A fresh escalation in US-Iranian tensions has plunged global trade and financial markets back into deep uncertainty, threatening to slow economic growth and drive shipping and marine insurance costs to record highs.
With the conflict hanging over vital sea lanes, the global economy is also grappling with mounting structural strain.
Strategic oil reserves are lower, while investors are increasingly reluctant to commit to long-term plans, leaving markets exposed to the sharpest supply shock since the start of the year.
Fadl bin Saad al-Buainain, a member of Saudi Arabia’s Shura Council, said the renewed tensions were gathering force like a “snowball,” with the risks growing steadily.
He said rising uncertainty would weigh particularly heavily on regional economies, disrupting foreign investment flows and undermining government spending on development projects.
Al-Buainain said any direct confrontation would hit critical sectors immediately.
Energy supplies could be disrupted by the closure of the Strait of Hormuz or attacks on oil facilities, sending prices sharply higher.
Major shipping routes could be cut, paralyzing supply chains. Government budgets would also come under pressure, especially in countries without alternative routes for crude exports, threatening both revenues and imports.
He warned against allowing the political deadlock to drag on and urged the activation of serious diplomatic channels.
Without genuine diplomacy, he said, proposed negotiations and agreements risk becoming little more than a means of buying time and preparing for a wider military confrontation.
Al-Buainain also called on the international community, through the United Nations and the Security Council, to adopt a clear resolution guaranteeing freedom of navigation in the Strait of Hormuz.
He said an international force should be formed to protect oil tankers and cargo vessels from continued Iranian threats to civilian assets and economic facilities.
Economy caught in the ‘Hormuz vise’
Abdulrahman Baeshen, head of the Al-Shorouq Center for Economic Studies in Jazan, said recent US statements that memorandums of understanding with Tehran were no longer in effect, combined with renewed strikes on Iranian ports and cities, had piled further pressure on global markets already under strain for months.
The impact was immediate, with oil prices rising by more than $4 a barrel.
Baeshen warned that the continued militarization or closure of the Strait of Hormuz would deliver a series of severe shocks to the global economy.
Energy, food, agriculture, pesticides and fertilizers would be among the first sectors hit, he said.
He said a return to economic stability and market certainty depended on the parties resuming serious negotiations and halting reciprocal attacks, allowing the strategic waterway to reopen and shipping to resume safely.
Supply shocks return as recovery falters
Khaled Ramadan, head of the International Center for Strategic Studies in Cairo, said renewed military conflict around the Strait of Hormuz threatened to revive the supply shock that hit the world in early 2026.
He said the escalation could push crude prices close to $100 a barrel in the near term, disrupt petrochemical and food supplies and trigger a renewed surge in energy inflation.
The global economy had only begun to recover from the spring crisis, Ramadan said, but was now entering another period of instability.
The risks are greater because major economies have already drawn down part of their strategic petroleum reserves, he added.
Ramadan said the sectors most at risk were:
Shipping and maritime transport: Hit by record bunker fuel prices and soaring war-risk insurance costs.
Agriculture and fertilizers: Pressured by an expected rise in natural gas prices, raising the risk of a global food crisis that would hit developing countries hardest.
Heavy and energy-intensive industries: Including aluminum, steel, cement and chemicals.
Options for confronting the crisis
Ramadan said the deep imbalances caused by tensions in the Strait of Hormuz required a two-track response to the cumulative strain.
The first track would focus on urgent action.
That would include immediately activating alternative pipelines, such as Saudi Arabia’s East-West pipeline and pipelines in the United Arab Emirates, increasing production from independent producers including the United States, Brazil and Canada, and redirecting trade through alternative logistics networks.
The second track would focus on longer-term structural measures.
These would include accelerating energy diversification, building larger strategic reserves capable of absorbing prolonged shocks and creating strong regional energy alliances linking Gulf producers with consumers in fast-growing Asian markets.
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