The Iran-American conflict in the Middle East is now changing the global political landscape by a volatile international oil market.
Oil today has become a top priority for world leaders and not just a concern of oil traders the world over. Energy today is the central nervous system of international relations and world politics. At the heart of this instability is the ongoing friction between the United States and Iran, a rivalry that has transcended regional friction to become a significant threat to global energy security.
As these two nations navigate their complex relationship, the “chokepoints” of global trade, specifically the Strait of Hormuz, have become the primary theatre of economic and tactical warfare. The bitter standoff between the two warring nations has sent seismic ripples throughout the economies of the community of nations reminding us loud and clear that the “Black Gold” of the 20th century is still the ruler of the world economy in the 21st century. After the blockade and closure of the Strait of Hormuz the international Energy Agency (IAE) has characterized the situation as the largest supply disruption in the history of the global oil market. Iran, facing intense economic pressure and internal transitions, has utilized its strategic position to influence the flow of oil from the Persian Gulf. By asserting its presence near the Strait — through which roughly 20% of global oil and a significant portion of liquefied natural gas (LNG) flows, Tehran has signaled that its own ability to export is inextricably tied to the stability of global prices.
The United States, in response, has bolstered its Fifth Fleet presence and formed international maritime coalitions to protect shipping lanes. This has created a high-stakes environment where any misunderstanding could trigger a global supply shock. Brent crude prices, which were projected by analysts to average much lower earlier this year, surged past $120 per barrel following the outbreak of hostilities in March. This sharp escalation is driven primarily by the near-halt of tanker movements through the Strait, forcing major producers like Kuwait, Iraq, Saudi Arabia and the UAE to struggle with logistical challenges as they attempt to get their product to market. The “risk premium” attached to every barrel has reached unprecedented heights, reflecting a world on edge. For Pakistan this crisis in the Middle East is not just a political upheaval but a direct threat to national survival.
The country’s energy requirement is predominantly reliant on imported refined and crude oil most of which originates from or passes near the very volatile Middle Eastern countries. In the first half of 2026 Pakistan is now grappling with massive surge in the international oil markets. High fuel and LNG costs are now raised the energy sector’s burden to almost unsustainable levels which could prompt the govt. to seek substantial loans from foreign agencies to maintain fiscal stability. The government is currently forced into a difficult position. While fuel oil prices were kept unchanged for the month of March 2026 to provide some relief to the public, the underlying pressure is immense.
Closing the Strait of Hormuz—a crucial maritime chokepoint handling 20% of global oil—triggers massive global economic disruptions. It causes instant spikes in oil and LNG prices, severe energy shortages, and massive supply chain disruption, with analysts warning of risks to global food security and potential for heightened military conflict.
The ongoing military escalation in the region has disrupted shipping flows through this narrow passage. The resulting ripple effects go far beyond the region, affecting energy markets, maritime transport and global supply chains. These developments raise concerns for global trade and development prospects. Oil markets have reacted quickly, with Brent crude prices now rising above $90 per barrel. Higher energy, fertilizer and transport costs – including freight rates, bunker fuel prices and insurance premiums – may increase food costs and intensify cost-of-living pressures, particularly for the most vulnerable. Disruptions in the Strait of Hormuz underscore the vulnerability of critical maritime chokepoints to geopolitical tensions and their potential to transmit shocks across supply chains and commodity markets.
Economic impacts, both globally and for the region, will depend on the duration, intensity and geographic scope of the tensions. Continued monitoring is essential to assess evolving risks and their potential impacts. Many developing countries already face high debt service burdens, limited fiscal space and constrained access to finance. In this context, rising energy, transport and food costs could strain public finances and increase pressure on household budgets, potentially heightening economic and social pressures and complicating progress toward sustainable development, particularly in economies heavily dependent on imported energy, fertilizers and staple foods.
The shipping crisis in the Strait of Hormuz is now “the largest supply disruption in the history of the global oil market”, according to the head of the International Energy Agency, Fatih Birol. While focus remains on the 11 million barrels of oil and 140 billion cubic metres of gas usually in daily global circulation, the impact extends far beyond energy.
—The writer is Professor of History, based in Islamabad.
