When it comes to talking about the crisis currently gripping the Middle East, words like “unprecedented” and “unparalleled” are often used to describe the intensity of the situation. Indeed, in many ways this is the case. But in some significant ways, we’ve been here before.
From the Opec embargo of 1973 to the oil shocks caused by the Arab uprisings in 2011, conflict involving energy producers has global repercussions. As recently as four years ago, when war returned to Europe in the form of Russia’s large-scale invasion of Ukraine, a combination of post-Covid demand and Moscow’s role as a major energy exporter sent oil prices above $100 a barrel.
Then, as now, price volatility led to growing fears of sharp rises in the cost of essentials such as petrol, diesel, fertilisers and jet fuel. The US Federal Reserve and European Central Bank quickly raised interest rates to stymie surging inflation but this also had the effect of creating lower economic growth.
Jump forward to 2026, and similar patterns are taking shape. War in the Middle East is again having an adverse effect on the worldwide economy as energy producers and exporters come under pressure. A younger Khamenei is the supreme leader of Iran. Danger in the Strait of Hormuz is undermining shipping, aviation and logistics networks.
It would be incorrect to describe the global reaction to the American and Israeli war on Iran and Iran’s attacks on the Gulf as panic. But when G7 finance ministers convene an emergency summit, as they did yesterday, and the UN Security Council debates at least two draft resolutions regarding the war, it is fair to say that a growing sense of fear of long-term escalation now characterises responses to this volatile mix.
This is in addition to the human cost of war. As well as the appalling loss of civilian life caused by US and Israeli bombs falling on an ill-prepared Iran, as well as Israeli attacks on Lebanon, Iran has hit civilian infrastructure and locations around the Gulf and beyond. The world is also witnessing acts that can credibly be called war crimes. These include the deadly bombing of a girls’ school in Minab and strikes against water desalination plants and airports that serve civilian populations. The moral imperative to end this war weighs just as heavily as the economic one.
Today is the 11th day of a war that the UAE and its neighbouring states lobbied long and hard to prevent. Previous shocks to the global economic system were severe but limited. However, now that the world is so interconnected and the Gulf’s global role is more important than ever before, no country can remain unaffected by the drones and missiles being targeted at the Gulf, even with the high success rates of interception. This makes the need for a diplomatic solution all the more important.
