Iran, the Strait of Hormuz, and the Economics of Modern Conflict
Last year, in June 2025, Israel and the United States launched a direct military confrontation with Iran that quickly became known as the Twelve-Day War. The conflict began on 13 June when Israel struck Iranian nuclear and military facilities. Nine days later, on 22 June, the United States entered the war with airstrikes on the deeply fortified nuclear sites at Fordow, Natanz and Isfahan.
The confrontation lasted exactly twelve days.
Iran retaliated by firing missiles at a US base in Qatar, but the strike came with advance warning to Washington. President Donald Trump publicly acknowledged the warning and said the missiles had been intercepted without American casualties. On 24 June a ceasefire was announced, largely brokered by the United States with quiet mediation from regional actors.
The speed with which the war ended was striking. All sides appeared aware that prolonged conflict in the Gulf carried enormous economic risks, particularly for global energy flows through the Strait of Hormuz.
That narrow passage is not merely a regional shipping lane. Pre-war averages showed roughly 20–21 million barrels of oil and petroleum products moving through the Strait each day — about 20% of global oil consumption and roughly 25–27% of seaborne oil trade — alongside major liquefied natural gas shipments from Qatar and the UAE. Any disruption to Hormuz reverberates immediately through shipping insurance, inflation, supply chains and energy markets across the world.
In June 2025 that economic fear appeared to restrain escalation.
The events of 2026 tell a different story.
Early this year the Trump administration entered indirect negotiations with Iran through intermediaries including Oman. By late February those discussions had reached Geneva. Public statements from both sides suggested cautious progress, with technical discussions expected to continue.
Yet on 28 February 2026, while diplomacy was still underway, Israel and the United States launched a new wave of strikes on Iranian targets. European allies reported they had not been consulted beforehand. Within days the conflict expanded into missile exchanges and attacks across the wider Gulf region.
The contrast with the Twelve-Day War was dramatic.
In 2025 economic caution ended the fighting. In 2026 the same economic dangers have not yet stopped it.
That raises a question rarely examined seriously in public debate.
If diplomacy was active and the economic risks were already known, why escalate at that moment?
The official explanations typically focus on familiar themes: nuclear concerns, missile programmes, regional security and deterrence. These issues are widely cited in official statements. Israel has repeatedly described Iran’s military and missile capabilities as a strategic threat, while successive US administrations have opposed the development of Iranian nuclear capability.
Yet wars between states rarely arise from a single factor. Alongside security concerns, analysts often point to structural economic interests that shape the strategic environment. In the Gulf region, the global energy system inevitably forms part of that landscape.
The Gulf remains the world’s most concentrated energy corridor. At the same time Iran has increasingly directed much of its oil trade toward Asian markets. In recent years China has become the largest buyer of Iranian crude, accounting for the majority of exports according to several energy market analyses. Much of this trade reportedly moves through complex trading and shipping networks operating under the constraints of international sanctions.
That trade does more than keep Iran’s economy alive. It also creates an energy channel operating partly outside the Western financial system that has long underpinned global energy markets.
Seen from Washington’s perspective, this is not simply a regional issue. It touches the architecture of global energy trade and the leverage embedded within it.
Within that context another strategic assumption appears to have shaped the escalation.
Some analysts have suggested that elements of what might be called a “Venezuela logic” influenced strategic thinking. In Venezuela, pressure on Nicolás Maduro was accompanied by signals that Washington could work with other power centres within the state if the leadership structure fractured.
A similar assumption may have shaped expectations about Iran. If the supreme leadership were removed, the political system might fragment, potentially opening space for negotiations with remaining institutions or elites.
Yet events appear to have moved in the opposite direction.
Iran responded with far greater defiance than expected. Missile and drone attacks spread across the region, including strikes linked to US-associated bases, embassies and energy infrastructure in Saudi Arabia, the United Arab Emirates, Qatar, Bahrain and Kuwait. At the same time Tehran escalated its most powerful form of leverage: pressure on the Strait of Hormuz.
The effect was immediate. Tanker attacks, shipping disruptions and insurance withdrawals destabilised global energy markets.
Rather than collapsing quickly, the conflict exposed how dependent the global economy remains on that narrow corridor.
This is where the deeper economic dimension becomes difficult to ignore.
Look at the policy reversals unfolding around the conflict.
Last year the United States imposed a 25% tariff on India for purchasing Russian oil. Amid the Hormuz crisis Washington quietly issued a 30-day waiver allowing Indian refiners to buy Russian cargoes already at sea in order to stabilise supply.
Britain was publicly criticised for not joining the initial strikes, only for Washington days later to call on London and other allies to help send naval forces to reopen the Strait.
China, frequently portrayed as the central strategic rival, has now been invited to assist in protecting shipping lanes that supply its own energy imports.
Meanwhile Russia — long framed as the principal geopolitical threat — suddenly received temporary sanctions relief on seaborne oil exports (until April 11), allowing stranded cargoes to reach global markets and easing pressure on global supply.
Taken together these reversals reveal something important.
Presidents command armies and shape rhetoric, but they do not operate independently of economic realities. When energy flows collapse and markets panic, positions that once seemed immovable can shift with remarkable speed.
Behind every geopolitical crisis lies a dense web of economic actors: energy producers, shipping companies, insurers, commodity traders and financial institutions. Their calculations revolve around supply, risk and price stability rather than ideology or political messaging.
Those pressures do not dictate every decision, but they define the boundaries within which decisions are made.
The current war illustrates that tension clearly.
Security concerns about Iran are genuine. So are regional rivalries and alliance commitments. Yet the moment global energy flows are threatened, the economic dimension becomes impossible to ignore.
That is why the Strait of Hormuz remains the real strategic centre of this conflict.
My own expectation is cautious.
I do not expect a decisive transformation of the region. Iran may suffer military damage yet remain politically intact. Energy markets will likely continue carrying a persistent risk premium, and diplomatic efforts will struggle to rebuild trust between the parties involved.
If that happens, the war will end not with a clear victory but with a more fragile regional order.
One lesson may gradually become clearer.
Wars are often explained through ideology, religion or leadership personalities. Yet beneath those explanations lie deeper economic forces shaping the limits of conflict and cooperation.
Understanding those forces does not end wars.
But it may help explain why they begin — even when diplomacy appears close to success.
And why they sometimes continue long after the original justifications begin to fade.
So the question remains:
What is truly driving this conflict — security fears, political rivalry, or the deeper anxiety of losing economic dominance?
— Maq Masi
Disclaimer
This article reflects the author’s personal analysis and interpretation of publicly available information regarding ongoing geopolitical developments. It does not claim access to classified sources and should not be interpreted as a statement of undisputed fact. The views expressed are intended for commentary and discussion on international affairs.
Sources and Data
Data and contextual references used in this analysis draw from publicly available reporting and research including the International Energy Agency (IEA), Reuters, Financial Times, Kpler shipping data, Al Jazeera, the New York Times, UNCTAD, EIA energy statistics, and other open-source geopolitical and energy market analyses.
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