The United States' war in Iran has inflicted severe economic damage on allies and adversaries alike, while the US economy remains relatively insulated, according to recent data. Asian nations have been hit hardest by the closure of the Strait of Hormuz, with traffic through the waterway collapsing by 90%. India redirected liquefied gas supplies to households, limiting industrial use; Nepal rationed gas; the Philippines trimmed the workweek to four days; and Bangladesh closed universities and rationed fuel.
Asia imports over a third of its energy on average, with South Korea importing four-fifths, Japan nine-tenths, and Thailand 55%, mostly from the Gulf. About 80% of oil and oil products transiting the strait in 2025 was destined for Asia, according to the International Energy Agency. Europe, less reliant on Middle Eastern fuel but dependent on imported natural gas, saw its MSCI index fall 11% since the war began, compared to 9% for Asia.
The US S&P 500 lost only 5%, reflecting the country's domestic natural gas abundance, which meets 36% of its energy needs. The International Monetary Fund's January forecasts showed US GDP growth revised up to 2.4% for this year, while growth prospects for Britain, Japan, Canada, India, the euro area, and Latin America weakened since Trump took office.
The World Trade Organization warned that persistently high energy prices could slow merchandise trade growth from 1.9% to 1.5%. North American export growth would slow slightly, but European exports would shrink by 0.6% instead of growing 0.5%. Energy costs would boost North American GDP growth to 2.5% but slow Asia to 3.1% and Europe to 0.4%.
Beyond growth, the war disrupts essential supplies: 70% of Brazil's and 40% of India's urea imports come via the Gulf, and Gulf nations import 75% of their rice, over 90% of corn, soybeans, and vegetable oil through the strait. Countries like Bangladesh, India, and Pakistan face reduced remittances from workers in Gulf states as the regional economy suffers.
The United States, once a guardian of global order, now spreads economic havoc with relative impunity, exposing the world to chaos.
