Global Economic Woes Deepen as Iran War Drags On

Attacks on Gulf energy infrastructure threaten prolonged worldwide economic pain

Mar. 29, 2026 at 9:18am

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The ongoing war between the U.S., Israel, and Iran has severely disrupted global energy supplies, sending oil and gas prices soaring and forcing developing countries to ration fuel and subsidize energy costs. Damage to key infrastructure like Qatar's LNG terminal could take years to repair, prolonging the economic fallout for months or even years. Experts warn the crisis raises the risk of a global recession, with poorer nations facing the biggest energy shortages as they struggle to compete for scarce resources.

Why it matters

The war in Iran has triggered an energy crisis that is darkening the outlook for the world economy. Higher fuel and energy costs are fueling inflation, dampening growth, and hitting the poorest nations hardest as they compete for limited supplies. The disruption to global energy infrastructure threatens to prolong the economic pain for the foreseeable future.

The details

U.S. and Israeli attacks on Iran have driven up prices, sent global stock markets reeling, and forced developing countries to ration fuel and subsidize energy costs. The loss of 20 million barrels of oil per day from the effective closure of the Strait of Hormuz is the "largest supply disruption in the history of the global oil market." Damage to Qatar's Ras Laffan LNG terminal, which produces 20% of the world's liquefied natural gas, will take up to 5 years to repair. The war has also disrupted supplies of key fertilizers and helium, threatening food production and high-tech industries.

  • The war began on February 28 when Iran responded to U.S. and Israeli attacks by effectively closing off the Strait of Hormuz.
  • On March 18, Iran struck Qatar's Ras Laffan natural gas terminal, wiping out 17% of Qatar's LNG export capacity.

The players

United States

A major player in the conflict with Iran, conducting attacks that have disrupted global energy supplies.

Israel

Partnering with the U.S. in attacks on Iran that have escalated the conflict.

Iran

Responding to U.S. and Israeli attacks by threatening shipping in the Strait of Hormuz and striking energy infrastructure in the region.

Qatar

Home to the Ras Laffan natural gas terminal, which was damaged in an Iranian strike, cutting 17% of the world's LNG exports.

International Energy Agency

Warned that no country will be immune to the effects of the crisis if it continues.

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What they’re saying

“Historically, oil price shocks like this have led to global recessions.”

— Christopher Knittel, Energy Economist, Massachusetts Institute of Technology

“You're raising the risk of higher inflation and lower growth.”

— Carmen Reinhart, Former World Bank Chief Economist, Harvard Kennedy School

“No country will be immune to the effects of this crisis if it continues to go in this direction.”

— Fatih Birol, Head, International Energy Agency

What’s next

Experts warn the process of recovery from the damage to energy infrastructure in the Gulf region will be slow, even under the best circumstances. The duration of the conflict and the extent of further economic damage remain uncertain.

The takeaway

The war in Iran has triggered a global energy crisis that is fueling inflation, dampening economic growth, and hitting the world's poorest nations the hardest as they struggle to compete for scarce fuel and energy supplies. The prolonged disruption to critical infrastructure in the Gulf region threatens to prolong the economic pain for months or even years to come.