Ongoing Iran War Deepens Global Economic Woes

Attacks on Gulf energy infrastructure threaten to prolong worldwide economic pain for months, even years

Mar. 30, 2026 at 1:30pm

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A minimalist illustration using abstract geometric shapes and primary colors to conceptually represent the global economic turmoil caused by the ongoing conflict in the Persian Gulf region.The escalating geopolitical conflict in the Persian Gulf threatens to prolong worldwide economic pain through disrupted energy supplies and soaring prices.Boston Today

The ongoing conflict between the U.S., Israel, and Iran has severely disrupted global energy supplies, driving up prices, damaging the world economy, and forcing developing countries to ration fuel and subsidize energy costs to protect their poorest citizens. Strikes on key facilities like Qatar's massive LNG terminal have wiped out significant production capacity, and the blockage of the Strait of Hormuz has cut off a fifth of the world's oil supply. Economists warn the ramifications could last for years as infrastructure is repaired.

Why it matters

The war has triggered an oil shock that threatens to push the global economy into recession, with higher energy and food prices hitting consumers and businesses hard. Poorer nations are especially vulnerable as they struggle to compete for scarce resources. The crisis also evokes memories of the 1970s stagflation, with rising inflation and falling growth.

The details

The attacks have targeted critical energy infrastructure across the Persian Gulf region. Iran struck Qatar's Ras Laffan natural gas terminal, which produces 20% of the world's LNG, wiping out 17% of Qatar's export capacity for up to 5 years. Iran also effectively closed the Strait of Hormuz, a transit point for a fifth of global oil, by threatening tankers. This caused major oil producers like Kuwait and Iraq to cut production due to lack of export routes. Overall, the IEA says this is the "largest supply disruption in the history of the global oil market."

  • The war began on February 28 with Iran's response to U.S. and Israeli attacks.
  • The strike on Qatar's LNG terminal occurred on March 18.
  • Oil prices have risen from around $70 per barrel before the war to over $105 per barrel as of March 25.

The players

United States

A major player in the conflict, conducting attacks on Iran.

Israel

Coordinating with the U.S. in attacks on Iran.

Iran

Retaliating against U.S. and Israeli strikes by targeting energy infrastructure in the Persian Gulf region.

Qatar

Home to a major LNG terminal that was struck by Iran, cutting 17% of global LNG export capacity.

Kuwait and Iraq

Major oil producers who had to cut production due to the blockage of the Strait of Hormuz.

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What they’re saying

“A week ago or certainly two weeks ago, I would have said: If the war stopped that day, the long-term implications would be pretty small. But what we're seeing is infrastructure actually being destroyed, which means the ramifications of this war are going to be long-lived.”

— Christopher Knittel, Energy economist, Massachusetts Institute of Technology

“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

“Nothing weighs more heavily on consumers' collective psyche than having to pay more at the pump.”

— Mark Zandi, Chief economist, Moody's Analytics

What’s next

Economists warn the recovery process will be slow, as repairing the damaged energy infrastructure in the Persian Gulf region could take years. The ongoing threat to global energy supplies means the economic pain is likely to persist for the foreseeable future.

The takeaway

The escalating conflict between the U.S., Israel, and Iran has triggered a major energy crisis that is inflicting severe economic damage worldwide. With key energy facilities destroyed and the Strait of Hormuz blocked, the global economy faces the prospect of prolonged high inflation, slowing growth, and the risk of recession. Poorer nations will be hit hardest as they struggle to afford scarce fuel and food supplies.