It has been ten weeks since the first U.S.-Israeli strikes on Iran, and the global economy is still awaiting the full bill. Iran’s deliberate throttling of traffic in the Strait of Hormuz has already sent fuel prices higher, rattled energy importers, and forced governments to consider emergency support. Yet in Europe and the United States, markets have remained strikingly calm — for now. According to The Guardian, several analysts and executives warn of a dangerous chasm between the reassuring behavior of markets and the pressure building within global supply chains.
Stockpiles of oil, fuel, chemicals, and industrial inputs have helped cushion the blow so far. But inventories are not infinite, and the longer Tehran seeks to weaponize this vital shipping lane, the greater the risk that the shock moves from higher prices to actual shortages.
(Oct. 16, 2025) The Arleigh Burke-class guided-missile destroyer USS Paul Ignatius (DDG 117) renders honors to the USS Roosevelt (DDG 80), Oct. 16, 2025. Paul Ignatius is on a scheduled deployment in the U.S. 6th Fleet area of operations to support the warfighting effectiveness, lethality and readiness of U.S. Naval Forces Europe-Africa, and defend U.S., Allied and partner interests in the region. (U.S. Navy photo by Seaman Bradley Wolff)
A U.S. Air Force F-22A Raptor aircraft assigned to the 27th Expeditionary Fighter Squadron flies above the guided missile destroyer USS Preble (DDG 88), not pictured, during an air defense exercise in the Philippine Sea Sept. 24, 2013. The Preble was part of the George Washington Carrier Strike Group and was underway in the U.S. 7th Fleet area of responsibility supporting maritime security operations and theater security cooperation efforts. (U.S. Navy photo by Mass Communication Specialist 3rd Class Paul Kelly/Released)
A U.S. Navy F/A-18F Super Hornet, attached to Air Test and Evaluation Squadron (VX) 9, takes off from Naval Air Station Point Mugu during Gray Flag, Sept. 12, 2025. Gray Flag 2025 is the naval aviation test community’s premier large force test event, providing unique venues for large-scale integration of new capabilities across services and platforms. Working with the Joint Force, industry, and our nation’s allies to ensure seamless integration and interoperability is key to ensuring warfighters have a decisive advantage in the field. (U.S. Navy photo by Mass Communication Specialist 2nd Class August Clawson)
Iran War: Hormuz Still in Chokehold
The Strait of Hormuz is one of the world’s most important energy arteries. The Telegraph revealed that around a fifth of global oil and gas passes through it. Since the conflict began, Brent Crude has climbed sharply, peaking above $126 a barrel before easing to $103–$105 following the latest failure in peace deal negotiations. All of these estimates are well above prewar levels.
For now, many European consumers are feeling the impact mainly at the gas pump. The broader shortages feared by some officials have not yet arrived. But The Guardian cited warnings that the squeeze could soon spread to jet fuel, fertilizer, aluminum, solvents, caustic soda, ammonia, methanol, and ethylene — materials that feed into everything from packaging to metal treatment.
Car Manufacturer Hit Hard
Could the automotive sector be a canary in the coal mine? Lucid Motors, which has operations in Saudi Arabia, initially suggested its production plans would be unaffected.
It has been warned that the war has disrupted the supply of materials critical to its manufacturing and could substantially increase the prices of raw materials and components. BMW has sounded more relaxed, telling investors recently that the impact has so far been “limited.” That may prove justified, but it also captures the uncertainty facing boardrooms across Europe.
An unnamed senior auto industry executive told The Guardian that some manufacturers were “playing with fire” by assuming the crisis would resolve itself. That is the risk: modern supply chains are built for efficiency, not prolonged geopolitical blockades.
The 2020 pandemic taught companies to pay more attention to resilience. Many firms have since mapped more of their suppliers and built larger buffers. Top firms still struggle to predict exactly what is in store for them, aside from their first- or second-tier suppliers. An absent chemical, metal component, or specialized input can still wreak havoc on production, even if the issue first concerns the lower rungs of the supply chain.
Energy importers are also in the proverbial crosshairs, with The Financial Times revealing this month that foreign investors have taken out almost $21 billion from Indian stocks since the latest conflict with the Islamic Republic erupted. The rupee is now at historic lows, with India being heavily reliant on imports for some 90 percent of its oil and gas. New Delhi has sought to shield consumers through a flurry of fuel subsidies, but this policy is not economically sustainable in the long term. Despite the chaos, elsewhere there are winners in this crisis.
The Telegraph reports that Saudi Aramco’s earnings rocketed more than a quarter in the first quarter, helped by higher oil prices and its ability to bypass Hormuz by using pipelines to Red Sea ports. BP and Shell are also posting stronger profits, fueling criticism of oil companies that cash in from wartime price swings while consumers grapple with tougher bills.
EU’s Damage Controls May Backfire
European policymakers are trying to contain the damage without blunting every incentive to conserve energy. Bruegel reported that the European Commission has rolled out a temporary state-aid framework permitting member states to support vulnerable sectors such as agriculture, fisheries, and short-sea shipping.
However, the think tank says that poorly targeted subsidies could actually weaken energy price signals, sustain demand despite dwindling supply, and revive subsidy competition between EU countries.
Central banks are facing a similarly awkward balancing act. Andrew Bailey, the Governor of the Bank of England, has said the world already faces a “very big energy shock” which is likely to hike prices, but he continues to warn against hasty interest rate decisions. Increased energy costs can exacerbate inflation while also slowing growth.
Governments are keen to dissuade panic-buying, but they also cannot continue to act as if these shocks are unserious. The United Kingdom’s Prime Minister Keir Starmer admitted last month that jet fuel shortages could impact people’s summer travel schedules, with his Chancellor Rachel Reeves set to outline plans to assist consumers with energy bills.
Naturally, it is unlikely that every country would run out of energy imports at the same time, but prolonged disruptions with no clear endpoint can inflict significant economic damage. As it stands, the world is gradually beginning to absorb these shocks, but if Hormuz’s traffic remains strangled, these shocks could be about to get a lot bigger.
About the Author: Georgia Gilholy
Georgia Gilholy is a journalist based in the United Kingdom who has been published in Newsweek, The Times of Israel, and the Spectator. Gilholy writes about international politics, culture, and education. You can follow her on X: @llggeorgia.
