The closure of the Strait of Hormuz, the focal point of the Israeli-American war of choice against Iran, represents the fourth global shock in seven years. It is causing disruption across the entire Middle East and has led to an unprecedented dual blockade – by Iran and the US – affecting a fifth of the world's trade in oil and liquefied natural gas, and around a third of global seaborne trade in fertilisers. It also affects refining by-products vital for industrial and mining sectors, including helium (used in semiconductors and optical fibres) and sulphur, for which the Middle East accounts for 45% of global exports.
In 2020, the pandemic caused the greatest disruption to supply chains since the Second World War and upended labour-power markets. In 2022, the invasion of Ukraine deprived Europe of Russian gas, created conflicting pressures for the restructuring of Europe's electricity sector, and triggered global rearmament. In 2025, US President Donald Trump launched a tariff-driven trade war against the rest of the world, a highly unpopular policy mix that includes complicity in the Gaza massacre, the abandonment of Ukraine to the care of Europe, threats against Greenland and Canada, the kidnapping of Venezuelan President Nicolás Maduro, and finally the war with Iran and the accompanying threat of NATO's breakdown. These fractures in the international order have come so close together that the effects of individual crises are barely absorbed into the global cycle before the next begins, and are only partially reflected in the rhythms of uncertain recoveries. Their combined impact is manifested most clearly in the accumulation of spending commitments and the public and private debts of the major powers. This factor constrains and limits the scope of their policies in the face of each new crisis.
The closure of Hormuz
The rise in energy and fertiliser prices in April is spilling over into general inflation. It is clear that the greatest damage stems from the crisis in supply flows and the war-related destruction causing it. These will determine both the duration and severity of inflation, as well as the slowdown in growth. The most up-to-date figure for the oil shortage, net of additional flows through the Arabian Peninsula and consumed stocks, stands at 1.3 million barrels per day.
The current crisis is having a disproportionate impact on supplies to Asia, which absorbs around 80% of the oil exports and 90% of the liquefied natural gas passing through Hormuz. This differs from the oil crisis of the 1970s, which hit Europe head-on at a time when Asian industrial development, with the exception of Japan, was still in its infancy. With that in mind, the assessment by the Director of the International Energy Agency (IEA), Fatih Birol – who believes that today's oil shortage is equivalent to the combined crises of 1973 and 1979 – measures the frustration and damage currently borne by the Global South. However, given that oil prices quadrupled in 1973-74 and then tripled in 1979, those crises remain larger in scale. The rule of liquefied natural gas (LNG) in this crisis confirms that this method of transport has transformed regional natural gas markets into a truly global market: Europe has learned this at considerable cost in the war in Ukraine, which has shifted its dependence from Russian pipelines to American LNG.
Warning signs of a food crisis
A second difference between the current shock and previous energy crises, as noted in The Financial Times by Adam Hanieh, director of the SOAS Middle East Institute at the University of London, is the significant impact of Middle Eastern agrochemicals on the global food system. This reflects the evolution of the Gulf industry and its integration into global supply chains, leveraging cheap gas and State investment financed from oil rents. The Middle East accounts for 30% of global ammonia exports and a large proportion of urea exports, raw materials for the production of nitrogen fertilisers, while oil capital holds stakes in major agri-food companies across the region. Crises reveal the vulnerabilities of supply chains.
The UN World Food Programme estimates that this crisis will push 45 million people, particularly in Africa, towards acute hunger, as food aid is being diverted around the Cape of Good Hope. Le Figaro highlights another vulnerability: soya production in Brazil's vast Mato Grosso region relies on phosphate fertilisers, 60% of which come from Egypt and Israel; where prices are skyrocketing, there are fears for the soya harvest, a staple feed worldwide for cattle, pigs, and poultry. A similar warning regarding fertiliser prices comes from the International Rice Research Institute, as Asia begins its rice-planting season.
Austerity in the Global South
Thailand, Vietnam, and the Philippines have declared a state of emergency. Some countries are introducing rationing, mandatory remote working from home for office staff, reduced use of air conditioning and lifts in public offices, and distance learning in schools. The disparities are vast. Indonesia and Vietnam report having only around 20 days of reserves, compared to over 200 days in Japan, South Korea, and China. In Africa, countries such as Kenya and Ethiopia, having previously abolished them, are reintroducing subsidies. The Philippines, after five years of adhering to sanctions against Russia, has received its first shipment of Russian oil in mid-April, and India, after seven years, has resumed imports of Iranian oil. South Korea has allowed its companies to import 27,000 tonnes of Russian naphtha.
Signs of protectionism are emerging: Uganda is refusing to lend Kenya its oil reserves. According to The New York Times, China halted its fertiliser exports at the start of the war to boost its natural gas reserves. According to the same newspaper, for India, which imports 40% of its oil and 80% of its gas from the Middle East, the crisis is a perfect storm in its strategic pursuit of the Chinese Dragon. Those who have followed China in its energy restructuring are reaping the benefits: Pakistan has invested heavily in solar panels, ranks sixth in the world rankings, and is relatively insulated from the crisis; Thailand and Angola, on the other hand, must sign new contracts for liquefied natural gas with the United States. China is exploiting its energy stability to attract foreign investment: the Global Times reports that, between January and February, 8,631 new foreign-invested companies were established in China, particularly in the hi-tech sector.
Alternatives to Hormuz
The Hormuz crisis is spurring Turkey's ambition to offer an alternative land route for the $3 million worth of goods traded between Asia and Europe, 90% of which currently travels by sea. Among other options, Ankara is considering a project to expand the Middle Corridor
, a route linking China and Europe via the Caucasus and Turkey, with a road and rail link between Azerbaijan and Turkey passing through Armenia and bypassing Iran, funded by the United States and named TRIPP, where the initial T is a nod to Trump's narcissism.
Badr Jafar, the United Arab Emirates' special envoy for business and philanthropy, stated in an article in the Financial Times that the war will put an end to the anomaly
of a single corridor of contention through which such a huge proportion of world trade passes. The alternative will be a network of ports, oil pipelines, electricity grids, water systems and trade corridors spanning the Arabian Peninsula and creating genuine intraregional economic integration
. Multinationals are reportedly ready. However the current crisis is resolved, no government will return to a posture of strategic dependence on a narrow strait controlled by an unpredictable neighbour
.
The IMF's What is to be done?
Even in advanced countries, the impact of the crisis is growing, with rising fuel prices, particularly for diesel in freight transport, and rising food prices. In the United States, petrol prices surpassing first $3 and then $4 a gallon are seen as an electoral time bomb. The price rises that most outrage affluent societies are those affecting the summer season: the hotel and tourism sector and the uncertainties surrounding flights and jet fuel supplies. Some airlines have announced the suspension of thousands of flights. It is not only the production and transport of crude oil, but above all refining, that is facing a bottleneck. The oil reserves of IEA member countries should be sufficient for a few months. However, the war began with several storage facilities half-empty at the end of the winter season.
In the presentation of the IMF's new World Economic Outlook in April, chief economist Pierre-Olivier Gourinchas assured that the current shock will be less severe than that of 2022. At that time, it is said, there were adverse circumstances that do not exist today: the pandemic had left behind high inflation and a tight labour market (i.e., it offered workers greater bargaining power), liquidity was high; there was a convergence of high demand and a fall in supply. All this serves to show, according to Gourinchas, that back then there were reasons to impose general price controls and widespread distribution of subsidies; today, the response will have to be limited to targeted and temporary measures, while advances in artificial intelligence will boost productivity.
IMF Managing Director Kristalina Georgieva outlines what government policy should be, based on a variety of scenarios: For now, there is value in waiting and watching, with central banks stressing their commitment to price stability but otherwise staying on hold. [...] If inflation expectations threaten to break anchor and ignite a costly inflationary spiral, then central banks should step in firmly with rate hikes. Fiscal support should remain targeted and temporary [...] If a severe tightening of financial conditions adds a negative demand shock to the supply shock, then monetary policy returns to a delicate balancing act, while fiscal policy – if and only if there is fiscal space – switches to well-calibrated demand support
.
Europe put to the test
These recommendations are aimed primarily at Europe, where calls have already emerged – including from Rome – for the suspension of the Stability Pact and for initiatives involving joint debt issuance. The IMF would once again entrust central banks with managing the crisis (first to tighten the purse strings if inflation becomes persistent, then to loosen them at the first signs of recession), while governments remain as much on the sidelines as possible. The rationale is as implicit as it is undeniable, and explicit elsewhere: the succession of crises has created mountains of debt as well as strategic priorities, namely the continuation of the restructuring of the energy sector and continental rearmament. The wars on Europe's doorstep and threats from its major ally would not seem to leave room for populist incursions, but the centrifugal force of electoral battles and parliamentary cretinism remains ever-present. The sluggishness of European growth encourages the temptation to force the issue: in 2026, the eurozone will grow by 1.1%, half the US rate (2.3%) and a quarter the Chinese rate (4.4%).
The International Monetary Fund's forecasts for deficits and debt in the three major areas of imperialism imply a policy target for Europe. The United States will increase its overall deficit in 2026 by 0.7 percentage points compared to 2025, to 7.5% of GDP; US debt is forecast to rise from 124% of GDP in 2025 to 142% in 2031, an increase of eighteen percentage points.
China will increase its deficit by 0.3 percentage points in 2026, from 7.9% to 8.2% of GDP, and its debt from 74% in 2025 to 86% in 2031, an additional twelve percentage points, though it will still be 56% lower than the US. This too is a measure of the dollar's exorbitant privilege.
The eurozone keeps its annual deficit at 3.3% in 2026 (compared to 3% in 2025) and its debt in 2031 is forecast at 90% of GDP, up just three percentage points from 87% in 2025. In the strategic contest between the two superpowers, debt too – within certain limits – is a resource.
But Europe's strategic lag will not allow it to capitalise on this advantage, unless it is accompanied by decisive progress in the unification of the capital markets and the Union's defensive capabilities.