Trump opened a Pandora’s box: what price will we pay for war in the Gulf?

As the American-Israeli war against Iran enters its second month, the authors argue that the conflict has already outgrown its regional frame. In their view, the war in the Gulf is triggering a wider economic, energy and geopolitical shock whose consequences will be felt far beyond the Middle East, from global shipping and gas markets to semiconductors, food security and Europe’s strategic position.

The second month of the American-Israeli “special military operation” against Iran has begun. A month, unlike “three days”, is long enough to allow for one bleak conclusion: the blitzkrieg has failed. The regime in Iran, despite having been decapitated, is showing resilience and an ability to adapt to the conditions of a prolonged war of attrition.

More than that, by acting asymmetrically in some respects and in mirror fashion in others, it has transformed a regional war in the Gulf into a war of global scope. This article does not claim to cover every dimension of the war in the Gulf. The authors’ aim is to look more deeply at various aspects of its economic dimension, its present state and the possible consequences threatening the world after Trump and Netanyahu opened a Pandora’s box in the Gulf.

2026 vs 1973

The Arab oil embargo against the West for its support of Israel was announced on 20 October 1973. It caused an almost fourfold spike in oil prices, which triggered a global economic crisis followed by a prolonged restructuring of the economy towards more sparing use of energy resources. In time, this led to a long period of low oil prices, from 1985 to 1999.

If we take the starting point of the current crisis in the Persian Gulf to be the beginning of the American-Israeli war against Iran on 28 February 2026, an interesting calendar symmetry emerges between these two dates relative to 1 January 2000. Both dates are almost exactly the same distance, just over 26 years, from New Year’s Day. In days, the symmetry is even more striking: 9,569 to 9,556, a difference of only 13 days.

We do not intend to search for hidden meaning in such symmetry. However, it is worth noting that crises, as a rule, symbolise the end of certain cycles of development and the arrival of new ones. Both periods under consideration, 1973–2000 and 2000–2026, in one way or another contain two smaller periods of high and low oil prices: 1973–1985 and 1985–1999, and 2000–2014 and 2014–2026 respectively.

At a time when people are fiercely debating how long the crisis caused by the war in the Gulf will last, the real question ought to be something else: will this war become an accelerator or a brake on the transition to a new Kondratiev cycle? The war may provide additional momentum for the energy transition from fossil fuels to renewables, a process that began with the climate discourse of the 1990s and accelerated during the period of rising oil prices in the 2000s. Energy transitions are long, inertial processes and do not involve the instant replacement of one resource by another. Energy crises trigger global economic crises, because a sharp and prolonged rise in energy prices for all import-dependent economies means an inflationary shock and falling GDP. That is exactly what happened in 1973 as a result of the Arab oil embargo brought about by the Yom Kippur War.

Two main scenarios are possible. The first is that hydrocarbons, because of their high price, will give additional impetus to the development of renewables, and the share of renewable energy in the global energy balance will continue to grow, while that of fossil fuels will continue to shrink. Given that more than 53–54% of global oil demand comes from transport — road vehicles, aviation and shipping — it can be said with confidence that a prolonged period of high oil prices will provide an additional push for scaling up electric transport technologies and reducing oil’s share in the global energy mix.

The second scenario is the opposite: a short-lived revenge of hydrocarbons, a kind of counter-offensive against the expensive energy of renewables, in which oil, having climbed to great heights, then collapses as it did in the mid-1980s, and fossil fuels for a time retain their share in the energy mix. Japan, for example, is reopening long-shuttered coal-fired power stations in anticipation of a worsening energy crisis. Italy is ready to restart coal-fired plants in the event of an energy emergency. Romania and Poland are revising plans to phase out coal generation.

Japan to ease coal plant restrictions as Middle East conflict strains energy supplies

In any case, it now appears that a serious multi-crisis lies ahead, not only military and political, caused by the war in the Gulf, but economic as well. All the more so because the Persian Gulf, unlike its role 53 years ago as solely the planet’s oil hub, is now a multimodal hub.

The Third Gulf War

From a military-political perspective, the current round of conflict in the Middle East can be seen as a continuation of a series of geopolitical processes set in motion by Operation Desert Storm in 1991, when coalition forces led by the United States, acting under a UN mandate, liberated Kuwait from Iraqi occupation.

That conflict became known as the First Gulf War. It was followed in the next decade by the Second Gulf War, aimed at removing the aggressive regime in Iraq.

For that reason, today’s American-Israeli-Iranian confrontation is being described as the Third Gulf War.

Viewed in this light, the current escalation is not an isolated episode but part of a longer strategic cycle. In essence, the United States is now seeking to correct the unforeseen geopolitical consequences of the First and Second Gulf Wars by limiting the ability of an aggressive power to dominate the regional geopolitical system.

In the 1990s and 2000s it was Saddam Hussein’s Iraq. Now it is Iran under the ayatollahs, which is far more dangerous given the proxy networks it has built, its missile and nuclear programmes, and its unchanging aim of destroying Israel.

Yet today’s Iran is not Iraq, nor is it Afghanistan, where the United States not only failed to achieve its original aims but suffered a fiasco. Nor is the Persian Gulf what it was even at the start of the twenty-first century.

Water

When we look at the Gulf, we should first look not at oil and gas, but at water resources in the broad sense. Everything the Arab monarchies of the Gulf have achieved has of course been thanks to oil and gas, but it all rests on water. Desalinated water made the Arabian deserts of Rub’ al Khali and Nefud habitable. That is why the foremost vulnerability of the region is water vulnerability.

Critically important water supply systems are within Iran’s military sights. Desalination plants provide from roughly half to almost 90% of national water supplies in some Gulf states. The strategic significance of desalination was described in a CIA assessment as far back as 2010, which noted that disruption to desalination systems in the Persian Gulf “could have more severe consequences than the loss of any other sector or commodity”. That same archival strategic analysis, which has not lost its relevance today, noted that large-scale damage to or destruction of desalination plants could have consequences far more serious than losses in the energy or industrial sectors, up to and including humanitarian catastrophe or economic paralysis, and stressed the importance of building strategic water reserves.

It is significant that although the states of the Gulf Cooperation Council have built substantial seawater desalination capacity, they have largely failed to create strategic reserves in case of supply disruption. The UAE, for example, published its Water Security Strategy 2036 in 2017, aimed at improving water-use efficiency and increasing national water reserves. But even if fully implemented, it would by 2036 provide reserves sufficient for only two days of national demand under normal conditions, and for 16 to 45 days in an emergency. Saudi Arabia has also created strategic reservoirs, but these provide only modest water reserves, while Bahrain, Kuwait and Qatar do not have sufficient storage capacity to offset major disruptions in supply. Major cities such as Abu Dhabi, Dubai, Doha, Kuwait City and Jeddah are now almost entirely dependent on the production and supply of desalinated water.

In 2023, the GCC states had around 815 desalination plants, accounting for roughly 31% of global desalination capacity.

Iran, too, has serious water problems. Before the war, the domestic situation was described as one of water bankruptcy. After five years of extreme drought, water levels in the country’s main reservoirs had fallen to a critical 10%, and the government was seriously considering a plan to evacuate Tehran. A policy of uncontrolled dam construction and depletion of groundwater has caused land subsidence in the capital of 300 mm per year, threatening the stability of the entire urban infrastructure. China has become Iran’s sole source of technology and capital for large-scale water-transfer projects. The 800-kilometre pipeline from the Gulf of Oman to Isfahan, presented by President Masoud Pezeshkian in December 2025, became a “strategic lifeline” for Iranian industry, notably for the steel giant Mobarakeh Steel.

Desalination is an energy-intensive process. Around three quarters of desalination plants in the GCC are integrated into power and water supply complexes. This means that fresh water production at those plants can be interrupted not only by precision strikes on the plants themselves. Iranian strikes on power generation would automatically affect desalination systems. Clearly, after Trump’s “reckless statements” about striking Iran’s energy sector, industry experts strongly advised the US administration against further escalation, because Iranian retaliatory strikes would likely be directed at the industrial water-and-energy hubs of the Arab Gulf states and could lead not only to economic collapse but to humanitarian disaster.

Digital infrastructure

The Persian Gulf is a fast-growing global hub for computing capacity, crypto-mining, artificial intelligence, cloud infrastructure and as a crossroads for subcontinental and intercontinental fibre-optic links between Europe, India, Africa and South-East Asia. Although the Arab Gulf states account for only about 1% of the total number of data centres worldwide, these are distinctive digital hubs that until recently were developing at speed. The Gulf states are trying to replicate in data and computation the role they once played in oil, because they have vast sovereign wealth funds, cheap energy resources — oil, gas and sun — and state programmes for digital transformation. The “big three” hyperscalers dominating the cloud technology market — Amazon Web Services, Google Cloud Platform and Microsoft Azure — have built major computing capacity there.

Data centres are critical infrastructure on the level of oil refineries if we compare them with the oil sector. The UAE is the region’s main cloud hub, an interconnector between Europe, Africa and Asia. Oman and Bahrain act as cable gateways: fibre-optic lines running through Salalah, Muscat and Manama provide digital transit from India to the Middle East and onward to Europe, and vice versa. A large flow of financial information passes through Qatar.

It should be borne in mind that data centres are exceptionally vulnerable, especially in the Gulf’s hot climate. The Arabian Peninsula is not Scandinavia; enormous amounts of energy are needed to cool servers. Strikes on substations, back-up power sources and cooling systems therefore threaten to knock data centres offline. If desalination plants are destroyed, and water also ceases to reach the cooling systems of data centres, the first in a cascade of consequences will be data centre shutdowns, followed by rapid degradation of global services — banks, exchanges, logistics, e-government and so forth — as well as overload and disruptions in other digital hubs, including European ones.

Iranian strikes on AWS facilities in the UAE and Bahrain have already caused service disruptions. The digitalisation of the region’s oil and gas infrastructure has increased its vulnerability. In the event of large-scale damage to the Gulf’s digital infrastructure, one cascade effect would be a negative impact on the oil and gas sector, which in turn would deepen the shortage of energy resources.

Fertilisers

Another consequence must be seen in the shrinking supply of mineral fertilisers, a significant share of which reaches the world market from the Middle East. The Gulf region is one of the global centres of nitrogen fertiliser production — ammonia, urea and nitrate — thanks to cheap natural gas as feedstock. The loss of urea supplies from the Gulf because of the Hormuz problem is not merely a logistical disruption but a shock to the global nitrogen market.

India, Brazil and African countries become especially vulnerable, as they will face a physical shortage of fertiliser, not just a price spike. It should be noted that producers in the United States, Canada and Russia stand to benefit, since they too have cheap gas, but supplies from those countries will not quickly be able to close the gap.

Alongside higher natural gas costs, a shortage of fertiliser could have a substantial impact on agriculture, reduce food production and intensify instability in many countries, particularly on the African continent. Russia can be expected to move quickly to exploit this, with its urea and its Africa Corps. China will also find itself in a difficult position. It is a major player on the global nitrogen fertiliser market, but in a crisis it always restricts exports, prioritising the domestic market to preserve food security.

Oil and gas

According to UN Trade and Development, around 20% of all seaborne oil trade on the world market passed through Hormuz, while in the final weeks before the war in the Gulf this share had reached 38%, chiefly destined for Asian countries. The Strait of Hormuz is also crucial for transporting 19% of global liquefied natural gas volumes and 29% of liquefied petroleum gas.

The war in the Gulf predictably caused a spike in oil prices. In 2025, prices had been on a downward trend, fluctuating in a Brent corridor of $80 to $60 per barrel over the course of the year. After the start of the American-Israeli operation on 28 February 2026, Brent rose from around $78 to almost $100 per barrel, and on peak days exceeded $110.

The effective blocking of tanker traffic through Hormuz has not only led to overflowing oil storage in Gulf countries, but also forced the Arab states to cut production by at least 10 million barrels per day, nearly half of the 15–20 million barrels a day that had been passing through the Strait. More than 3 million barrels a day of refining capacity in the region has already gone offline because of attacks and the lack of export routes, increasing the insurance premium on the European petroleum products market.

Saudi Arabia and the UAE have partially rerouted oil exports along routes that bypass Hormuz. The Saudis have maximised crude throughput via the East-West pipeline to the Yanbu terminal on the Red Sea. The UAE has shifted volumes to the Fujairah pipeline with access to the Gulf of Oman.

Because of negative dynamics in the oil market, the Trump administration moved to relax sanctions policy against Russia. At the beginning of March, the United States granted India a temporary 30-day waiver to purchase Russian oil that had already been loaded on tankers and was at sea as of 5 March 2026. On 12 March, the US Treasury’s Office of Foreign Assets Control officially authorised the shipment and sale of Russian oil and petroleum products that had been loaded on tankers by 12 March 2026, for a period running until 11 April 2026.

https://eutoday.net/us-gives-india-a-30-day-window-to-buy-russian-oil/

To stabilise prices, the International Energy Agency recommended releasing 400 million barrels from the strategic reserves of 32 OECD member states. Those reserves consist of government stocks amounting to 1.2 billion barrels and mandatory commercial stocks of 600 million. In theory, that is enough to cover more than 140 days of imports. The United States alone has around 410 million barrels in reserve, though that is far below the 700 million barrels it held in 2022. In France, according to the IEA, reserve volumes as of March this year were equivalent to 117 days of net imports.

A co-ordinated release of part of those reserves is one of the measures activated to stabilise prices. It is important that such decisions have been taken only five times since the IEA was founded in 1973. The last two occurred during the 2022 energy crisis caused by Russia’s invasion of Ukraine. It is equally important that this instrument has only limited effectiveness. Releasing reserves is designed to deal with temporary physical supply disruptions, but it cannot absorb a geopolitical shock if the strait remains blocked for a long time. The situation would become still worse if the problem of Hormuz were compounded by the problem of Bab el-Mandeb, which remains under threat from Houthi strikes from Yemen. Those Iranian proxies have already stated their intention to renew the blockade of the strait and threaten strikes on the Saudi terminal at Yanbu on the Red Sea.

The global natural gas market operates under the influence of a range of determinants, among them not only market, technological, regulatory and financial factors, but geopolitical ones too. The interaction of these determinants intensifies not only competition between fuels, but also competition between regional markets, notably Europe and Asia.

The European Union remains dependent on natural gas imports. The cold winter of 2025–2026 depleted gas stored in underground facilities, while the threat of disruption to LNG supplies from Qatar — currently around 12 billion cubic metres, or 3.8% of total imports to the European market — has created concern and risks upsetting the common gas import policy. Qatar’s share of EU gas imports has never matched that of the leading suppliers. Yet a supply shortfall from the Gulf affects global LNG price dynamics and the security of supply to Europe. At present, the United States is the EU’s main LNG supplier, with a share of about 58%. Last year, imports from the United States rose to around 80 billion cubic metres, almost four times the 2021 figure. Last year’s nearly 50% reduction in imports from Russia was offset by LNG supplies from the United States, an important factor enabling the EU to pursue its policy of moving away from Russian gas.

At the same time, alongside the war in the Gulf, an increasingly significant factor is the unpredictable policy of the United States itself. On the American side there is an interest in long-term contracts with European consumers. On the European side there is distrust of possible political decisions by the US president and reluctance to lose other gas supply sources against the backdrop of uncertainty over Europe’s own gas demand.

Helium

After Qatar announced the suspension of LNG exports, helium exports were also halted, since helium is a by-product of natural gas processing. This matters because helium is used critically at several stages of semiconductor production, for cooling and for high-precision technological processes. In 2025, Qatar provided around a third of global helium production: 63 million cubic metres out of a total global market volume of 190 million cubic metres came from Qatar.

Every month without freedom of navigation through Hormuz means the global market misses out on 5.2 million cubic metres of helium from Qatar. The longer the strait remains blocked, the sharper the shortage will become. For the defence-industrial sector, helium is a critical resource, and a prolonged blockade of more than five months would lead to production constraints for semiconductors, sensors and precision electronics.

As of the start of April there is no helium shortage on the market, but certain signals point to the beginning of a real imbalance in the production chain: helium suppliers have moved to manual reallocation, while chipmakers have introduced internal quotas and prioritised output. This is a classic sign of a shift from market management to operational management in the global semiconductor chain on the eve of a looming crisis. Since the disruptions in Qatar began, spot helium prices have already doubled. Qatar’s energy minister, Saad al-Kaabi, has acknowledged that even if the crisis ended immediately, normalisation of supplies would take weeks or months.

Military prospects

Iran’s ayatollahs prepared for war. The Islamic Revolutionary Guard Corps studied the lessons of years of concealed confrontation with the United States. After the “12-day war” in June last year, anticipating further attacks by the United States and Israel, Iran’s military leaders settled on a strategy of resistance. In shaping their concept of war, IRGC generals proceeded from the assumption that in a conventional war Iran had no chance of defeating the United States and Israel. A stronger adversary would at the very beginning of the war attempt to destroy Iran’s leadership and command-and-control system, which in turn would require an asymmetrical response and the stretching of the conflict in time and space.

Strategically, instead of relying primarily on regional allies that once formed the forward line of defence, Tehran is now acting mainly on its own. Iranian strategists are carrying out asymmetrical strikes against American assets in the region while at the same time seeking to put pressure on oil supplies — a strategy of indirect action aimed at creating economic pressure, above all on Trump, to force him to end the war. As we can see, this came as a surprise to the White House and its inept team. Iran wants this “surprise” to become a shock for America: Tehran is turning armed confrontation into an economic shock for its enemy.

Rather than concentrating its limited forces on a static defence, Tehran has gone onto the offensive, launching a campaign of missile and drone strikes across the Gulf region. “This is asymmetrical warfare in its purest form, in which Iran achieves extraordinary, even global, consequences with a small number of attacks that inflict painful losses,” said Michael Eisenstadt, director of the Military and Security Studies Programme at the Washington Institute for Near East Policy.

Such a strategy by the IRGC creates a need for a US ground operation to secure freedom of navigation through Hormuz, which, given Iran’s size, is unlikely to succeed. The seizure of a number of islands in the strait zone, as well as Iran’s largest oil terminal on Kharg Island, would be accompanied by heavy casualties among American personnel. That would have serious domestic political consequences for Trump and the Republicans. But above all, control of Hormuz and the terminal would not guarantee the elimination of fire strikes against targets in the Gulf, given the tactical and technical characteristics of the strike systems still at the IRGC’s disposal.

Where are we heading?

The Third Gulf War is, in one way or another, a reflection of the growing contradictions between the United States and China. The shale revolution made the United States independent of Middle Eastern oil. China, meanwhile, gradually assumed the position of principal importer of oil and LNG from the Gulf states and became their main trade and economic partner. In considering various forecasts, one must take into account the fact that the Trump administration wants to bring the planet’s main oil and gas resources under its control: not only to hinder the rise of its strategic competitor, China, but also to become the “global operator”, the dominant player on the market, which in Trump’s view would make America “great again” and give it the right, by virtue of strength, to dictate the rules to everyone else.

Evidence for this lies in the fact that, unlike the Biden administration, Trump’s administration is calmly watching the systematic efforts of Ukraine’s Defence Forces to gradually destroy Russian oil logistics and refining. That is in the interests of the American majors, to whom the current occupant of the White House owes no small part of his presidency. Trump believes he achieved his aim in Venezuela, where the world’s largest oil reserves are concentrated. He set himself the same goal, by his own admission in an interview with the Financial Times on 29 March 2026, with regard to Iranian oil. But it is already clear that Iran will not be so easily dealt with. That is why Trump shifted his visit to China to May, hoping to finish the war in the Gulf by then and arrive in Beijing imagining himself the victor.

China, meanwhile, has found itself at the centre of the Gulf’s geopolitical triangle, where its role as an economic giant and partner to both Iran and the Arab monarchies is intertwined with the need to ensure the stability of sea routes. China has strategic partnerships with virtually all the key energy exporters in the Persian Gulf, building for itself a system of energy security and logistical corridors within the framework of the Belt and Road Initiative. For Beijing, the war in the Gulf is a complex threat. At the same time, it opens a unique window of opportunity to resolve the “Taiwan question” as the self-proclaimed “peacemaker of all times and peoples” becomes more deeply bogged down in war with Iran and increasingly unable to act simultaneously in the Middle Eastern and Pacific theatres.

Unlike the resource-intensive economies of Asia — Japan, China, South Korea and India — which depend on hydrocarbon supplies from the Gulf, the European Union’s dependence is not existential in volume terms, but it is critical in terms of price and market stability. Existing 90-day strategic oil reserves will probably carry Europe through until the middle of summer. Gas is more problematic, or more precisely the creation of stocks in underground storage for the next winter season. The EU has already been hardened by the experience of 2022, when Russia acted to “dry out” the gas market and Gazprom drove price escalation.

The European Union is faced with the challenge of refilling gas reserves against a backdrop of shrinking supply and rising prices on the global market, maintaining its political line of moving away from Russian gas, and protecting itself against the temptation Trump may feel to use LNG supplies to Europe for political purposes. One marker of determination and consistency in a policy of energy independence should be the development of an intra-European market in biomethane, low-carbon hydrogen and hydrogen derivatives.

A further challenge for the EU may come from Russian sabotage disguised as accidents on Norwegian production platforms in the North Sea and on pipelines carrying gas to continental Europe. This is a scenario that would allow Russia to intensify the energy crisis and then “come to the rescue” and “save Europeans” in winter by offering to restore gas supplies. That scenario was successfully played out before September 2022, with gas prices rising as deliveries through Yamal-Europe and Nord Stream were cut off, until “unknown actors” blew up Nord Stream 2. Yet even that did not prevent the EU from continuing on a path of gradually phasing out Russian pipeline gas. Whether the EU will be able this time to withstand pressure from assorted lobbyists and resist the Kremlin’s gas temptation remains an open question, especially given the amorphous behaviour of the European Commission over the Druzhba pipeline, its inability to confiscate Russian assets, implement the Council decision on €90 billion in aid to Ukraine, open imports of biomethane and green electricity from Ukraine, and so forth.

In these circumstances, the use of substantial spare underground gas storage capacity in Ukraine would greatly assist in creating a strategic EU gas reserve and significantly strengthen European energy security.

The EU continues to invest heavily in renewable energy, improved energy efficiency and lower use of fossil fuels, but at the same time all this strengthens the position of right-wing and left-wing populist political forces that propose a return to Russian gas as a solution to the problem of price and availability.

In conclusion, it should be said that regardless of how the Third Gulf War ends, it is becoming the prologue to tectonic shifts not only in energy, as happened in the 1970s, but in the global economy and politics as well. This is the result of Western democracies allowing freedom of action to the Herostratus figures of our time — Putins, Trumps, and smaller-calibre figures such as Orbán and Fico. The spectre of a global economic crisis is becoming ever more visible in the fog of the Third Gulf War in the Gulf.

It is likely that Trump is beginning to edge backwards out of the Gulf, blaming everyone around him and, above all, NATO allies who did not come to his aid. But edging backwards does not mean the war will end. It will continue, because Trump’s wishes mean little either to Iran or to Israel. It appears that, while preparing for a ground operation, the administration of the “Nobel non-laureate” will also make a manoeuvre to shift attention to other issues — once again pressing Ukraine, urging President Volodymyr Zelenskyy towards capitulation under the guise of a “peace agreement” and “security guarantees” from the United States, the zero value of which can now be clearly seen in the case of the Arab allies in the Gulf; and the issue of Greenland may once again surface as a form of revenge against Europe.

In the circumstances described, Ukraine and Europe should prepare for the worst-case scenarios. Europe’s prospects can improve only if Russia is defeated militarily, because Russia in one way or another is covertly supporting the Iranian regime, since the Third Gulf War in the Gulf not only brings additional revenue into the Russian budget through high oil prices, but also distracts the West, divides it and reduces support for Ukraine. Just as the United States and Israel are trying to finish off Iran’s proxies, so the EU must deal with Russia’s proxies within Europe itself — the regimes of Orbán and Fico, as well as numerous far-left and far-right formations masquerading as political parties, which Russia is helping into power in their respective countries.

Against the backdrop of EU sanctions inertia and the reversal of American sanctions, Ukraine’s Defence Forces urgently need not merely to continue but to intensify effective “sanctions actions” deep inside Russia’s continental interior and across the expanses of the world ocean.

Mykhailo Honchar
President of the Strategy XXI Centre for Global Studies

Oksana Ishchuk
Executive Director of the Strategy XXI Centre for Global Studies

Pavlo Lakiichuk
First Rank Captain, Head of Military Programmes at the Strategy XXI Centre for Global Studies

Sergiy Lesniak
Head of the East Asia Bureau at the Strategy XXI Centre for Global Studies

Ihor Stukalenko
Strategy XXI Centre for Global Studies

Yanina Chaikivska
Associate Expert at the East Asia Bureau of the Strategy XXI Centre, international affairs journalist

Andriy Chubyk
Associate Energy Market Analyst at the Strategy XXI Centre for Global Studies

First published on zn.ua.