The war with Iran is not just a military misadventure but an economic catastrophe that will rival the financial fallout of 2008. The Strait of Hormuz closure has triggered shortages in oil, gas, helium, and fertilizer, leading to rising costs and supply chain chaos. We ignored the warnings, and now we are paying the price.
The mainstream media and the administration tried to spin this as a quick victory, but the reality is far darker. As I have been warning for months, the blockade of the Strait of Hormuz cuts off roughly 20% of global oil trade and a third of agricultural inputs, driving up gas prices and food costs. [1] The situation was entirely predictable: the U.S. massed naval firepower in February 2026, Iran responded by closing the strait, and the global economy immediately seized up. [2] Our economy floats on oil, as Sharon Astyk wrote in Depletion and Abundance: “Our food is grown with oil, packaged in oil, and transported to our grocery stores with oil.” [3] That oil lifeline has been cut, and the consequences are only beginning.
Closing the Strait doesn’t just affect oil. Helium shortages threaten semiconductor production, medical MRIs, and the AI bubble. I have seen this firsthand in my lab, where helium supplies have been rationed by key gas suppliers and prices have skyrocketed. Critical commodities like sulfur and urea are also in short supply, impacting industries from microchips to fertilizers. [4] The administration’s spin that a quick deal will restore everything fails to account for the long-term deficit. Even if the Strait reopens, the International Energy Agency warns that it will take two years for oil and gas supplies to fully recover. [2]
Fertilizer shortages are already causing crop failures. The Al Jubail industrial complex in Saudi Arabia, which produces much of the world’s ammonia and petrochemicals, has been effectively shut down due to the conflict. [5] Without fertilizer, global food production will plummet, triggering a widening famine that will hit the poorest nations first. For some countries, their entire food system will be facing near-collapse conditions by mid-2027.
As I reported in my article “No Way Out,” the oil wells in the Persian Gulf have suffered permanent damage that cannot be quickly repaired. [6] Investors cheered when oil prices dropped on news of a deal, but that optimism is misplaced. The structural damage to energy infrastructure ensures that future price spikes are inevitable.
The Strait of Hormuz is not just a chokepoint for oil; it is the jugular of the entire modern economy.
Iran used a decentralized, strategic-depth approach – exactly what George Washington did – turning our blitzkrieg into a quagmire. They didn’t need a large navy; they just needed to credibly threaten the Strait. Iran’s control of that narrow passage, between two islands, allowed it to dictate global trade flows with relative impunity.
Through all this, the Iranians proved rational and disciplined, while we blundered into an unwinnable war. As Middle East Eye reported, the Islamabad agreement “reads less like terms imposed on a defeated state than like a retreat from the American-Zionist project to remake the region.” [10] Another analysis concluded bluntly: “We have lost.” [11] University of Tehran professor Mohammad Marandi described the outcome as a “decisive victory” for Iran. [12]
This is a historic defeat for American power. Dmitry Trenin wrote that the truce “marks a defeat for American power.” [13] The US-Israeli war has ended the dream of a “greater Israel” and elevated Iran as the regional superpower. [14] [15] We are witnessing the end of American hegemony in the Middle East, all because of a reckless war that Trump never should have started in the first place.
