How has the war against Iran weakened the US?
In the Strait of Hormuz, tankers have been burning, along with what remains of the post-1945 American-led order. … strange and profound changes are under way. … A less reliable America means more wars and crises… – Patrick Foulis, Financial Times, 25-26 April 2026, p.11
The war against Iran, dubbed Operation Epic Fury, has significantly weakened the US in the Great Power competition by straining military resources, depleting critical munitions, and diverting attention from key strategic areas such as Europe and Asia. While the US has achieved tactical military successes, the strategic costs have created opportunities for its primary rivals, enabling China to expand its global influence and providing Russia with economic advantages due to sharply increased oil prices, thereby challenging the US's protective role in the Middle East and ultimately risking U.S. global hegemony.
Eight weeks after the US and Israel launched their war against Iran, the costs of the war are mounting – the war is causing severe damage worldwide. The US seems unable to achieve victory, bring the conflict to a close, or clearly express the goal of its war against Iran. In addition to thousands of Iranian deaths, the economic consequences of the war and blockade of the Strait of Hormuz have already proven to be catastrophic for the world. The war has significantly disrupted the economies of the most affected countries, damaging their infrastructure and industries in ways that could have long-lasting effects.
Before the war started, the Strait of Hormuz handled about 25 per cent of worldwide oil transportation and a large share of natural gas shipments. The disruptions to these energy supplies are leading to increased fuel prices, higher electricity costs, and rising transportation expenses for billions of people. The global nature of the oil market means that events such as the war in Iran influence oil prices — and, in turn, the prices of many oil-derived products — worldwide. The US Navy no longer guarantees the free flow of oil from the Gulf to global markets. This shift creates additional risks, not just for the oil trade but also for nearly all facets of industrial production. Due to the US-Israeli war on Iran, oil production has fallen in Saudi Arabia and has almost collapsed in Kuwait and the UAE. When the oil supply suddenly tightens, oil prices rise sharply. When oil prices rise, manufacturers, businesses, and consumers all face higher costs. This process can sometimes occur gradually, giving people time to adapt their purchasing habits or activities to lessen the impact of sudden price shocks. However, if a major oil source is suddenly blocked without warning — such as when the current closure of the Strait of Hormuz — prices can spike quickly.
The Middle East is also a significant producer of fertilisers. In 2024, up to 30% of global fertiliser trade passed through the Strait of Hormuz from the Persian Gulf to export markets worldwide. The current war has severely affected this trade, leading to price hikes that coincide with the critical spring planting season for farmers in the Northern Hemisphere, threatening to reduce fertiliser use, lower crop yields, and inflate food costs. This leads to higher production costs and smaller harvests, as farmers either plant less to save money or use less fertiliser. Disruptions to fertiliser production and supply put pressure on food prices, already leading to significant price increases. Prices are likely to continue rising as long as production and shipping from the Gulf remain disrupted.
The war's economic impact has been particularly severe in the Asia-Pacific region, which depends heavily on Middle Eastern oil imports. Over 80 per cent of crude oil and LNG passing through the Strait of Hormuz goes to countries in this region, such as China, South Korea and Japan. In 2025, Pakistan, India, and Bangladesh primarily obtained LNG from Qatar and the United Arab Emirates, while Pakistan, Japan, and the Philippines each relied on over 90% of their crude oil imports from the Persian Gulf. Fuel prices in key Indian cities have surged, with petrol and diesel costs rising by approximately 10-15 per cent over just a few weeks. Although inflationary pressures in India remain manageable, they could intensify if global supply chains are not reestablished.
In Indonesia, nickel producers have reduced output by at least 10 per cent due to shortages of natural gas and sulphur, which are essential for reaching the high temperatures required to extract and refine the metal. Additionally, garment factories in Bangladesh are experiencing severe production disruptions due to shortages of polyester and nylon, which are fossil-fuel byproducts used in clothing manufacturing. The war in Iran has significantly increased costs for key petrochemicals (benzene, toluene, xylene, propylene, ethylene) and synthetic fibres such as polyester and nylon, which are 90-100% oil-dependent, affecting manufacturing globally and squeezing margins as customers resist paying more for their existing orders. Increasing synthetic material costs have caused a bullish trend toward natural options; for the first time in two years, hedge funds are now taking a net position in cotton as it becomes more attractively priced.
Another important impact arises from the disruption of remittances. Millions of workers from South Asia and Africa work in the Gulf region, providing essential income to their impoverished families. As Iranian drones and missiles target the wealthy Arab states of the Persian Gulf, ongoing economic disruptions caused by the Iran conflict might jeopardise the hundreds of billions of dollars in remittances sent annually by millions of South Asian workers living in the region.
Most of these workers come from India, Pakistan, and Bangladesh. For decades, they have been vital to driving the Gulf countries' economic growth across sectors such as construction, hospitality, tourism, and healthcare. Meanwhile, households in countries such as Bangladesh, which depend heavily on remittances from the Gulf, are experiencing a "perfect storm" of rising oil prices and decreasing financial support from their overseas relatives.
Even advanced manufacturing, such as the semiconductor production used in chip production in Taiwan, is facing challenges. Before the war, Qatar supplied about a third of the world's helium, which is essential for semiconductor manufacturing. However, on March 2, missile and drone strikes during the regional war disrupted Qatar's Ras Laffan hub, removing 20% of the global LNG supply. Disruptions in chip manufacturing could ripple through many industries, affecting everything from electronics to automobiles.
The war against Iran and the resulting disruption to shipping through the Strait of Hormuz have severely affected African nations, which rely heavily on imported fertiliser. Rising natural gas prices have increased farmers' costs, raising the risk of lower crop yields and potential famine in regions dependent on subsistence farming. Simultaneously, currency depreciation in several countries exacerbates the impact of rising global prices, making imports more costly, reducing real wages, and increasing debt repayment burdens for already struggling governments.
In Europe and North America, too, fuel prices have surged significantly, adding to the financial strain on working people as economies stagnate, mass layoffs occur, and governments in each country thwart social programs to fund expanded military budgets. In Germany, Lufthansa announced the immediate shutdown of its CityLine subsidiary, coinciding with a strike by thousands of airline workers demanding job security and higher wages. This is a direct response to skyrocketing jet fuel costs — which have doubled since the onset of the Iran war — and ongoing financial burdens from labour disputes. Despite America's highly publicised "energy independence," American consumers experienced significant price hikes at the pump, with U.S. gasoline prices surging past the $4-a-gallon mark for the first time since 2022.
Who is responsible for the war?
Many observers put the blame for this war on Trump's personality. Trump II's foreign policy does not mark a full break from previous policies, often described as a mix of impulsivity, a transactional approach, and "madman"- style diplomacy. While Trump's second term has seen more muscular military actions and a deliberate dismantling of the traditional post-WWII international order, his aggressive policies are continuous with the foundations laid by earlier Democratic and Republican governments, particularly the Neocons of the George W. Bush administration. Several observers note that the groundwork for current imperialist aggression was laid by previous administrations — George W. Bush, Bill Clinton, and Barack Obama — particularly through the aggressive use of executive power, foreign policy interventions, and border security.
The global landscape has significantly evolved over the past thirty years. As a result of the rising economic success of emerging powers and the slowdown of the core economies of Western Europe, the previous world order under US/Western Europe's hegemony has visibly weakened. This ongoing fundamental power shift towards the global East and the decline of the Anglo-American core since the late 1960s lie at the root of the increasingly aggressive policies of US leadership.
By all indications, the age of dominance by any single hegemonic power, first experienced by European colonial powers and then by the US, seems to be coming to an end. The impact of new powers is so significant that the centre of gravity of the global economy has already shifted away. Despite the slowing down experienced by China, India and other emerging economies, the emerging world of the global East is still growing substantially, outpacing much of the rest of the world, not racing ahead fast, but with a more balanced growth.
The 2026 US-Israeli war on Iran, just like the wars of the War on Terror early in the century, is not helping to solve the problems of US power. All these wars are accelerating the end of the American century by draining US resources and creating a power vacuum, allowing China to expand its influence through pragmatic diplomacy, secure energy supplies, and observation of US military tactics. While the US faces economic strain, China gains influence by presenting itself as a non-interventionist partner, leveraging the conflict to advance its global economic interests and reshape the geopolitical order.
Several observers agree that the joint US-Israel military intervention in Iran has been characterised as the most detrimental foreign policy endeavour in the history of the United States and as the imperial overreach that marks the end of the American Century and the beginning of a prolonged decline in US hegemony. The current war in Iran is widely regarded as a strategic blunder, inviting regional instability, economic risks, and an unpredictable, protracted conflict, described by some as a modern-day Suez Crisis, because of the conflict's sudden escalation, the diplomatic isolation of the intervention powers, and the severe disruption to global trade and energy security.
Political developments since 2001 have clearly illustrated that the superior military forces of the United States and its allies have been unable to retain control over the oil resources of Iraq, Libya, and other Middle Eastern countries. Far from preventing the decline of US economic and financial hegemony, ongoing military aggression and arrogance may instead compel its regional and European allies to distance themselves from its strategic objectives. This development prompts an essential inquiry for the oil-abundant nations of the Gulf: if the United States cannot adequately safeguard them from attacks, and if having US military bases indeed increases their susceptibility, should they reconsider the wisdom of their dependence on the United States in the Middle East?
Gulf states are increasingly questioning their reliance on Washington. China entered this region around the early 2000s with strategic patience and diplomatic ambition. As of early 2026, Saudi Arabia exports more oil to China than to any other nation. The UAE has incorporated Huawei technology into its critical infrastructure. Chinese firms are building ports, railways, 5G networks, and smart cities across the Gulf. In March 2023, Beijing supported the Saudi-Iranian normalisation deal, highlighting China's rise as a key mediator in the Middle East. That year, Saudi investment minister Khalid al-Falih stated that a multipolar world had formed and emphasised the important role of Gulf-Chinese cooperation. As the US is seen as an increasingly unreliable protector, the Gulf states might pursue increased security and economic ties with other powers.
Geopolitical impact of the blockage of the Strait on the US
By obstructing the Strait to hostile nations and selling its oil in alternative currencies, Iran is actively challenging the United States' financial supremacy — the global dominance of the US dollar, which has historically dictated that most of the world's oil is priced and transacted in US dollars. Iran is now contesting the dollar's exclusive role by informing countries that, to pass through the Strait of Hormuz, they must cease supporting US-Israeli military aggression against Iran and agree to sell oil not in US dollars but in China's currency, the yuan. The petrodollar system has been a geopolitical tool that has allowed the US to maintain a strong grip on the world economy and financial markets by ensuring the dollar remains the world's primary reserve currency. The system creates a constant external demand for US dollars and Treasury bonds, which allows the US to run large trade deficits while keeping domestic interest rates low. The dominance of the dollar is not just a financial matter, but also something deeply rooted in the geopolitical role of the United States. It appears that Iran fully understands the implications of this challenge for US hegemony, the significance of the dollar system, and the petrodollar, which explains Iran's direct targeting of this system.
The current war has exposed significant weaknesses in US power, often described as a "strategic paradox" in which overwhelming US-Israeli military superiority has failed to produce stable political outcomes or meet key strategic objectives. Despite achieving tactical successes in striking Iranian infrastructure and military leadership, the coalition has not forced Iran into submission. Instead, it has pushed the conflict into a long, uncertain war of attrition. Experts argue that even a US military victory could be Pyrrhic – a success that exacts such devastating costs on the victor that it is tantamount to defeat, leading to a fractured alliance network and a global economy gradually aligning more with Beijing's leadership.
For over seventy years, the United States has maintained its position as the cornerstone of the global order, not solely through military strength but also via the institutions, regulations, and economic frameworks that have shaped the post-Second World War international system. To navigate this strategic environment, the United States established a security and energy framework that has become integral to its worldwide influence. The February 2026 strike on Iran has raised significant questions regarding both the credibility and sustainability of the United States' leadership. China has used the US-Israel war on Iran to present itself as the more responsible of the world's two superpowers, and as one that often prefers to stay in the background rather than be out front and centre. Beijing has positioned itself as a voice of reason thanks to its longstanding policy of "noninterference" in other countries' internal affairs, a cornerstone of its foreign policy since 1955, and its working relationships with all players in the war on Iran. The war in Iran is viewed in Beijing as validation that the US-centred liberal international order is eroding, reinforcing China's conviction that a multipolar world is emerging, in which its influence can expand.
Whether the current ceasefire signals a permanent end to the conflict remains uncertain, but the result of this ill-advised war is clear: the US, as a global superpower, is now weaker than before. While the strikes inflicted heavy damage on the Iranian military, command, and infrastructure, the conflict has failed to achieve its core objectives of swift regime change or total ballistic disarmament. Instead of strengthening the United States' influence, Trump's military intervention has portrayed an image of instability, untrustworthiness, and aggression on the global stage, thus facilitating China's emergence as a responsible international leader. Even if the ceasefire holds, the strait reopens, and future negotiations yield successful outcomes, this will not constitute an American victory, nor is it something easily forgotten in a region with a long history of geopolitical humiliation.
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