The economic consequences of the U.S.-led war against Iran are spreading well beyond the Middle East, with Europe and Asia absorbing the heaviest financial costs despite playing no direct role in the conflict. The Washington Post reports that the fallout is hitting the rest of the world harder than the United States, a asymmetry that is sharpening tensions over burden-sharing among Western allies.
The immediate transmission mechanism is oil. Disruption to flows through the Strait of Hormuz has pushed energy prices sharply higher, but analysts and policymakers are warning that the inflationary effects extend further. Politico has flagged what it calls "Hormuz inflation" — price pressures that ripple from shipping costs into manufactured goods and food. CNN notes that oil is only the most visible of several price channels now working against consumers.
The IMF has said a prolonged increase in energy prices could both boost inflation and reduce economic growth, a stagflationary combination that limits the room central banks have to respond. CNBC reports that economists see the shock worsening an already K-shaped global economy, widening the divergence between commodity exporters, which benefit from elevated prices, and energy-importing nations, which do not.
For Europe and Asia, the arithmetic is particularly uncomfortable. The New York Times identifies both regions as acutely exposed given their structural dependence on imported energy and their reliance on Hormuz-adjacent shipping lanes for trade beyond hydrocarbons.
The Economist argues the war is simultaneously weakening Donald Trump domestically: a Yahoo poll puts 66% of Americans disapproving of the president's handling of gasoline prices, suggesting the economic pain is also a political liability at home. Barron's, meanwhile, is advising investors to position for a longer conflict rather than assume a swift resolution.
Goldman Sachs, according to Fox Business, has said the war is unlikely to trigger a full global supply chain crisis, offering a measure of reassurance. But the broader consensus across the Financial Times, Axios and others is that the scarring to the global economy will be durable, and that the countries bearing the greatest economic cost are precisely those that had no say in starting the war.
