TEHRAN- As tensions escalate in the West Asia and the United States builds up its military presence, the world watches with growing unease. A potential conflict with Iran, holder of the world's third-largest oil reserves and controller of one of global energy's most vital arteries, would send shockwaves far beyond the battlefield. While diplomatic efforts continue, with U.S. and Iranian officials reportedly set for talks in Oman, the threat of military action looms large.

Any war would exact a terrible human cost, but the economic consequences would also be profound and far-reaching, hitting global energy markets, destabilizing Iran's neighbors, and ultimately landing on the doorstep of American consumers.

Global energy markets: Shock through the Strait

The most immediate and severe impact of any U.S.-Iran conflict would be felt in global energy markets. Iran sits atop approximately 4.7 million barrels per day of oil production, accounting for roughly 4.4 percent of global supplies. But its true strategic significance lies in its geography: Iran controls the northern coastline of the Strait of Hormuz, a narrow 21-mile waterway through which a staggering volume of the world's oil must pass.

"If a conflict breaks out, Iran may attempt a blockade of the Strait of Hormuz, which would stop the flow of around 20 percent of the world's oil and liquefied natural gas from various Persian Gulf countries. If that happens prices would strike to much higher levels," warns Ajay Singh, a management advisor based in Tokyo and former Shell executive. 

The numbers are stark: more than 14 million barrels per day of oil and condensates traversed this choke point in 2025, representing a third of global seaborne oil exports. For liquefied natural gas, Qatar, which shares the world's largest gas field with Iran, ships virtually all its production through these waters.

Iran has demonstrated its ability to disrupt this route. Its Revolutionary Guard partially closed the strait for several hours in February 2026 to conduct military exercises, and officials have made clear they are prepared to shut it down if ordered. "Lloyd's is not going to allow or insure tankers to go through Hormuz in that kind of environment," notes Bob McNally, founder of Rapidan Energy and former White House energy advisor.

The price implications would be severe. Current projections suggest Brent crude, which has already surged on rising tensions, could rapidly climb toward $80 per barrel in a limited conflict scenario. But a prolonged closure of the Strait would send prices much higher. McNally warns that prices would likely exceed $100 per barrel, curbing demand and potentially precipitating an economic downturn. Rob Thummel, a senior portfolio manager at Tortoise Capital, concurs: "A prolonged disruption in the Strait of Hormuz would send oil above $100".

Nor could this oil be easily replaced. While OPEC and other producers currently maintain surplus capacity of 3-4 million barrels per day, a sudden loss of 20 percent of global flows would create a gap that cannot be filled at short notice. The resulting price spike would ripple through every economy that depends on oil, which is to say, every economy on earth.

Regional crossfire: Iran's neighbors at risk

For countries bordering Iran, the threat is both immediate and existential. Persian Gulf states that host American military facilities would find themselves in the crosshairs of Iranian retaliation. During the 12-day conflict with Israel in June 2025, Iran fired missiles at Qatar's Al Udeid base, the largest U.S. military installation in the West Asia. Any future conflict would likely see similar or escalated attacks.

The economic stakes for Persian Gulf Cooperation Council countries could hardly be higher. These nations are pursuing ambitious and costly agendas, fundamental economic transformation away from oil dependency, massive construction projects such as Saudi Arabia's NEOM, and expensive energy transitions. All of this requires sustained investment and stable revenues. 

Beyond the Persian Gulf, the ripple effects would extend across the region. Pakistan, which shares a lengthy border with Iran, would face particular peril. Former Pakistani diplomat Maleeha Lodhi warns: "Any U.S. military attack on Iran would have dangerous destabilizing consequences for the entire region. Pakistan in particular would be seriously affected if there is a spillover across its border. Any ungoverned space opening up near its border would strengthen militants in its restive province of Baluchistan and pose a grave security threat to Pakistan.

Turkey, already hosting millions of Syrian refugees, fears a new wave of displacement. Sinan Ulgen of Carnegie Europe notes that "the cross-border shocks are likely to be an order of greater magnitude given the size, population, heterogeneity of the country.

The American price: At the pump and beyond

For Americans, the costs of war with Iran would arrive first and most visibly at the gasoline pump, and at a politically precarious moment. Donald Trump, who won reelection in 2024 on promises to reduce inflation and avoid costly foreign conflicts, now faces midterm elections in which economic concerns dominate voters' priorities.

The arithmetic is straightforward: higher oil prices translate directly to higher gasoline prices. 

But the costs would extend far beyond the pump. Higher energy prices ripple through every sector of the economy, raising costs for transportation, manufacturing, agriculture, and virtually all goods and services. This would compound the affordability crisis that already concerns American voters. Republican strategist Rob Godfrey notes the political peril: "The president has to keep in mind the political base that propelled him is skeptical of foreign engagement and foreign entanglements because ending the era of 'forever wars' was an explicit campaign promise.

There are also deeper macroeconomic consequences. Capital Economics analysts warn that sustained oil price increases could slow or halt central bank interest rate cuts that markets currently anticipate. Higher oil prices typically add about 0.1 percent to inflation in advanced economies for every 5 percent year-over-year increase in crude costs. 

Warning from CNBC and energy analysts: The Strait of Hormuz vulnerability

CNBC has provided extensive coverage of the oil market risks, featuring warnings from prominent energy analysts. John Kilduff, founder of Again Capital, told the network: "This Iranian situation just scares the daylights out of this market consistently.

Bob McNally, founder of Rapidan Energy and a former White House energy advisor, offered a particularly sobering assessment. He warned that Iran could disrupt the Strait of Hormuz "for a lot longer than many market participants think." 

In conclusion, a U.S. war with Iran would be unlike any conflict the West Asia has seen in decades. 

The economic consequences would cascade across borders and continents. Global energy markets would face supply disruptions not seen since the 1970s. Iran's neighbors would confront threats to their critical infrastructure, their economic transformation plans, and their very livability. And American consumers would pay at the pump while confronting the broader inflationary consequences of higher oil prices.

As the world watches and waits, the warnings from economic circles grow increasingly urgent. The Strait of Hormuz is not just a shipping lane, it is the jugular of the global energy system. And any conflict that threatens it threatens all.