How the Iran War Could Pop America’s AI Bubble — Through a Helium Shortage

Summary and Key Points: The closure of the Strait of Hormuz from the Iran War is now triggering second-order economic effects far beyond gas prices. Shortages of naphtha — what the New York Times calls the ‘flour of industry’ — are threatening plastics, paints, and pharmaceuticals. Helium shortages from Qatar are slowing semiconductor production and could pop the U.S. AI bubble. And nitrogen-fertilizer disruptions risk an 80 percent jump in urea prices, a food crisis, and another wave of global migration.

The Iran War Crisis Is About To Get Worse 

President Donald Trump takes questions after signing Executive Orders, Tuesday, February 18, 2025, at his Mar-a-Lago resort in Palm Beach, Florida. (Official White House Photo by Daniel Torok)
President Donald Trump signs Executive Orders, Tuesday, February 18, 2025, at his Mar-a-Lago resort in Palm Beach, Florida. (Official White House Photo by Daniel Torok)

It’s starting to dawn on some people, even the New York Times, that the current situation in the Middle East, where the Strait of Hormuz has been closed for months (and is unlikely to reopen anytime soon), is disrupting the world. That’s because 20-25 percent of globally traded oil and around 20 percent of Liquefied Natural Gas (LNG), as well as nearly one-third of the world’s important fertilizers, pass through the contested waterway connecting the Persian Gulf with the Arabian Sea.

Right now, the world is awakening to the reality that our gas prices are higher than they were this time last year. But that “oil shock” is only beginning. What’s more, it’s the first part of a major economic calamity. These oil price hikes, while still manageable for now, are the outer bands of the larger economic and financial storm that has erupted, thanks to the closure of the Strait of Hormuz resulting from President Donald Trump’s war of choice against the Islamic Republic of Iran.

From an “Oil Shock” to an Industrial Civilizational Breakdown

The gasoline prices and the coming shortages, which most experts believe will hit around mid-summer of this year, as the United States reaches the “bottom” of its oil and natural gas buffers, will merely be first-order effects of the prolonged shutdown of the Strait of Hormuz. Modern economies are built entirely on hydrocarbons. Modern hydrocarbons are used for industrial feedstocks, too.

Everything from fertilizers to plastics to important industrial chemicals–even pharmaceuticals–relies on hydrocarbons, which are no longer available, thanks to the blockade of the Strait of Hormuz. These hidden dependencies ensure that the United States will experience economic pain not felt since at least the Great Recession of 2008 or the pandemic crash in 2020.

Donald Trump speaking to supporters at an immigration policy speech at the Phoenix Convention Center in Phoenix, Arizona. By Gage Skidmore.

However, the key difference between the economic collapse in 2020 resulting from the pandemic shutdowns and the impending crash later this year is structural. Back in 2020, that economic downturn was on the demand side. This time, it’s on the supply side, which will have far more lasting and damaging consequences for us.

Understanding Naphtha

New York Times reporters recently identified a petroleum derivative known as “naphtha” as being the “flour” of industry. Naphtha comes from petroleum during crude oil refining or from the processing of natural gas condensates. It isn’t consumed directly by people, but it is such an important component of industrial processes today that without it, industry would come to a halt.

Steam crackers heat naphtha to extreme temperatures, breaking the hydrocarbons apart into molecules that then become the basis for a retinue of products we take for granted. Plastics, polyester, detergents, paints, and medical equipment are just some of the many products that will suffer drastic shortages without access to reliable quantities of naphtha.

Per the Grey Lady, major shortages have already been experienced in East Asia, since those nations rely disproportionately on imports from Qatar and Kuwait–two Middle Eastern nations that have been unable to export their goods because of the blockade.

Unable to Stop the Storm

President Trump is unable to end the blockade of the strait, contrary to whatever he or his advisers tell the public. And Iran will only end their blockade if it can get a real deal with Washington (which is contingent on President Trump reining in Israeli Prime Minister Benjamin Netanyahu in Lebanon).

So, there will be no deal. There might be a temporary pause. In some ways, that’s more harmful to the global economy as global risk analysts will be unable to gauge the dependency on the strait remaining open (which will spike insurance prices and have downstream effects everywhere).

Currently, the Trump administration enjoys some relief from the political fallout of its policies in the Middle East because the forty-seventh president can point to the stock market’s endless rise. In Trump’s world, if the stock market keeps going gangbusters, despite his actions in the Middle East, then all the concerns about major shortages, price spikes, and national economic ruin are overblown. But much of the stock market is divorced from reality.

Plus, the president keeps telling the markets he’s getting a deal with Tehran, which triggers massive rallies–notably in the energy markets. Never mind that none of Trump’s peace proposals have ever gone beyond the Truth Social posting stage of negotiations with Iran.

How Helium Shortages Could Pop the AI Bubble in America

The real reason the stock market is soaring, despite the unfolding economic catastrophe, is the artificial intelligence (AI) boom. Semiconductor production, investments in new AI capabilities, and physical expansion of America’s data center infrastructure create the illusion of prosperity that is lighting the stock market on fire.

For months, though, some financial analysts have asserted that there is an AI bubble that’s only getting larger (and therefore more dangerous). Like most bubbles, the people benefiting from it disbelieve that it’s a bubble.

Too bad for them that there is already evidence of a slowdown in the AI development sector. The reason behind this slowdown?

The closure of the Strait of Hormuz has created shortages of key helium sources. Qatar is one of the leading producers of helium.

They’ve been unable to export their product not only because of the blockade but also because, early in the war, the Islamic Republic of Iran destroyed an essential helium production facility in Qatar. With those shortages, AI development is slowing because the tech sector cannot produce its standard retinue of semiconductors (computer chips) to power AI, as helium is essential to their production.

Thus, the AI bubble we’ve been in may be readying to pop due to helium shortages resulting from the Iran War. And if that’s the case, then the entire stock market boom–the illusory prosperity of the US economy–will be swept away, further collapsing the US economy.

The Fertilizer Threat

These scenarios are merely sauce for the goose, as they say. The real meat (or lack thereof) of this economic catastrophe comes from the fertilizer shortages. People underestimate how important nitrogen is for fertilizer. Without access to this key ingredient, crop yields will collapse, and food prices will explode. Soon, famine risks increase. And remember: a hungry man is an angry man—similarly, revolutions (or at least severe political instability) march on empty stomachs.

As for the rest of the world, an 80 percent increase in urea fertilizer prices would annihilate South Asia, Sub-Saharan Africa, and other import-dependent agricultural economies. To be clear, despite America’s fertile land, the country remains a net importer of food.

What independent war correspondent Michael Yon refers to as “human osmotic pressure” will increase as scores of people flee food-deprived regions and move en masse toward regions believed to have more supplies, such as North America.

On top of everything else, this crisis will trigger another round of mass migration globally, from the Developing World to the Developed World, notably the United States and Canada. This crisis will have profound political ramifications in North America’s already shaky politics.

While we might not see a national famine, Americans will definitely experience catastrophic increases in food prices due to product shortages, and many cornerstone agricultural products that Americans take for granted will simply be unavailable (or will be in short supply and available only at onerous prices).

And the whole catastrophe is delayed. When most Americans experience it, it will be utterly devastating.

Consider this: historically, fertilizer disruptions have preceded riots, waves of migration, debt crises, sovereign defaults, and regime instability. Global food-price spikes partially preceded the Arab Spring itself.

The Coming Crisis  Will Accelerate Global Fragmentation and Geopolitical Collapse

The broader implications of the three-month closure of the Strait of Hormuz are profound. What’s more likely is that the implications of this closure will be more damaging because it is not abating anytime soon. But even if it does abate, there will already be pain baked into the United States’ future economic cake.

There will be stagflation here in the United States resulting from the closure of the Strait of Hormuz. That will destroy many American families. It will exacerbate the class divide in America’s K-shaped economy. Further, the economic crisis will ensure that politics here becomes more divisive and radical, not less.

One major outcome, though, will be that the post-Cold War international system will be dead as a doornail. That’s because countries will prioritize domestic fertilizer production and strategic stockpiles; they will enhance local refining, expand whatever energy independence they possess, and work toward industrial self-sufficiency.

Many reading this might assume this will play into Trump’s hands politically, since these are policies he’s advocated since his first presidential run in 2016, because it sounds like America would come out in the most advantageous position from this crisis.

Indeed, all things being equal, this would be a correct assumption.

The problem is that the short- and medium-term pain for ordinary people will be so profound that it is unlikely either President Trump or his political party will reap electoral gains, because Americans won’t be able to capitalize on the natural advantages North America offers them in terms of self-sufficiency for many years to come.

President Donald Trump is joined by Secretary of Commerce Howard Lutnick, Vice President JD Vance, British Ambassador Peter Mandelson, U.S. Trade Representative Jamieson Greer, and Secretary of Agriculture Brooke Rollins, while announcing a trade agreement with the U.K., Thursday, May 8, 2025, in the Oval Office. (Official White House Photo by Emily J. Higgins)

Prominent energy analysts continue to publicly say that the disruptions in the energy sector alone are “unprecedented.” Contrary to what some Pollyanna-ish public intellectuals claim, this crisis will not be like either the Arab oil embargoes of the 1970s or the pandemic crisis of 2020.

America is going to deplete its oil and natural gas stockpiles. Once that happens, the price spikes will be almost instantaneous–and the global price of oil will not come back down for months, if not years (possibly ever, depending on the severity of the depletion of our stockpiles).

From there, everything else collapses rapidly. There is no avoiding the crisis. It’s just a question of how severe and long-lasting it will be. When we come out of it, though, we’ll be in a whole new world that is poorer, more dangerous, and–for a time–less productive.

About the Author: Brandon J. Weichert

Brandon J. Weichert is Senior National Security Editor. Recently, Weichert became the editor of the “NatSec Guy” section at Emerald. TV. He was previously the senior national security editor at The National Interest. Weichert hosts The National Security Hour on iHeartRadio, where he discusses national security policy every Wednesday at 8 p.m. Eastern. He hosts a companion show on Rumble entitled “National Security Talk.” Weichert consults regularly with various government institutions and private organizations on geopolitical issues. His writings have appeared in numerous publications, among them Popular Mechanics, National Review, MSN, and The American Spectator. His books include Winning Space: How America Remains a Superpower, Biohacked: China’s Race to Control Life, and The Shadow War: Iran’s Quest for Supremacy. Weichert’s newest book, A Disaster of Our Own Making: How the West Lost Ukraine, is available for purchase at any bookstore. Follow him via Twitter/X @WeTheBrandon.