The US–Israeli military strikes on Iran beginning 28 February 2026, and Iran's subsequent retaliatory actions, had global and regional economic consequences. The conflict led to immediate surges in oil and gas prices, widespread disruptions in aviation and tourism, declines in stock markets, and heightened volatility in financial markets. Analysts projected potential global inflation increases and risks of recession if disruptions persisted, particularly through closures of key shipping routes like the Strait of Hormuz.^[1][2] The strikes included the assassination of Ali Khamenei Iran's Supreme Leader, which involved millions of dollars in US military equipment, exacerbating economic uncertainties.^[3]

The conflict disrupted approximately 20% of global oil supplies transiting the Strait of Hormuz, causing prices on the Brent Crude oil market to rise from around $70 to over $80 per barrel within days.^[4] Airspace closures in the United Arab Emirates (UAE), Qatar, Kuwait, and other Gulf states led to the grounding of thousands of flights, affecting major carriers like Emirates Airlines and causing significant losses in tourism revenue.^[5] Stock markets experienced declines, with the Dow Jones Industrial Average falling over 400 points on 2 March.^[6] Broader economic forecasts warned of inflationary pressures and slowed global growth if the conflict prolonged.^[7]

The 2026 Iran conflict began on 28 February 2026, with joint US-Israeli airstrikes targeting Iranian leadership and military infrastructure, including a decapitation strike that assassinated Supreme Leader Ali Khamenei.^{[citation needed]} The operation, codenamed "Operation Epic Fury" by the US, involved advanced military equipment costing millions of dollars, such as precision-guided munitions and stealth aircraft.^[8] Iran retaliated with missile and drone strikes on US and Israeli targets, as well as Gulf states hosting US forces, leading to airspace closures and attacks on infrastructure.^[9]

Prior to the conflict, Iran's economy was strained by sanctions, protests, and a depreciating rial, with inflation exceeding 40% in 2025.^[10] The strikes intensified these pressures, while global markets reacted to fears of supply chain disruptions.

The conflict caused immediate volatility in energy markets, with Brent crude oil prices surging 10–13% to around $80–82 per barrel by 2 March 2026.^[11] Iran's closure of the Strait of Hormuz disrupted 20% of global oil supplies and significant liquefied natural gas (LNG) volumes.^[12] Analysts forecasted prices could reach $100 per barrel if disruptions persisted, potentially adding 0.8% to global inflation.^[13] Exports from the region are typically going to Asian countries, with China, India, Japan and South Korea accounting for 75% of oil and 59% of LNG exports.^[14]

European natural gas prices nearly doubled after the attacks on Qatari facilities caused Qatar to close its LNG plants in Ras Laffan Industrial City and Mesaieed Industrial Area, raising concerns over energy security and fertilizer costs.^[4] The EU gas prices decreased again to a less-high €48/MWh on Wednesday 4 March.^[15] The United States of America, buffered by domestic production, faced less direct impact but saw gasoline prices rise 5–10 cents per gallon daily.^[6]

British think tank The Food Policy Institute has warned of long-term increases in food prices, due to disruption in fuel and fertiliser markets.^[16]

Iran's airspace was largely empty of civilian aircraft following the initial strikes on 28 February as regional states closed airspace.^[17][18] Bahrain, Iraq, Israel, Kuwait, Qatar, Syria and the UAE closed their respective airspace following the attacks, with multiple airliners being redirected to other destinations.^[19][20][21] International airlines like Air India, Biman Bangladesh Airlines, British Airways, Cathay Pacific, IndiGo, Lufthansa, Virgin Atlantic, and Wizz Air suspended services to the Middle East in view of the conflict, as did airlines based in the region, including Kuwait Airways and Qatar Airways.^{[22][23][24][25]}

Airspace closures in the UAE, Qatar, Kuwait, Bahrain, and other Gulf states led to over 4,000 daily flight cancellations, stranding hundreds of thousands of passengers.^[26] Dubai International Airport (DXB) and Abu Dhabi sustained damage from Iranian strikes, while planes in Kuwait were grounded after airport hits.^[27]Emirates Airlines suspended operations from Dubai until 3 March, with Etihad and Qatar Airways facing similar disruptions, leading to losses estimated in billions.^[5] Tourism in the UAE and Qatar suffered, with hotel bookings plummeting and economic hubs like Dubai facing paralysis.^[28] According to a Wirtschaftswoche analysis, prolonging the conflict would mean a "catastrophe" for the smaller Gulf states such as Qatar and the UAE.^[29]

Global stock markets declined, with the Dow Jones falling over 400 points and the S&P 500 dropping 0.7% on 2 March.^[30] European and Asian indexes fell 1–2%, reflecting fears of inflation and supply chain issues.^[31] Gold prices rose as a safe-haven asset, while airline stocks like United Airlines dropped 6%.^[32]

Prolonged conflict risked global recession, with higher energy costs eroding consumer spending and industrial competitiveness.^[33] Developing economies faced currency pressures, while central banks grappled with rate decisions amid inflation.^[7] Emerging markets experienced currency pressures from a stronger US dollar.^[7]

Financial markets saw volatility, with stock indices like Japan's Nikkei dropping over 2%.^[34] On 2 March, the KSE 100 index witnessed a market halt and recorded its largest-ever single-day decline, losing 16,089 points, or 9.57%, to close at 151,973 points.^[35][36] South Korea's KOSPI index suffered its biggest crash since the 2008 financial crisis, dropping up to 12% in a single day and triggering a circuit breaker on 4 March. The Thai Stock Exchange also imposed a trading curb after a 8% decline.^[37]

Following the war, most flights to and from Dubai were grounded due to geopolitical tensions in the Middle East, disrupting gold shipments. According to some experts, the disruption caused significant price swings in target markets, including India, where gold prices went from a $50 discount to the London price in a matter of days.^[38]

In the United States, domestic energy production buffered immediate shocks, but uncertainty risked undermining 2026 growth outlooks.^[2] Europe faced energy security threats, with eurozone growth potentially reduced by 0.1% and inflation up 0.5%.^[39] Asia's importers, like China, saw heightened costs, while Middle Eastern economies suffered from suspended aviation and tourism.^[40]

Iran's economy, already contracting under sanctions, faced further infrastructure damage and revenue losses.^[41]

The countries along the Caucasus (Armenia, Azerbaijan and Georgia) have been diplomatically cautious due to reasons linked to trade and national security. The main preoccupation is related to the high risk of being merged the Armenia-Azerbaijan conflict with the Iran–Israel proxy conflict due to the informal pro-US Azerbaijan–Israel and pro-Russia Armenia–Iran geo-strategic alliances (which also could affect the Georgian–Ossetian conflict), as also the fear of an uprising by Azerbaijani separatists in Iran backed by the US and Israel that could destabilize the local Geopolitical calculations in the zone (currently based in the 2025 Armenia–Azerbaijan peace negotiations). Another preoccupation has been the exodus of foreign nationals seeking to escape the war zone through the Azerbaijan–Iran border and Armenia–Iran border. The three Caucasian countries have been calling for a quick cessation of hostilities.^[42][43]

For the nations in Central Asia (all of them Landlocked countries), the conflict damaged its trade routes to southern markets, risking their commerce to the rest of the world through the Indian Ocean from Iranian ports (which are essential to Central Asia's trade geography to reach Europe and South Asia). The immediate consequences have been an increasing inflation risks for importers and a risk of dependence in their air and sea northern corridors through the Caspian Sea from Russia's Volga–Don Canal (which also damages their land southern corridors linking Central Asian rail and port networks to Turkey). Although countries like Kazakhstan (with oil reserves) may see stronger export revenues in the short term due to higher crude prices. In the long term, higher risk premiums will be reflected directly in freight rates on routes used by Central Asian exporters, and as insurers reassess war risk, smaller carriers and landlocked economies will absorb the cost first.^[44]

On 3 March, the foreign ministers of the "C6" countries (Azerbaijan, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, Uzbekistan) spoken together by telephone about the Middle East crisis, amining to develop coordinate responses to its geopolitical impact in the Caspian Sea and Greater Central Asia regions. Such diplomatic forum expresses a shift toward more structured regional crisis management instead of purely economic coordination like other Multilateral consultative meetings in the past. The main goal is maintaining close coordination and prompt interaction amid the crisis to develop an operational diplomatic mechanism to avoid the region to be absorved by the problems caused by the current external crises in the Iran–Israel proxy conflict, Afghanistan–Pakistan border skirmishes and American Interventionism, as also helping in the evacuations of people fleeing Iranian territory through Iran–Turkmenistan border and the Azerbaijan-Iran border.^[45]

The Port of Berbera in Somaliland (an ally of Israel and of the United Arab Emirates, who have a military presence in the area)^[46] has been considered a military target by Houthis (and their Al-Shabaab allies). The Israel recognition of Somaliland included discussions of Israel having a military base in Berbera, with Houthis warning after the recognition that "Israeli assets in Somaliland would be legitimate military targets", risking regional stability in the Horn of Africa.^{[47][unreliable source][48]}

Ismaïl Omar Guelleh, president of Djibouti and ally of Saudi Arabia, denounced that both Israel and United Arab Emirates are driving strategic realignments across Northeast Africa that risk intensifying current conflicts (like the Somali Civil War, Sudanese Civil War, Insurgency in Chad, Libyan crisis, etc.) and a possible merging of them with the Iran–Israel proxy conflict.^[49] Similar notices has been sent by the Houthis to the rival Presidential Leadership Council, threatening to attack any US or Saudi military facilities in Yemen on a current civil war.^[50]

India, which relies heavily on the Gulf countries for its oil imports is monitoring the situation as a significant fall in the nation's oil reserves is expected to cause a significant economic hit and drive up inflation and exacerbating local supply chain disruptions.^[51] On the other hand, both Afghanistan and Pakistan had stated that the US-Israel war on Iran could negatively impact the whole region, fearing the possibility of their ongoing war being merged with the Iran–Israel proxy conflict and the Iran-United States crisis.^[52][53] The Pakistani Government is highly concerned about cross-border clashes in Balochistan^[54] (spillover effects, sectarian tensions, or proxy and terrorist activity) due to its western borders with Iran becoming unstable, as that would endanger them with a Two-front war that they cannot afford and that could affect negatively their interests in their eastern borders on the Indo-Pakistan conflict.^[55][56]

Also have been threatened China's interests in South Asia and Arab world in favour of India's one (in the context of their rivalry) due to the conflicting China-Pakistan partnership (which included Iran as an economic partner) with the Israel-India partnership (which bringed Afghanistan and Gulf states to its side only economically), as both wars in the Persian Gulf and Pashtunistan harms the Belt and Road Initiative (which depended it's stability on Chinese Mediation between conflicting sides of the Iran–Saudi Arabia proxy war and Afghan conflict) by alienating the countries that are politically hostiles to Iran and Pakistan.^[57][58] China officially declared itself Neutral country, not wanting to also alienate whatever possible regime change in Iran, as Iran is China's third-largest supplier of crude oil (being expected an increasement in China's energy import costs and overall inflationary pressures) and China has invested over US$100 billion in energy and infrastructure projects in Iran (which could be halted by the fighting or by sanctions from the US against the renminbi settlement system between China and Iran).^[59]

• Economic impact of the Iran–Israel proxy conflict
• 2026 Strait of Hormuz crisis
• Iranian economic crisis
• Global energy crisis (2021–2023)