The United States is recklessly spreading economic havoc among global friends and foes while suffering relatively little harm itself, according to an analysis of the ongoing conflict in Iran. The war, initiated by US and Israeli bombardments, has led to a near-total closure of the Strait of Hormuz, with traffic through its waters collapsing by 90%.
Asian economies have been hardest hit. India has redirected liquefied gas supplies to households, limiting industrial use; Nepal has rationed gas; the Philippines trimmed the government workweek to four days; Bangladesh closed universities and rationed fuel. Asia imports over a third of its energy on average, with countries like Japan (90%), Korea (80%), and Thailand (55%) heavily reliant on Gulf supplies. About 80% of oil and oil products transiting the strait in 2025 was destined for Asia, according to the International Energy Agency.
Europe, though less dependent on Middle Eastern fuel, faces surging natural gas prices due to the bombardments. By 20 March, the MSCI European stock index had fallen about 11% since the war began, compared to a 9% drop in the MSCI Asia index. The US economy has shown the most resilience, with the S&P 500 losing only 5% over the same period, thanks to its abundance of domestic natural gas, which meets 36% of its energy needs.
The International Monetary Fund’s latest growth forecasts reveal a lopsided impact. In January, before the war, the IMF projected US GDP growth of 2.4% for 2025, up from its October 2024 forecast. In contrast, growth prospects for Britain, Japan, Canada, India, the euro area, and Latin America have all weakened since Trump took office. The World Trade Organization warns that persistently high energy prices could slow merchandise trade growth from 1.9% to 1.5%, with European exports shrinking by 0.6% instead of growing by 0.5%.
The disruption extends beyond energy. About 70% of Brazil’s and 40% of India’s urea imports, essential for agriculture, come through the Strait of Hormuz. Gulf nations import most of their food, with 75% of rice and over 90% of corn, soybeans, and vegetable oil passing through the strait. Countries like Bangladesh, India, and Pakistan also face a drop in remittances from citizens working in Gulf countries as the war damages the regional economy.
