On 28th February, 2026, the US and Israel launched what they called Operation ‘Epic Fury’ and ‘Roaring Lion’ respectively, to destroy Iran’s missile capabilities, continue the years-long confrontation over Iran’s nuclear programme and regional influence, target its navy, and disrupt Iran-backed groups in the region. 

The war which began with the US-Israeli series of explosions on the capital, Tehran, and city Minab (as shown in the map), which killed dozens of girls gathered at the Shajareh Tayyebeh (the Good Tree) school, soon escalated, killing the Iran’s supreme leader, Ayatollah Ali Khamenei, followed by Iran’s retaliatory missiles attacks towards Israel, the US, and several locations linked to its military operations, such as Qatar, Kuwait, the United Arab Emirates, Bahrain, Saudi Arabia, Jordan, Iraq, and Turkiye. Entering its twentieth day, the war killed around 1,444 civilians in Iran and left over 18,551 injured, including children, which UNICEF described as a ‘catastrophic’ situation.

In no time, the war pulled the region into its fold by crippling its economies, upending the global trade and energy markets, and creating a crisis deeper than after the Yom Kippur war of 1973 and the 2022 Ukraine war. The Gulf Cooperation Council (GCC) countries faced Iran’s missiles and drones aimed at national military sites, oil and gas infrastructure, seaports, airports, and tankers, halting the flights; whereas, international shipping companies’ insurance rates increased. With the turn of events, Iran, now under the leadership of Ayatollah Khamenei’s son, Mojtaba Khamenei, shut down the Strait of Hormuzv, a narrow passage of water responsible for about a fifth of the world’s oil shipping, stifling oil and gas exports passing through it, creating a regional and global economic shock by paralysing shipping lanes, and spiking the oil prices. The daily vessel arrivals dropped to their lowest by 15 March 2026 (as shown in the graph below). 

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As a consequence, the Gulf countries cut total oil production by at least 10 mb/d due to halted shipping flows, an estimation probable to increase in the future.

Brent crude rose from $73 on 27 February to $105.70 a barrel on 16 March, 2026, 40 per cent higher than before the war began.

Brent crude rose from $73 on 27 February to $105.70 a barrel on 16 March, 2026, 40 per cent higher than before the war began.

The global supply of Liquefied Natural Gas (LNG) dropped by around 20 per cent, something which is expected to transform market dynamics by the end of 2026. Amid the exacerbating crisis, the International Energy Agency (IEA) released supplies, revealing the seriousness of the regional economic situation, as shown in the graph below. It also warned of the largest supply disruption in the history of the global oil market as a consequence of this war. 

While initial strikes degraded key Iranian military assets, the broader strategy has faltered as the war caught the US off guard on several fronts, particularly military, economic, and diplomatic.

While initial strikes degraded key Iranian military assets, the broader strategy has faltered as the war caught the US off guard on several fronts, particularly military, economic, and diplomatic.

In the first six days, the war cost the US military more than $11.3 billion (around $2 billion a day), and degraded the US military’s readiness for home defence, while the cost of living and economic prices for Americans spiked. Amid the maritime warfare and looming economic crisis, the US had to release up to 172 million barrels of crude oil from its strategic petroleum reserve to calm markets. Additionally, Iran’s closure of the Strait of Hormuz, particularly for the US and its allies, also created challenges for the US. The spike in the US dollar rate redirected investors towards the Euro, which might be further jeopardised if the oil tankers are permitted to transit through the Strait of Hormuz in Chinese Yuan. 

Therefore, the success of the US joint efforts with Israel remains elusive, as it entered into a war without a clear plan. Firstly, the US defensive war against an “existential threat” was expected to be a four- to six-week major combat operation. However, it escalated into a prolonged crisis as Washington failed to fully anticipate Iran’s willingness to close the Strait, which severely affected the US economy. Secondly, the US plan of gaining victory by empowering the Iranian people to fight the Iranian government did not materialise upon the killing of the Supreme Leader, instead turning the nation’s focus to surviving an external assault. Thirdly, the US experienced rifts with its Western and regional allies over its policies, driven largely by diverging security and economic perspectives and interests, particularly among its trading and strategic partners, who were previously burdened by imposed costs and now bear the brunt of the war. This will potentially shape their relations with the US in post-war stabilisation. Fourthly, President Donald Trump’s decision to go to war has been met with criticism from US citizens at home and in the Middle East, the administration’s fervent supporters and inner circle, and even a few among the forces. The administration’s lawmakers have highlighted the lack of an operational plan to reopen the Strait.

Moreover, a survey reveals that around 54 per cent of the respondents disagree with president Trump’s handling of Iran. As a consequence, the already debated ‘America first’ policy has resurfaced, possibly jeopardising the administration’s upcoming elections. 

Moreover, a survey reveals that around 54 per cent of the respondents disagree with president Trump’s handling of Iran. As a consequence, the already debated ‘America first’ policy has resurfaced, possibly jeopardising the administration’s upcoming elections. 

So far, the war has created significant challenges for the US, raising questions about its approach. Unless the administration finds a resolution, the continuation of the war carries a high risk of the US economy experiencing 1970s-style stagflation or a recession, especially if oil remains $140 a barrel throughout the year. The duration of the war will greatly determine the normalcy of the Gulf trade and energy markets, and thus regional and global stability; therefore, the administration’s strategic decision-making, planning, and negotiations as soon as possible will be crucial.

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