Dr. Hassan Hassan Khani, an economic issues expert from the Saba think tank, argues that the global economy is increasingly interconnected, leading to reduced problem-solving capabilities. He likens the current state of the world to the Wiemar Republic, characterized by disorder and political crisis. In this context, commodity prices have significantly risen. The price of LNG has doubled, and oil prices have increased by 30%. Additionally, the costs of petrochemical products like urea, sourced from the Strait of Hormuz, are on the rise, and agricultural product prices are also affected.
Which countries will be affected by the oil crisis resulting from the Iran-U.S. war?
Before the onset of the war, 20% of the world’s oil passed through the Strait of Hormuz, while Saudi Arabia has redirected its oil tankers toward the port of Yanbu to mitigate the effects of the crisis. However, refining infrastructures in Europe and other parts of the world face serious challenges due to the inability to make substantial modifications.
How long will the war between Iran and the U.S., Israel last, and what are its consequences?
In the event of a crisis, oil reserves in Europe and the United States are expected to rise significantly, resulting in a halt in extraction processes. Several scenarios can be imagined regarding the duration of the war. If the conflict lasts over six months, the prices of oil and its products will rise considerably. If the war concludes within a month, physical reserves will be utilized; however, a spike in oil prices above $100 could lead to significant social and political repercussions for Americans. Meanwhile, if the conflict ends rapidly, oil prices might return to the $70 range, but the refining infrastructures in Persian Gulf countries will still be left damaged.
Overall, a short-term conflict is unlikely to provide deterrence for Iran, and on the contrary, a prolonged conflict could inflict serious damage to the U.S. economy, particularly with the accompanying increase in gasoline prices.
This policy note is written by Dr. Hasan Hasan Khani in collaboration with Saba Think tank in 2026.
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