Iran war is squeezing the global economy—and exposing new ironies

Kharg Island, Iran’s main oil export terminal in the Persian Gulf. US President Donald Trump warned that oil infrastructure on the island could be next if Iran disrupted shipping in the region.Facing adversaries that far outstrip it in firepower and military might, Iran appears to have chosen its targets carefully.The first is international fuel supplies.Iran has attacked at least 16 ships in the Strait of Hormuz since the war began on 28 February.

Tehran has also warned that oil prices could nearly double to $200 a barrel as retaliation escalates.Beyond choking shipping through the Strait, Iran has also targeted oil infrastructure in neighbouring Gulf countries. Missiles and drones have reportedly struck data centres, while banks and financial institutions have been threatened.

Subsea cables have also reportedly been caught in the crossfire.Meanwhile, attacks on airports in the region, particularly Dubai, have disrupted flights in and out of the Gulf.None of this is good news for the region.Several Gulf economies had begun transitioning away from dependence on oil revenues, attracting foreign investment and positioning themselves as hubs for innovation, artificial intelligence, data centres, tourism and financial services.The war has cast a long shadow over these ambitions. It may take time for international investors and expatriates to regain confidence in a region still marked by deep ethnic and religious divisions.Vali Nasr, the widely quoted Iranian-American scholar at the Johns Hopkins School of Advanced International Studies, offered an interesting perspective in a Financial Times column on Friday.He argues that Iran is playing “the long game.”With Iran controlling the northern shore of the Gulf and its Houthi