War with Iran escalates energy crisis

What's happened

Since late February the US and Israel have launched a campaign to degrade Iran’s regime and military; Iran has struck back at Gulf energy infrastructure and closed the Strait of Hormuz, sending oil and fertiliser prices higher and forcing global markets and some allies to distance themselves from Washington. Tensions are persisting and economic pain is widening as diplomacy stalls.

What's behind the headline?

What is happening now

• The US and Israel have been carrying out strikes on Iranian targets while Iran is striking back at Gulf energy infrastructure and shipping.
• Iran is keeping the Strait of Hormuz closed or restricted, which is pushing crude above earlier levels and disrupting fertiliser supply chains.

Who will feel the effects

• Global energy markets will remain volatile and inflationary: petrol and industrial gas prices will stay elevated while supply routes remain insecure.
• Farmers will face higher input costs and shortages of urea and other fertiliser components, which will reduce crop yields and raise food prices in the coming planting seasons.

Strategic dynamics

• The US is balancing limited direct goals — degrading Iranian military capacity and protecting shipping — against domestic pressure over fuel prices; allies in Europe and the Gulf are refusing to join a wider military reopening of the strait.
• Israel is prepared to continue strikes longer than Washington because it is focused on crippling a regime it views as an existential threat; that divergence will prolong the conflict.

Likely next steps

• Expect continued targeted strikes and naval operations to protect specific shipping routes; a prolonged campaign will keep energy and food markets under strain.
• Diplomatic channels will remain active but slow; absent wide allied military support, the US will limit its footprint while Israel will press its campaign, which will keep Iran resistant and reactive.

Bottom line

The conflict will continue to export economic pain globally. Energy and fertiliser markets will drive political pressure on governments to push for an agreement or an operational solution to reopen shipping lanes.

How we got here

The US and Israel have opened a military campaign targeting Iran on 28 February aiming to weaken its leadership, military and nuclear capabilities. Iran has retaliated with missile and drone strikes across the Gulf, damaged oil and gas facilities, and closed the Strait of Hormuz, disrupting roughly a fifth of global oil and large shares of fertiliser shipments.

Our analysis

Thomas L. Friedman in the New York Times has criticised the US leadership and argued that the campaign has lacked a plan for the aftermath, writing that President Trump has been "flip-flopping" and underestimated Iran’s staying power (New York Times, Thomas L. Friedman, 31 Mar 2026). The Independent has focused on the economic fallout, noting that "a fifth of the world’s oil and gas" passes the Strait of Hormuz and that disruption will hit oil, gas and fertilizer supplies and prices (The Independent, 25 Mar 2026). Al Jazeera has warned that destroying Iran’s energy infrastructure would create long-term humanitarian and environmental damage and that a negotiated end or US withdrawal would ease economic pressure on oil markets (Al Jazeera, 24 Mar 2026). The Times of Israel quoted Israel’s ambassador to the US, Yechiel Leiter, saying the campaign must continue "until the Islamic Republic's regime is degraded to the extent that it has 'no power'" and that Israel sees popular uprising as the likely endgame (The Times of Israel, 23 Mar 2026). These sources present three overlapping lines: US political and economic constraints, Israeli strategic persistence, and regional economic damage. Friedman highlights leadership failures in Washington; The Independent and Al Jazeera highlight market and humanitarian consequences; The Times of Israel provides an Israeli rationale for prolonging operations. Together they show why the war is persisting, why allies are reluctant to expand involvement, and why markets are reacting.

Go deeper

• How long will the Strait of Hormuz remain restricted?
• What concrete steps are allies willing to take to protect shipping?
• How soon will fertiliser shortages affect food prices?

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