Kamal Ghorui
The latest escalation in the Middle East is rapidly moving beyond the limits of a regional war and is beginning to shake the foundations of the global energy system. Rising tensions in the Gulf, combined with the continuing war in Ukraine and sharpening rivalry among major powers, have created a moment in which oil supply, shipping routes and geopolitical alignments are becoming inseparable. Markets are reacting not only to military developments but to the fear that the conflict could disrupt the arteries through which the modern world economy flows. If the crisis deepens, the consequences will be felt far beyond the battlefield — in fuel prices, inflation, strategic partnerships and the balance of power from Asia to Europe.
The scale of vulnerability today is unusually high because a large share of global energy production lies within regions affected by conflict. Nearly eleven countries directly or indirectly involved in major wars — stretching from the Gulf to Eastern Europe — together account for roughly 51 per cent of global crude oil production and about 56 per cent of natural gas output. The closest historical parallel is the Gulf War, when countries engaged in the conflict represented around 45 per cent of global energy production. Despite decades of diversification and the gradual rise of renewable energy, the world economy still runs overwhelmingly on oil and gas. Global crude output is expected to exceed 100 million barrels per day, and demand continues to rise, leaving markets extremely sensitive to any disruption. In such conditions, even limited military escalation can produce global economic shockwaves, pushing energy security back to the centre of international politics.
At the heart of the current crisis lies the Strait of Hormuz, the most critical energy chokepoint in the world and the decisive variable in the unfolding conflict. According to assessments by the International Energy Agency and the US Energy Information Administration, close to 20 million barrels of oil per day — nearly one-fifth of global consumption and more than a quarter of seaborne oil trade — passes through this narrow waterway, along with a substantial share of global liquefied natural gas exports. Most Gulf producers, including Saudi Arabia, Iraq, Kuwait, Qatar and the United Arab Emirates, depend heavily on this route, and alternative pipelines can carry only a fraction of total exports. Any prolonged disruption would therefore remove a significant portion of global supply almost overnight. Because the majority of shipments through Hormuz go to Asia, countries such as India, China, Japan and South Korea would be hit first, but the impact would quickly spread worldwide through higher prices, currency volatility and inflation. In strategic terms, the Strait of Hormuz is not merely a shipping lane; it is the pressure point of the global economy, and the ability to threaten it provides enormous leverage in times of war.
This explains why the present conflict is already driving volatility in energy markets. Traders are pricing in the possibility of attacks on oil facilities, restrictions on shipping and a wider regional confrontation. Unlike earlier crises, the current situation coincides with the war in Ukraine and intensifying competition among major powers, creating a rare convergence of military conflict and energy insecurity. The result is a geopolitical environment in which even the perception of risk can send prices soaring and force governments to rethink long-standing policies.
One of the clearest beneficiaries of rising oil prices is Russia. As one of the world’s largest energy exporters, Moscow gains whenever supply tightens and prices climb. Higher prices increase revenue even when Russian crude is sold at discounted rates following sanctions imposed after the Russian invasion of Ukraine. A prolonged Middle East crisis also diverts Western attention from Ukraine, easing diplomatic pressure on Moscow and creating opportunities for Russian energy to re-enter global markets through indirect channels. In times of shortage, economic necessity often outweighs political restrictions, and buyers prioritise supply stability over sanction discipline.
A similar pattern could bring Iran and Venezuela back into the centre of global energy calculations. If production in the Gulf remains under threat, previously sanctioned exporters may become indispensable simply to stabilise markets. Energy crises have historically weakened sanction regimes because governments cannot afford prolonged shortages or uncontrolled price rises. The longer the conflict continues, the stronger the bargaining power of oil-producing states becomes, particularly those willing to sell outside Western regulatory frameworks. This shift strengthens a loose alignment between Russia, Iran and China, all of whom benefit from a fragmented and uncertain energy order.
China, the world’s largest energy importer, has prepared for such disruptions by building strategic reserves and diversifying supply routes through Central Asia, Russia, and maritime networks. Beijing is therefore likely to avoid direct military involvement while quietly supporting any arrangement that keeps oil flowing. The United States, by contrast, has strong incentives to maintain a naval presence in the Gulf to ensure freedom of navigation and reassure its regional partners. The result could be a familiar but dangerous pattern: the United States focused on protecting sea lanes, China safeguarding supply chains, and Russia benefiting from higher prices and Western distraction. Such a configuration risks turning a regional conflict into a wider contest among major powers.
For the Middle East itself, the stakes are equally high. The region’s economies depend heavily on uninterrupted energy exports, and any sustained disruption could weaken state revenues, increase domestic pressure and intensify rivalries. Attacks on oil and gas infrastructure would not only affect global markets but could also trigger political instability within producer states. In a region already marked by proxy conflicts and strategic competition, an energy shock could accelerate realignments and deepen existing fault lines.
India is among the countries most exposed to such a scenario. A large share of its oil imports comes from the Gulf, and any disruption in the Strait of Hormuz quickly translates into higher fuel prices, inflation, and pressure on the rupee. Rising energy costs affect transportation, fertiliser production, electricity generation, and food prices, making the impact felt across the entire economy. In previous crises, India increased purchases of discounted Russian oil to shield domestic markets, and a similar strategy may again become necessary. Yet such decisions complicate India’s diplomatic balancing between the West, Russia and the Middle East, forcing New Delhi to manage economic necessity alongside strategic partnerships.
The shock would not stop with India. The entire Asia-Pacific region depends heavily on Middle Eastern energy supplies. Japan, South Korea, Southeast Asian economies and even Australia rely on stable shipping routes through the Gulf for oil and liquefied natural gas. Any prolonged disruption could slow growth, raise inflation and force governments to accelerate efforts to diversify energy sources. Unlike China, many of these countries lack large strategic reserves, leaving them particularly vulnerable to sudden supply shocks.
In the end, the trajectory of the conflict may depend less on battlefield victories than on what happens in the Strait of Hormuz. Even the threat of closure is enough to rattle markets and alter strategic calculations. If the waterway remains under pressure, oil prices will stay elevated, exporters will gain influence and geopolitical rivalry will intensify. The world could then find itself in a situation reminiscent of past oil crises, but with far deeper economic interdependence and far wider political consequences.
What is unfolding is not just another Middle Eastern war. It is a reminder that control over energy routes still shapes global power in ways few other factors can. As long as the Strait of Hormuz remains at the centre of the confrontation, the conflict will continue to reverberate far beyond the region — strengthening some powers, weakening others, and forcing energy-dependent nations to navigate an increasingly uncertain geopolitical landscape.
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