closure did not require a naval blockade in the classical sense. Speed boats, shore-based anti-ship missiles, sea mines, and attack drones gave Iran the capacity to threaten any vessel attempting passage. The threat alone was sufficient. Within days, tanker traffic collapsed by more than ninety percent.

Some 2,000 ships became stranded across the Gulf region. Approximately 400 vessels held position in the Gulf of Oman, waiting. Iran enforced a selective passage system — Chinese-flagged tankers were allowed through, a geopolitical signal of considerable significance. One vessel reportedly paid two million dollars for the privilege. Iran demanded that any vessel wishing to transit must agree to sell its cargo in Chinese yuan rather than US dollars — a condition that struck at the petrodollar system itself.

The IMO confirmed at least eighteen attacks on vessels across the Gulf since the war began, including the March 11 ramming of a Safesea oil tanker by two unmanned ships, which killed one crew member. The major carriers — Maersk, Hapag-Lloyd, CMA CGM, MSC — all suspended Hormuz transits and imposed emergency freight surcharges. Insurance premiums for war risk coverage surged by three hundred percent.

By April 5, tanker traffic through the strait remained near zero for most commercial operators. The industry’s verdict was sobering. Nils Haupt of Hapag-Lloyd told Al Jazeera that even when the war officially ended, the logistics war would just be beginning. Oscar Seikaly, CEO of NSI Insurance Group, was more categorical: for war-risk coverage to return to normal rates, resolution ‘must be truly permanent and security guaranteed at one hundred percent, not partial or ninety percent.’ The question was no longer whether Iran could close the strait. It had. The question was whether the world could function until it reopened.

Five weeks into the most consequential American military operation in the Middle East since 2003, the war that was supposed to be decisive has become something more complicated: a grinding contest of wills between a superpower with unmatched airpower and a regional power that has chosen the global economy as its battlefield.

As of April 5, 2026, CENTCOM reports more than 12,300 targets struck across Iran and the region, 155 Iranian naval vessels damaged or destroyed, and 13,000 combat flights flown. By the US military’s own accounting, Iran has lost ninety percent of its missile launch capability and ninety-five percent of its drone production capacity. And yet the Strait of Hormuz remains closed.

On April 1, President Trump addressed the nation in a primetime speech, floating a two-to-three week timeframe for ending direct US operations. Markets responded: Brent crude fell back below one hundred dollars per barrel in intraday trading. Asian stock markets surged. The optimism was fragile. Iran denied it had asked for a ceasefire. Its foreign minister called Trump’s statements ‘unrealistic, illogical and excessive.’ The IRGC announced a new wave of strikes on US and Israeli targets the same morning Trump spoke. An Iranian missile wounded eleven people in central Israel.

A Four-Nation Mediation Bloc comprising Pakistan, Turkey, Saudi Arabia, and Egypt has established a backchannel framework in Islamabad. Trump’s envoy Steve Witkoff confirmed the US had presented a fifteen-point framework for peace via Pakistan. Tehran rejected it. Iran’s President Pezeshkian said Iran has ‘the necessary will to end this conflict,’ but conditioned resolution on security guarantees Washington has not offered. Inside Iran, the IRGC has hardened its position: Mojtaba Khamenei’s appointment as Supreme Leader was not an opening. It was a declaration of continuity.

Trump’s April 6 deadline for Iran to reopen the strait — under threat of strikes on power plants and possibly desalination infrastructure — expires tomorrow. As of this edition, no agreement has been reached. The next forty-eight hours may be the most consequential of the entire conflict.

Every war has its logic. The logic of the 2026 Iran war rests on a triangle of interests so deeply entangled that it is impossible to understand any one actor without understanding all three. The United States brought the firepower. Israel brought the intelligence and the will. Iran brought the one weapon no amount of airpower could immediately neutralise: geography.

The United States brought to this operation the full weight of its conventional military superiority: B-2 stealth bombers, Tomahawk cruise missiles, HIMARS rocket systems, carrier strike groups, and the GBU-57 Massive Ordnance Penetrator. What the United States did not bring was allied consensus. The operation was launched without consulting NATO, without a UN Security Council mandate, and with a War Powers notification to Congress rather than formal authorisation. Spain refused use of its airbases. Germany, Japan, the UK, and others declined to contribute warships to escort operations in the Strait. Trump’s frustration at NATO’s non-participation culminated in his April 1 suggestion that he was considering withdrawing the United States from the alliance.

Israel’s role in Operation Epic Fury was constitutive, not secondary. Its intelligence apparatus identified the precise timing and location of Khamenei’s meetings. Its fighter aircraft delivered the decapitation strikes. RAND’s Shira Efron captured the Israeli calculus precisely: even if the Islamic Republic survives in some form, the degradation of its missile arsenal and the setback to its nuclear programme represent a genuine improvement in Israel’s security environment — one that buys years, if not decades, of reduced threat. The risk is that Israel remains tied down in Lebanon, in Gaza, and now in a sustained aerial campaign over Iran with no clear endpoint.

Iran’s strategic position as the war began was one of accumulated weakness and residual power. Years of sanctions had hollowed out its economy. The Twelve-Day War had degraded its air defences and nuclear programme. Its key proxies had been significantly weakened. On paper, the moment the United States and Israel chose to strike was well chosen. And yet Iran had a weapon neither adversary had fully priced in: the ability to make the war catastrophically expensive for the entire global economy by closing twenty-one miles of water. The appointment of Mojtaba Khamenei as Supreme Leader — a direct contradiction of the Islamic Republic’s founding rejection of dynastic succession — signalled that the IRGC had chosen continuity and defiance over accommodation.

When the missiles began falling on February 28, the Arab states of the Persian Gulf found themselves in a position that none had sought and none had been consulted about: caught between an Iranian neighbour that had just been attacked by their American ally, and an American ally that expected them to absorb Iranian retaliation without complaint. They absorbed a great deal of it. By April 1, the UAE’s air defences had intercepted 438 ballistic missiles, 19 cruise missiles, and 2,012 drones. Kuwait’s international airport had been set ablaze by drone fire. Saudi Arabia’s Eastern Province had endured repeated strikes. Bahrain, host to the US Navy’s Fifth Fleet, took direct hits. Qatar’s Al Udeid Air Base, the largest American military installation in the Middle East, was struck repeatedly.

Saudi Arabia condemned what it called ‘flagrant and brutal Iranian aggression’ and reserved the right to respond. Crown Prince Mohammed bin Salman, who had reportedly urged Trump to ‘keep hitting the Iranians hard’ in calls before the war, was not publicly seeking de-escalation. Qatar’s position was more complicated — simultaneously hosting CENTCOM at Al Udeid, Qatar shot down two Iranian Su-24 bombers in retaliation while maintaining back-channel communications with Tehran and positioning itself as a future mediator.

Turkey absorbed an Iranian ballistic missile in its Hatay province. President Erdogan condemned both the US-Israeli strikes on Iran and Iran’s retaliatory strikes on its Arab neighbours — a studied ambiguity that reflected Turkey’s position as a NATO member with complex ties to both sides. NATO Secretary General Mark Rutte confirmed the alliance’s commitment to defending Turkey. Iran denied firing the missile, claiming it was an Israeli false flag. The incident crystallised Turkey’s impossible position.

Iraq deserves particular attention. Ninety percent of Iraq’s state budget comes from oil revenue. Ninety percent of its food, medicine, and goods imports transit the Strait of Hormuz. Iran-aligned militias on Iraqi soil attacked US bases. The Iraqi government — deeply penetrated by Iranian influence but formally aligned with the United States — issued statements condemning both sides simultaneously. RAND’s Raphael Cohen framed the long-term realignment with precision: Iran chose to strike countries throughout the region, including some previously neutral toward Tehran. The geopolitical landscape of the Middle East may look very different once the dust settles.

The most consequential players in the 2026 Iran war may be the two that have not fired a single missile. China and Russia have watched Operation Epic Fury unfold from what appears, at first glance, to be a position of careful neutrality. Neither has intervened militarily. But neutrality is not the right word for what they are doing. Atlantic Council analysts Kimberly Donovan and Emily Ezratty — both former senior officials in the US economic policy community — describe it as participation through supply chains: a form of strategic enablement that predates the war and has intensified since it began.

For years before February 28, China, Russia, and Iran had been constructing what the Atlantic Council’s GeoEconomics Center terms the ‘Axis of Evasion’ — an integrated network of supply chains, payment systems, and shell companies designed to circumvent Western sanctions. Iranian drones built from Chinese-routed electronics, navigation technology including access to China’s BeiDou positioning system, and chemical precursors for missile propellant have all flowed through this network. Russia established a drone production facility at its Alabuga Special Economic Zone using Iranian technology and expertise. The Kremlin then began supplying Iran with Russian-made Shahed variants. What began as a sanctions workaround evolved into a trilateral military-industrial ecosystem.

Russia’s strategic position in the 2026 Iran war is, by any measure, advantageous. The Peterson Institute for International Economics estimated that in a three-month war scenario, Russia could earn an additional $161 billion in export revenues. The Hormuz closure has stranded Gulf oil that would normally undercut Russian prices in Asian markets. Trump’s temporary waiver of Russian oil sanctions has deepened Moscow’s windfall further. Russia’s calculation is cold and rational: let the United States degrade Iran, collect the energy profits, and watch Washington’s alliances fray.

China’s position is more complex. The Strait of Hormuz carries approximately 5.4 million barrels of oil per day to China. Beijing has pursued a characteristic dual track: negotiating directly with Tehran for safe passage of Chinese-flagged vessels, drawing down its strategic petroleum reserves estimated at roughly 104 days of imports, and purchasing stranded Iranian oil cargoes paid for in renminbi through China’s CIPS system. Iran’s condition that Hormuz passage be contingent on renminbi-denominated payment has done more to normalise yuan-based oil trade than years of Chinese diplomatic effort. RAND’s Howard Shatz captured the essence precisely: China and Russia are not Iran’s saviours. They are its enablers — profiting from the war without paying its costs.

Of all the major powers navigating the 2026 Iran war, none faces a more genuinely impossible set of choices than India. It is the only country in the world that has simultaneously deepened its strategic partnership with the United States, maintained investments in Iran’s Chabahar Port, relied on Gulf Arab states for the remittances of ten million overseas workers, watched its LNG supply from Qatar disrupted, and been offered a US sanctions waiver to buy Russian oil — all in the same five-week period. India’s response has been defined by a single word: restraint.

The reasons are structural. India sources roughly fifty-three percent of its oil imports from the Middle East, with a significant share transiting the Strait of Hormuz. Its LNG supply from Qatar has been severely disrupted since QatarEnergy declared force majeure in early March. Its investment in Iran’s Chabahar Port — designed to give India access to Afghanistan and Central Asia without crossing Pakistan — is suspended in effective limbo. The US Treasury’s decision to grant India a temporary thirty-day emergency waiver to purchase stranded Russian oil cargoes was simultaneously a lifeline and a demonstration of exactly how much Washington could manipulate India’s energy access as a foreign policy lever.

Chinese Foreign Minister Wang Yi urged closer coordination within BRICS during the crisis, signalling that the alternative to US-dependent energy is a renminbi-denominated energy architecture anchored by BRICS solidarity. India has not accepted that invitation. It has also not rejected it. What India is doing — with considerable diplomatic skill — is buying time. Its strategic value to both Washington and Beijing means that neither can afford to lose it. India’s restraint is not weakness. It is leverage, carefully preserved in a conflict where every other major actor has been forced to show their hand. When the war ends, India will need to decide where it stands in a Middle East remade by conflict. That decision, which New Delhi is doing everything possible to defer, may prove to be the most consequential foreign policy choice of a generation.

Hezbollah is, in the words of the Council on Foreign Relations, ‘a state within a state’ — an organisation that over four decades has accumulated the functions of a government, the arsenal of a mid-sized military, and the ideological conviction of a revolutionary movement, while remaining constitutively dependent on a patron whose interests and its own have been inseparable since the organisation’s founding day.

The year is 1982. Israel has invaded Lebanon for the second time in four years. Iran’s Islamic Revolutionary Guard Corps deployed approximately 1,500 advisers to Lebanon’s Bekaa Valley and unified a collection of Shiite factions into an organisation they called Hezbollah: ‘The Party of God.’ In 1985, Hezbollah published its founding manifesto: expulsion of Western forces from Lebanon, destruction of Israel, and explicit allegiance to Iran’s Supreme Leader. The organisation’s early years were marked by spectacular violence — the 1983 bombing of US and French barracks in Beirut killed over three hundred people.

By 2000, Hezbollah had fought the Israeli military to a standstill and forced a withdrawal from southern Lebanon. Its leader Hassan Nasrallah — who took over in 1992 after Israel assassinated his predecessor — became a figure of enormous popular prestige. By the time of the 2026 Iran war, Hezbollah had been considerably weakened by the Israeli campaign that began in September 2024. Nasrallah himself had been killed in an Israeli strike on September 27, 2024. His deputy Naim Qassem assumed leadership.

When Operation Epic Fury began on February 28, 2026, Hezbollah chose conflict over ceasefire. On March 2, four days after the US-Israeli strikes on Iran began, it launched rockets into northern Israel for the first time since the November 2024 ceasefire. Since then it has sustained barrages that have killed Israeli civilians and soldiers, launched drone attacks that struck a British RAF base in Cyprus, and provided Iran with a second front that has forced Israel to fight simultaneously on both its northern and southern flanks. Israel responded on March 17 with a limited ground invasion of southern Lebanon. RAND analyst Kyle Kilian captured the strategic reality: Hezbollah is fighting a war of attrition with a leadership structure already decimated before this conflict began, and weapons stockpiles being further depleted. What its role in the post-war Middle East will be remains one of the conflict’s defining open questions.

In the rugged mountains of northwestern Yemen, in a province called Sa’ada that sits hard against the Saudi border, a movement was born that most of the world had never heard of — until it began shutting down global shipping lanes. The Houthis — formally Ansar Allah, ‘Defenders of God’ — are the product of a grievance as old as modern Yemen itself, rooted in a Zaydi Shia tradition that maintained a political imamate in northern Yemen for roughly one thousand years, until a military coup in 1962 ended the imamate and established a republic.

The revivalist movement that would become the Houthis found its most influential voice in Hussein Badr al-Din al-Houthi, a Zaydi politician who organised the Believing Youth network in the 1990s. After the American invasion of Iraq in 2003, Hussein al-Houthi adopted a chant that would define his movement: ‘God is great, death to America, death to Israel, curse the Jews, victory for Islam.’ The Saleh government moved to crush him. In September 2004, Yemeni forces killed him. His brother Abdul-Malik took over. The movement, now militarised by persecution, grew. Between 2004 and 2014, the Houthis fought six rounds of armed conflict, captured Sanaa, and forced President Hadi to flee.

Iran’s relationship with the Houthis is real but more complicated than Tehran’s relationship with Hezbollah. The Houthis were not created by Iran — they emerged from Yemen’s internal politics. Iranian military support is estimated to have begun around 2009, years after the movement had already demonstrated its viability. The Houthis practice Zaydism, not Twelver Shiism. The partnership is transactional as much as ideological.

When Operation Epic Fury began on February 28, the Houthis announced they would resume attacks on shipping and on Israel. On March 28, four weeks into the conflict, they formally entered the war, firing ballistic missiles toward Beersheba in southern Israel. The Houthis’ control of Yemen’s Red Sea coast gives them leverage over the Bab el-Mandeb Strait — the southern chokepoint of the Red Sea, through which much of the world’s container trade flows. Whether they will move to severely disrupt the Bab el-Mandeb — a step that would extend the shipping crisis from the Gulf to the entire Indo-Pacific trade route — remains the most consequential military decision still unmade in this war.

Before a single missile was fired on February 28, 2026, the Persian Gulf was already the most consequential energy region on earth. What the war has done is make visible what the world had long chosen to treat as a given — that a staggering proportion of global civilisation’s energy supply flows through a geography that was always, in truth, fragile.

In 2025, approximately twenty million barrels of crude oil and petroleum products passed through the Strait of Hormuz every day, according to the International Energy Agency. That represents roughly twenty-five percent of all seaborne oil trade. The critical question is not how much flows through the strait in absolute terms, but who receives it. The answer is Asia. An estimated eighty-four percent of crude oil and condensate shipments through the strait are destined for Asian markets. China alone receives approximately 5.4 million barrels per day through Hormuz. Japan imports ninety percent of its crude from the Middle East. South Korea channels sixty-eight percent of its crude imports through the passage.

Kharg Island, Iran’s primary crude oil export terminal, accounting for approximately 90% of Iran’s oil exports in peacetime. Satellite imagery, open-source mapping.

Saudi Arabia and the UAE have pipelines that bypass the Strait of Hormuz. Saudi Arabia’s East-West Pipeline has a capacity of approximately five to seven million barrels per day. The UAE’s Abu Dhabi Crude Oil Pipeline handles approximately 1.5 million barrels. Together, a maximum of nine million barrels per day can be rerouted — less than half the twenty million that normally transit the strait. Iraq, Kuwait, Qatar, and Bahrain have no alternative export routes whatsoever. And even the existing pipelines face limitations: they pass within range of Iranian missiles and drones, and Iran has struck pumping stations and port facilities in the UAE since the war began. The arithmetic of global energy dependency, built over decades on the assumption that the strait would always be open, has no elegant solution when the assumption fails.

It is twenty-one miles wide at its narrowest point. The navigable shipping lanes within that passage measure two miles each, with a two-mile buffer zone between them. In a world of continental scale and oceanic distances, these are almost comically small numbers. And yet the Strait of Hormuz sits at the intersection of the global economy’s most fundamental dependency: the need for energy.

Three pipelines have emerged as the world’s imperfect answer to the closure. Saudi Arabia’s East-West Pipeline — the Petroline, operated by Aramco — runs 1,200 kilometres from the Abqaiq processing centre on the Gulf coast to the Yanbu port on the Red Sea. In theory it can carry up to seven million barrels per day; by late March, Saudi Arabia had ramped flows from an average of 770,000 barrels per day before the war to nearly three million — a significant effort, but still far short of what Hormuz normally carries. The UAE’s Abu Dhabi Crude Oil Pipeline handles approximately 1.5 million barrels per day. The Iraq-Turkey Pipeline carries approximately 200,000 barrels per day, a fraction of its 1.6 million barrel design capacity. Together these three pipelines offer roughly nine million barrels per day of alternative capacity — against twenty million that normally flow through the strait.

The deeper and more durable challenge is not the backlog or the rerouting costs. It is the Bab el-Mandeb Strait — the narrow passage between Yemen and Djibouti at the southern end of the Red Sea, only twenty-nine kilometres wide at its narrowest point. Through it flows oil from the Saudi Red Sea ports, rerouted from Hormuz. The Houthis have demonstrated, through their 2023-2025 Red Sea campaign, that they can severely disrupt traffic through the Bab el-Mandeb. A Houthi decision to activate that capability simultaneously with the Hormuz closure would effectively sever two of the world’s most critical energy arteries simultaneously. As of April 5, the Bab el-Mandeb remains open, though Houthi commanders have issued public statements saying they ‘stand fully militarily ready with all options.’

On October 17, 1973, Arab oil-exporting nations retaliated against the United States’ military support for Israel during the Yom Kippur War. They raised the price of oil by seventy percent, cut production by five percent per month, and banned oil shipments to the United States, the Netherlands, Portugal, and South Africa. The weapon was oil. The target was politics. The embargo removed 4.5 million barrels per day from global supply — roughly seven percent of what the world was consuming. The results were immediate and severe. American drivers faced forty-five percent increases in petrol prices. The United Kingdom introduced a three-day workweek. Japan watched its economic growth reverse from eight percent expansion to 1.2 percent contraction in a single year. The International Energy Agency was founded in 1974 as a direct response — to coordinate emergency reserve releases so that no single country could be held hostage to a production cut.

The 2026 disruption is not a production cut. It is a transit closure. And the scale comparison is brutal. In 1973, the shortage was 4.5 million barrels per day. In 2026, the closure of the Strait of Hormuz has stopped the transit of approximately twenty million barrels per day — roughly three times the scale of the 1973 shock, delivered not gradually over weeks but effectively overnight. Brent crude was trading at $66 per barrel on February 27, 2026. Within a week it had crossed $100. By mid-March it had reached $106. At its peak, Brent touched $126 per barrel.

The structural differences between 1973 and 2026 are as revealing as the scale comparison. In 1973, the shock fell primarily on Western economies — which had both the resources and the institutions to respond. The 1973 crisis ultimately drove Western energy diversification: North Sea oil, US shale, nuclear power, LNG. Oil’s share of global primary energy has fallen from 46.2 percent in 1973 to roughly 30 percent today. But that diversification has been overwhelmingly concentrated in OECD economies. The developing Asian markets most exposed to the 2026 shock — Vietnam, Pakistan, Bangladesh, Indonesia — remain intensely dependent on Gulf oil. Vietnam holds fewer than twenty days of oil reserves. Pakistan and Indonesia hold approximately twenty days each. The IEA’s emergency release of 400 million barrels provides approximately twenty days of normal Hormuz transit volume. It is a buffer, not a solution.

The number that has defined the war’s economic dimension is not a casualty count or a missile tally. It is a price: one hundred dollars per barrel of Brent crude oil. Every dollar added to the price of a barrel of oil ripples outward through the global economy in ways that are immediate and visible — petrol stations, airline surcharges, heating bills — and in ways that are slower and more insidious: fertiliser costs, food prices, shipping premiums, inflation expectations, central bank decisions, and ultimately the pace of economic growth itself.

Before the war began, Brent crude was trading at $66 per barrel. Within one week it had crossed $100. At its peak in mid-March it reached $126. The World Economic Forum’s Robert Muggah described the war’s economic fallout as a series of concentric rings emanating from the Gulf. The first ring is oil, gas, shipping, and aviation — the immediate energy shock, already fully visible. The second ring is inflation, industrial costs, and food security — emerging over weeks and months. The third ring is trade routes, investment decisions, and political stability — the structural damage that will define the post-war landscape.

The fertiliser shock is potentially devastating, though it has been largely overlooked in mainstream coverage. The Gulf is a major artery for urea, ammonia, sulfur and other fertiliser inputs. Prices for urea, the world’s most widely used synthetic nitrogen fertiliser, have risen approximately thirty percent over the past month. Northern hemisphere spring planting is beginning. Farmers from Canada to India to sub-Saharan Africa are making purchasing decisions against a backdrop of price spikes and supply uncertainty. The fertiliser shock will not register in headline inflation numbers for months. It will register in crop yields later in the year.

The helium dimension has received almost no mainstream coverage but deserves attention. Qatar’s Ras Laffan energy hub — struck by Iranian drones — is a major source of global helium, a byproduct of natural gas processing. The war has already removed approximately one-third of the world’s helium supply from the market. Helium is essential for semiconductor manufacturing and medical imaging. Japan imports ninety percent of its crude from the Middle East. South Korea routes more than ninety-five percent of its Middle Eastern oil imports through the strait. Oxford Economics modelled the prolonged-war scenario: global GDP growth slowing to 1.4 percent for the full year 2026, global inflation reaching 7.7 percent.

There is a thought experiment that shipping executives have been running since early March 2026, and its conclusion is uncomfortable for everyone hoping for a quick resolution: suppose the Strait of Hormuz reopens tomorrow. What happens? The answer, according to every major industry voice that has examined the question, is months of continued disruption. Perhaps a year before something approaching normality returns. And in some respects, a permanent alteration in how the shipping industry calculates risk.

When the IRGC declared the strait closed on March 2, approximately 2,000 ships became stranded across the Gulf region, according to the International Maritime Organization. Around 400 vessels held position in the Gulf of Oman, waiting. Nils Haupt, senior director for corporate communications at Hapag-Lloyd, put it directly: ‘When the war is officially over, and the bombardments are stopped, that does not mean that the war is over for logistics, because then the real work starts.’ Svein Ringbakken of the Norwegian Shipowners’ Mutual War Risks Association confirmed: ‘The short answer is that it would take months to get shipping supply chains back to normal because of the backlog.’

For ships that have not waited, the alternative routes are punishing. The Cape of Good Hope route adds ten to fourteen days to voyage times. Ships that were completing four voyages per year can now complete three. The effective global shipping capacity has contracted without a single vessel being added to or removed from the world’s fleet. War-risk insurance premiums have risen by three hundred percent. One vessel that transited through Iranian authorisation reportedly paid two million dollars for the privilege. The major carriers have all imposed emergency freight surcharges on Gulf-bound cargo. Air France-KLM raised its long-haul baggage fees citing surging jet fuel costs.

Nick Marro, the Economist Intelligence Unit’s lead analyst for global trade, drew the parallel with the Houthi Red Sea campaign: traffic through the Red Sea remains below pre-2023 levels even now. Oscar Seikaly of NSI Insurance Group was unambiguous: for war-risk coverage to return to normal rates, resolution ‘must be truly permanent and security guaranteed at one hundred percent, not partial or ninety percent.’ The long-term consequence is structural: global shipping companies will permanently reprice the Gulf as a risk zone, diverting traffic where possible to alternative routes and building redundancy into supply chains that previously assumed Hormuz was reliable.

The word that economists have been most reluctant to say, and most unable to avoid, is stagflation. The combination of rising prices and stagnating growth — the defining economic pathology of the 1970s, the one that the world spent a decade and severe recessions to cure — is back on the table. Not as a certainty. As a serious risk.

The International Monetary Fund delivered its clearest assessment on March 31. In a blog written by its top economists, the IMF warned that the war was causing a ‘global, yet asymmetric shock’ — a disruption that would push inflation higher and growth lower across the world economy, while distributing its pain with profound unevenness. The phrase the economists settled on — ‘all roads lead to higher prices and slower growth’ — was not the IMF’s usual measured institutionalism. It was a warning.

Global stock markets fell sharply in the immediate aftermath of the February 28 strikes, with Asian markets bearing the worst of the initial shock. The European Central Bank paused its rate reduction cycle on March 19, raising its inflation forecast and cutting its GDP growth projection. The OECD projects that US inflation will reach 4.2 percent in 2026. UK inflation is expected to breach five percent — the worst among major European economies. In Germany, annual GDP growth has been revised down to 0.6 percent. The G7 finance ministers acknowledged the difficulty on March 31, issuing a statement that they were ready to take ‘all necessary measures’ to safeguard energy market stability — language deliberately vague, because the honest answer is that the measures available are limited.

Oxford Economics modelled the prolonged-war scenario in stark terms: global GDP growth slowing to 1.4 percent for the full year 2026, global inflation reaching 7.7 percent — close to the 2022 peak triggered by Russia’s invasion of Ukraine. But unlike 2022, this shock arrives at a moment when fiscal deficits in most advanced economies leave less room for the kind of household income support that cushioned the 2022 blow. The IMF will release a full World Economic Outlook on April 14. Whatever it says, it will be out of date before the ink is dry.

Since 1974, the invisible currency beneath global oil trade has been the US dollar. The petrodollar system — forged in a secret agreement between the Nixon administration and Saudi Arabia in the aftermath of the 1973 oil embargo — created a self-reinforcing loop: Gulf oil is priced and sold in dollars, generating enormous dollar surpluses that are recycled into US Treasury securities and American capital markets, which sustains demand for the dollar as the world’s reserve currency, which allows the United States to borrow at low rates and run persistent trade deficits.

The 2026 Iran war has introduced, for the first time, a serious and immediate challenge to that system — not through a policy decision or a summit communiqué, but through a single condition attached to transit through a chokepoint. On March 2, as Iran declared the Strait effectively closed, Iranian officials communicated a condition for selective passage: any vessel wishing to transit with Tehran’s authorisation must settle its cargo in Chinese yuan through China’s Cross-Border International Payment System (CIPS), rather than in US dollars. This was not symbolic. It was immediately applied to multiple vessels.

Prof Dr. Maszlee Malik and Wan Naim Wan Mansor, writing in the Middle East Monitor on March 14, argued that the war ‘may ultimately matter less for its immediate military consequences than for the pressures it places upon the foundations of the existing monetary order.’ Deutsche Bank analysts warned on March 18 that if yuan-denominated oil settlement became even semi-permanent, it would represent a structural rather than cyclical shift in global petrodollar flows. The dollar’s share of global foreign exchange reserves has already fallen to approximately 56.77 percent — the lowest since 1995.

Fortune’s coverage of the petrodollar debate provides a necessary corrective. Several leading economists have argued that dollar dominance is not seriously threatened by the 2026 war. The network effects that entrench dollar primacy — the depth and liquidity of US financial markets, the absence of any credible alternative reserve asset at comparable scale — cannot be unwound by a few months of yuan-denominated oil transits through a single chokepoint. What the 2026 war may actually produce is not dollar collapse but dollar erosion: a gradual narrowing of the margin by which the dollar dominates global settlement, accelerating a shift that was already underway. The petrodollar system will not end with this war. But it may be the moment when the world began, seriously and at scale, to look for what comes next.

Wars are fought in blood and steel. They are also fought in currencies. The five weeks since Operation Epic Fury began have produced the clearest currency verdict yet on which economies are exposed to the war, which are relatively insulated, and which have been devastated outright.

The US dollar index has gained approximately 2.5 percent in March 2026 alone — its best monthly performance since July 2025. The dollar has benefited from two simultaneous dynamics: safe-haven demand, as risk-averse capital flows to the world’s reserve currency in times of geopolitical crisis; and the unique position of the United States as a net energy exporter, meaning that higher oil prices improve rather than damage America’s terms of trade. MUFG Research, in its March 23 FX Weekly, noted that any intensification of the conflict ‘can only result in renewed US dollar strength.’

The euro has fallen approximately 2.5 percent against the dollar in March — its worst monthly decline since July 2025. The ECB’s decision to pause its rate-cutting cycle on March 19 encapsulates Europe’s policy paralysis: caught between the need to combat imported inflation and the risk of strangling growth. Sterling has fared worse than the euro, declining approximately 1.75 to 1.9 percent against the dollar — its worst monthly performance since October 2025. The Japanese yen weakened past 160 per dollar before Japanese officials intervened verbally and materially. Finance Minister Satsuki Katayama warned of readiness to respond ‘on all fronts’ against volatile moves.

The most extreme currency movement belongs to Iran itself. The rial had already reached record lows before the war began — touching 1,500,000 rials to the US dollar on January 27, following months of protest-triggering hyperinflation. By late February, open-market trackers placed the street rate at 1.6 to 1.7 million rials per dollar. Since the war began, the rate has deteriorated further toward 1.75 million rials per dollar. At the time of the 1979 Iranian Revolution, one US dollar exchanged for approximately 70 rials. Today it exchanges for more than 1.75 million. Iran’s currency has lost roughly 20,000 times its value over four and a half decades.

At 2:00 PM on September 22, 1980, Iraqi fighter jets swept low over Tehran’s Mehrabad Airport and ten other Iranian air bases. Without warning, without a formal declaration of war, Saddam Hussein had decided to act. He had been watching the chaos of Iran’s year-old Islamic Revolution — the purged officer corps, the fractured command structures, the revolutionary tribunals executing generals — and concluded that this was the moment. Iran was weak. Iraq would be quick. The war, his advisers told him, would be over in weeks. It lasted eight years.

By the time UN Security Council Resolution 598 brought a ceasefire into effect on August 20, 1988, between 500,000 and one million people were dead. Both regimes were still standing. No borders had changed. Neither side had achieved its war aims. It was one of the most destructive conflicts of the late twentieth century — and it ended exactly where it began.

The Iran-Iraq War’s long shadow reaches directly into 2026. The IRGC — the Islamic Revolutionary Guard Corps, founded in 1979 as a parallel military structure loyal to Khomeini rather than to the army — emerged from the war as a battle-hardened institution with its own doctrine, culture, and political power. The commanders who shaped the IRGC’s doctrine in the 1980s became the architects of the ‘forward defence’ strategy that deployed Hezbollah, Hamas, and the Houthis as Iran’s first lines of defence against the threat that has now, in 2026, finally arrived at Persian soil directly.

The Tanker War — Iraq’s systematic targeting of Iranian oil exports in the Persian Gulf, and Iran’s retaliatory attacks on Gulf shipping — brought the superpowers directly into the conflict. In 1987 the United States agreed to reflag Kuwaiti tankers and escort them through the Strait of Hormuz. The precedent — American naval forces protecting Gulf oil transit against Iranian interdiction — would echo directly into 2026. Iraq also emerged from the war with a million-man army, an armaments industry capable of producing missiles and chemical weapons, and a debt burden exceeding eighty billion dollars — owed largely to Kuwait and Saudi Arabia. Unable to repay and unwilling to be patient, Saddam invaded Kuwait on August 2, 1990. The chain from the Iran-Iraq War to the Gulf War to the 2003 Iraq War to the chaos that followed is direct and unbroken.

On August 2, 1990, a force of one hundred thousand Iraqi troops crossed the border into Kuwait and overran the country in a matter of hours. Saddam Hussein had calculated, with the same fatal confidence he had shown a decade earlier when he invaded Iran, that the world would accept a fait accompli. He was wrong again.

President George H.W. Bush’s response was the model of multilateral coalition building that his son’s 2003 invasion would conspicuously abandon. A coalition of thirty-four nations was assembled under UN Security Council authorisation, including Arab powers — Egypt, Syria, Saudi Arabia — that gave the operation a legitimacy that purely American action would never have commanded. The air campaign began on January 17, 1991, and ran for forty-two days. The ground war began on February 24. It lasted one hundred hours. Iraqi forces, outnumbered, outgunned, and demoralised by forty-two days of aerial bombardment, surrendered in mass or retreated. Bush declared a ceasefire on February 28, choosing not to advance on Baghdad — a decision that left Saddam Hussein in power, to be dealt with twelve years later in circumstances that would prove far more costly.

The Gulf War’s most enduring immediate legacy was structural: the United States established a permanent military presence in the Gulf states that had not previously existed. Bases in Saudi Arabia, Qatar, Bahrain, Kuwait, and the UAE became the forward operating infrastructure for all subsequent American military operations in the region. It was this presence — American soldiers stationed permanently in the kingdom that houses Islam’s two holiest cities — that radicalised Osama bin Laden and furnished al-Qaeda’s core operational grievance. The 2001 World Trade Center attacks, and everything that followed from them, trace at least one of their roots to a decision made in the summer of 1990 to defend Saudi Arabia from Iraqi aggression.

The 2026 Iran war is the latest iteration of a strategic problem that the Gulf War of 1991 defined but did not solve: how does the United States manage a Gulf security order that requires permanent American military presence, generates permanent Islamist resistance to that presence, and depends on the continued goodwill of authoritarian Gulf states whose interests align with Washington’s only partially and intermittently? The 1991 coalition — built through UN authorisation, Arab participation, and allied cooperation — stands in the starkest possible contrast to Operation Epic Fury, launched without allied consultation, without UN sanction, and with the explicit hostility of NATO partners who declined to participate.

Everything that has happened in the 2026 Iran war flows, in one way or another, from a single fact that the world spent twenty-five years trying to manage and ultimately failed to resolve: Iran’s nuclear programme. To understand why the United States and Israel launched Operation Epic Fury on February 28, 2026, you must trace the nuclear file from its beginning — from the moment the world learned Iran had been lying about what it was building, through the decade of diplomacy that produced a deal, through the American withdrawal that unravelled it, through the strikes that physically damaged the programme, and finally to the war that was supposed to end it.

In August 2002, the National Council of Resistance of Iran disclosed the existence of two undeclared nuclear facilities: a large underground uranium enrichment plant at Natanz and a heavy-water reactor under construction at Arak. Both had been built in secret, in violation of Iran’s NPT safeguards obligations. In 2009, Western intelligence revealed a third secret facility: the Fordow Fuel Enrichment Plant, carved into a mountain near Qom. The discovery of these three sites defined the subsequent two decades of international nuclear diplomacy. In July 2015, the Joint Comprehensive Plan of Action was agreed by Iran and the P5+1. The deal was, by the assessment of most non-proliferation experts, a genuine achievement: Iran agreed to reduce its enrichment to 3.67 percent, cap its enriched uranium stockpile at 202 kilograms, reduce its operating centrifuges from nearly 20,000 to approximately 5,060, and submit to intrusive IAEA monitoring. The estimated ‘breakout time’ — the time Iran would need to accumulate enough weapons-grade uranium for one bomb — was extended to approximately one year.

In May 2018, President Trump unilaterally withdrew the United States from the JCPOA, imposing a ‘maximum pressure’ sanctions campaign. Iran began systematically breaching its commitments. By late 2024, according to the Arms Control Association, Iran could produce enough weapons-grade uranium for five to six nuclear devices in less than two weeks. In June 2025, Israel launched Operation Midnight Hammer — strikes against Iran’s nuclear facilities — later joined by US forces. Natanz, Fordow, and Isfahan were struck. But the 460-kilogram stockpile of 60 percent enriched uranium was not destroyed. Its precise location was never confirmed before or after the strikes.

Operation Epic Fury targeted the remnants of Iran’s nuclear programme. But the stockpile remains the central unsolved problem. Trump, asked about it on April 1, said: ‘That’s so far underground, I don’t care about that.’ The IAEA and the nuclear non-proliferation community care very much. If the Islamic Republic collapses, the concern shifts from a state nuclear programme to something potentially more dangerous: dispersed scientists, unaccounted fissile material, and the knowledge — developed over three decades — of how to enrich uranium to weapons grade. The nuclear file that opened in a mountain in Qom in 2002 has not been closed by the war. It has been suspended, at enormous cost, in a condition of dangerous uncertainty.