Vol. 42, No. 06
06/01/2026
The Economic Impact of the Iran War
AT A GLANCE
• The United States remains partially dependent on Saudi oil.
• The U.S. will be less vulnerable than others to the oil-price shock, but not immune.
• The crisis in the Persian Gulf will affect food stocks as well as oil.
• China, Japan, South Korea, and India are being harmed by the Strait of Hormuz closure.
The headline prices for crude oil and the stock market indicate that investors believe the Iran War — and in particular, the closing of the Strait of Hormuz — represents a serious but manageable problem. To be sure, the now-familiar pattern of President Donald Trump’s bellicose deadlines followed by gracious-sounding extensions suggests that the adults in the room won’t let the standoff spiral out of control.
Nonetheless, as of this writing (in late April), the Strait is still effectively closed. For example, on April 19 only three vessels transited the waterway (one inbound and two outbound), which should be contrasted with a pre-crisis norm of 100-plus ships crossing daily. Furthermore, 870 vessels remain trapped in the Persian Gulf, having been in the wrong place when the war broke out. From February (prewar) to March, the flow of oil through the Strait dropped from 20 million barrels per day to two million.
Before the crisis, the Strait of Hormuz was a petroleum artery, accounting for 25 percent of seaborne crude oil and 19 percent of the global trade of liquefied natural gas (LNG). Its blockage is thus extremely consequential. Even if the Strait were opened for business immediately, at this point I believe a global recession is unavoidable. If the Strait stays closed for several more weeks, we will see major economic disruption in Europe and Asia along with humanitarian crises in the Gulf States and large portions of Africa. Finally, if the Strait should stay closed for several more months, it will spell a global depression, with perhaps North America being the only continent to avoid catastrophe. I realize such warnings might strike some as hyperbole, but I will devote the rest of this article to a justification of my claims.
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The full article includes detailed analysis of Massie's legislative strategy, exclusive quotes from the interview, and insider information about upcoming votes.
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