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Worries about global economic pain have deepened as the war in Iran drags on and damage spreads to energy infrastructure, with economists warning the shock could last months or even years. In reporting on the widening effects, the Associated Press said strikes and counterstrikes on Persian Gulf refineries, pipelines, gas fields and tanker terminals have been threatening supplies and pushing countries to ration fuel or subsidize costs to protect poorer residents.
The disruption has also worsened what economists described as a global oil shock that began early in the conflict. The report said Iran responded to U.S. and Israeli attacks Feb. 28 by threatening tankers attempting to pass through the Strait of Hormuz, a transit route for a fifth of the world’s oil, effectively constraining access. It said Gulf oil exporters including Kuwait and Iraq cut production because there was nowhere for their oil to go without Strait access.
Oil market pressure showed up in benchmarks cited by the AP. The report said Brent crude rose 3.4% to settle at $105.32, and U.S. crude rose 5.5% to settle at $99.64 per barrel, with Brent up from roughly $70 before the war began. Christopher Knittel, an energy economist at the Massachusetts Institute of Technology, said that even if the fighting stopped, the long-term implications would be small only earlier in the conflict. In updated remarks carried by the AP, Knittel said that what has been happening now includes infrastructure destruction, which he said would make the war’s repercussions long-lived.
The AP also said the war has raised the risk of a familiar inflation-and-growth problem—stagflation—by combining higher prices with weaker economic conditions. Carmen Reinhart, of the Harvard Kennedy School and a former World Bank chief economist, said the risk includes both “higher inflation and lower growth.” The report added that Gita Gopinath, a former International Monetary Fund chief economist, wrote that global growth projected at 3.3% before the war would be 0.3 to 0.4 percentage points lower if oil prices averaged $85 a barrel in 2026.
Beyond crude oil, the conflict has hit liquefied natural gas and related supply chains. The AP said Iran struck Qatar’s Ras Laffan natural gas terminal, which produces 20% of the world’s liquefied natural gas, and that the March 18 strike wiped out 17% of Qatar’s LNG export capacity. QatarEnergy said repairs could take up to five years, and the AP framed the longer repair timeline as part of why economic pain could persist.
Fertilizer shortages and higher prices were identified as another transmission channel from the energy shock to the food supply. The AP said the Persian Gulf supplies a large share of the world’s nitrogen fertilizers and that producers in the region have an advantage because of easy access to low-cost natural gas used as feedstock. It said up to 40% of world exports of nitrogen fertilizer pass through the Strait of Hormuz, and that when passage was blocked, urea prices rose 50% and ammonia prices rose 20%, citing a commentary by Alpine Macro commodity strategist Kelly Xu. The AP said higher fertilizer costs could lead farmers to skimp on application, producing lower yields and making food more expensive, with the effects landing hardest on families in poorer countries.
The AP also reported that energy disruptions have reached other industrial inputs. It said the war has interfered with global helium supplies, describing helium as a byproduct of natural gas and a key input in chipmaking, rockets and medical imaging, with Qatar making helium at Ras Laffan and supplying about a third of the world’s needs.
Countries have begun taking steps to ration fuel and control energy use. The report cited International Energy Agency head Fatih Birol, who said on March 23 that “No country will be immune to the effects of this crisis if it continues to go in this direction.” The AP said Lutz Kilian, director of the Center for Energy and the Economy at the Federal Reserve Bank of Dallas, warned poorer countries will be hit hardest because they will be outbid when competing for remaining oil and natural gas.
The AP described how the exposure varies across regions. It said more than 80% of the oil and LNG passing through the Strait of Hormuz heads to Asia, and noted country-level measures such as the Philippines opening government offices four days a week and limiting air conditioning to no cooler than 75°F (24°C). It added that Thailand told public workers to use stairs instead of elevators, and that India prioritized households over businesses as the government allocated limited LPG supply and absorbed most of the price increases to keep costs low for poor families. It said LPG shortages forced some eateries to shorten hours, close temporarily, or cut menu items that require a lot of energy. For South Korea, which the AP said is dependent on energy imports, it reported restrictions on car use by public employees and the reinstatement of fuel price caps that had been dropped in the 1990s.
The AP said the United States is somewhat insulated because it is an oil exporter and can benefit from higher prices for energy companies, while U.S. LNG prices are lower than elsewhere because U.S. export liquefaction facilities are already running at full capacity. Even so, the report said higher gasoline prices are weighing on American consumers, citing AAA figures that put the average price of a gallon of gasoline at nearly $4 compared with $2.98 a month earlier. It also quoted Mark Zandi, chief economist at Moody’s Analytics, saying that “Nothing weighs more heavily on consumers’ collective psyche than having to pay more at the pump,” in a commentary written with colleagues.
The report linked the energy shock to a backdrop of already-weak U.S. momentum. It said the U.S. economy expanded at an annual pace of 0.7% from October through December, down from 4.4% from July through September, and reported that employers unexpectedly cut 92,000 jobs in February and added 9,700 jobs in a month in 2025—describing that hiring as the weakest outside a recession since 2002. It cited Gregory Daco, chief economist at EY-Parthenon, saying he had raised the odds of a U.S. recession over the next year to 40%, compared with a 15% risk when times are “normal.”
While the AP noted that the world economy has previously shown resilience against repeated shocks such as the pandemic and Russia’s invasion of Ukraine, it said hopes that the Iran war would be an exception have faded as threats continue to energy infrastructure in the Gulf. It said Kilian warned that damage to LNG facilities in Qatar would likely take years to repair and that repairs would also be needed for refineries in countries like Kuwait, as well as for tankers in the Gulf that must be re-provisioned and stocked up with marine fuel. The AP added that Zandi and his colleagues wrote there is “no economic upside” to the conflict with Iran and said the key question becomes how much longer hostilities will continue and how much economic damage they will cause.