War in Iran & Fracturing of Global Order

Written By: Ms Habiba Malik

According to the source article, the conflict that began with US-Israeli strikes against Iran on 28 February 2026 rapidly escalated beyond a bilateral military confrontation and developed into a wider regional crisis with global economic consequences.

The strikes were described as targeting Iran’s nuclear programme, ballistic-missile capabilities, military infrastructure and senior leadership.

Iran responded through a multidimensional strategy involving:

• Ballistic-missile strikes
• Drone attacks
• Pressure on US military facilities in the region
• Attacks affecting Gulf infrastructure
• Maritime pressure in the Strait of Hormuz
• Activation of aligned regional networks

The result has been a conflict with ramifications far beyond Iran itself.

Critical energy routes, global trade, food production, financial markets and the wider geopolitical balance have all been affected.

From Regional War to Global Crisis

The source presents the effective disruption of the Strait of Hormuz as one of the most consequential features of the conflict.

The Strait is a vital global energy chokepoint, and disruptions there have created a major supply shock.

The article states that the International Energy Agency responded by releasing strategic petroleum reserves in an effort to stabilise energy markets.

At the same time, the US-Israeli campaign is described as pursuing comprehensive degradation of Iran’s strategic capabilities by targeting:

• Command-and-control nodes
• Air-defence systems
• Missile infrastructure
• IRGC facilities
• Nuclear-related capabilities

Iran’s response has widened the geographical scope of the confrontation and forced its adversaries to manage multiple theatres simultaneously.

Iran’s Internal and Regional Position Is Weak

The attacks came at a time when the Iranian state was already facing significant internal and regional pressure.

The source identifies several factors contributing to this weakness.

Domestic Protests and Economic Pressure

Iran experienced extensive protests in early 2026.

The unrest was linked with:

• Economic weakness
• Struggling infrastructure
• Declining public confidence
• Questions over regime legitimacy

The protests were suppressed through extensive use of force.

Weakening of Regional Allies

Several of Iran’s regional partners had already been weakened by military pressure and conflict beginning in 2023.

This reduced Tehran’s ability to rely on its traditional network of allied actors across the region.

Damage to Iranian Defence Capabilities

The source states that Israeli strikes in 2024 and joint US-Israeli strikes in 2025 had already weakened elements of Iran’s air defences and nuclear infrastructure.

Growing Isolation in the Gulf

Iran’s counter-strikes against Arab Gulf states further complicated Tehran’s regional position because several Gulf governments had been attempting to improve relations with Iran before the latest escalation.

Failure of Nuclear Negotiations

The attacks also followed unsuccessful indirect negotiations in February 2026 concerning a new agreement aimed at restricting Iran’s nuclear programme.

According to the source, Oman had played a mediating role and had reported signs of progress before negotiations ultimately failed.

The Iranian Regime: Bruised but Still Standing

Despite severe military pressure, the Iranian political system is portrayed in the article as more resilient than many of its opponents expected.

The regime has suffered:

• Leadership losses
• Large-scale strikes on military capabilities
• Damage to infrastructure
• Pressure on its economy

Yet the state apparatus has continued to function.

The source argues that the Islamic Republic is structurally larger than any one political leader.

It also notes the absence, at that stage, of:

• A nationwide uprising capable of threatening the state
• Major defections among political elites
• Major defections within the security establishment

Hard-line factions within the system may even have gained influence during wartime conditions.

Survival Does Not Solve Iran’s Long-Term Crisis

Even if the Iranian regime survives the conflict, the article argues that it continues to face a deeper political and economic challenge.

The government has struggled to provide the economic and political opportunities demanded by large sections of its population.

Its long-term options may therefore involve either:

• Continued repression
• Major ideological and political reform

The source considers rapid ideological transformation unlikely.

Under this interpretation, surviving the war may postpone rather than eliminate Iran’s next major domestic crisis.

Possibility of Regime Change in Iran

Military strikes against senior commanders and critical infrastructure were partly intended, according to the source, to destabilise the Iranian system internally.

However, regime-change strategy faces a fundamental obstacle: the absence of a unified and credible opposition capable of replacing the existing system.

A Fragmented Opposition

Iranian opposition forces include:

• Monarchists in exile
• Reformists
• Imprisoned activists
• Secular democrats
• Ethnic minority movements
• Grassroots protest networks

These groups share opposition to clerical rule but remain divided over:

• Leadership
• Strategy
• Political ideology
• The structure of a post-regime state

Reza Pahlavi

The source discusses Reza Pahlavi, son of Iran’s last Shah, as one figure attempting to position himself as a transitional leader.

He advocates secular democracy, national reconciliation and a referendum over Iran’s future political system.

However, the source argues that his domestic appeal remains limited and that perceptions of alignment with US and Israeli narratives may weaken his legitimacy inside Iran.

Ethnic Opposition Movements

Kurdish and Baluch movements remain politically active but are described as fragmented and geographically concentrated.

Neither has developed a unified national platform capable of replacing the existing state.

Why External Regime Change May Fail

The article argues that Iran’s regime survives partly because there is no coherent alternative capable of mobilising a critical mass of the population.

External efforts to impose regime change may therefore reinforce nationalist sentiment instead of generating revolution.

Geo-Economic Implications

The most far-reaching effects of the war may ultimately be economic rather than military.

The crisis has disrupted energy markets, maritime trade, food production and financial expectations across the world.

The Hormuz Fault Line

The Strait of Hormuz has shifted from a long-recognised geopolitical risk into an active geo-economic fault line.

The source states that roughly:

• 20 percent of globally traded oil
• 25–30 percent of seaborne crude
• Nearly one-fifth of global LNG trade

passes through this corridor.

This includes between approximately 15 and 20 million barrels of oil per day, alongside significant Qatari LNG exports.

As a result, disruption of the Strait creates a physical supply shock rather than merely speculative market anxiety.

Alternative Routes Cannot Fully Replace Hormuz

Saudi Arabia and the United Arab Emirates possess pipelines capable of bypassing the Strait to some extent.

These include:

• Saudi Arabia’s East-West Pipeline
• UAE’s Habshan-Fujairah corridor

However, the source argues that their combined capacity is insufficient to replace normal Hormuz traffic.

Qatar’s LNG exports remain particularly dependent on the Strait.

Even maximum use of alternative routes would therefore leave a substantial shortfall.

Immediate Market Effects

The conflict has caused major disruption in global energy and shipping markets.

The source highlights:

• Sharp increases in oil prices
• Pressure on European gas markets
• Higher war-risk insurance premiums
• Withdrawal of some insurers from Gulf coverage
• Rising freight rates
• Rerouting of ships through the Cape of Good Hope

This demonstrates how military insecurity rapidly translates into higher global trade costs.

Attacks on Middle Eastern Oil and Energy Facilities

The conflict has increased the vulnerability of Gulf states whose critical infrastructure has become part of the wider battlefield.

According to the source, regional defence systems have faced large numbers of Iranian ballistic missiles, cruise missiles and drones.

Potentially vulnerable assets include:

• Oil terminals
• Refineries
• Desalination facilities
• Air bases
• Ports
• Energy pipelines

The source also refers to reported damage to Saudi Aramco’s Ras Tanura facility as an example of the conflict expanding towards strategic energy infrastructure.

This creates a paradox for Gulf states.

They become more dependent on US-enabled defence architecture while simultaneously discovering the limitations of those systems under sustained regional pressure.

Rising Hydrocarbon Prices

The source makes an important argument: a global energy shock does not require complete physical scarcity.

Uncertainty itself carries a price.

When markets fear disruption, prices can rise much faster than actual shortages would immediately justify.

Oil is also an input into numerous other economic sectors.

Higher crude prices therefore contribute to rising costs for:

• Transport
• Food
• Fertilizer
• Manufacturing
• Electricity
• Household consumption

The War Is Transforming the Global Economy

The macroeconomic effects of the conflict extend well beyond oil and gas.

Higher energy costs increase production and transportation expenses throughout the global economy.

Energy-importing countries face especially difficult choices.

Central banks must balance:

• Inflation control
• Economic growth
• Currency stability

Governments may respond through fuel subsidies or strategic reserve releases, but these measures place additional pressure on fiscal balances.

Higher Interest Rates

If energy-driven inflation remains persistent, central banks may maintain or raise interest rates.

This can increase:

• Mortgage costs
• Business borrowing costs
• Consumer-loan rates
• Debt-servicing burdens

Lower-income households may suffer disproportionately because they spend a larger share of their income on essential goods.

Fertilizer and Food-Security Crisis

Natural gas is an important input in fertilizer production.

Disruption to Gulf LNG supplies therefore creates potential consequences for global agriculture.

The source highlights pressure on countries in East Asia that depend heavily on imported LNG and fertilizer inputs.

The Northern Hemisphere planting season intensifies the risk because farmers require fertilizers at precisely the time prices are rising.

Higher production costs may therefore affect:

• Crop profitability
• Food prices
• Agricultural output
• Food security

The countries most vulnerable are likely to be poorer import-dependent economies with limited fiscal capacity.

Semiconductors and Helium

The source also connects Gulf disruption with semiconductor production.

Helium is an important industrial input in advanced manufacturing, including semiconductor production.

Supply constraints could therefore create additional pressure on major technology-producing economies such as Taiwan.

This illustrates how a Middle Eastern conflict can transmit shocks into sectors that appear geographically unrelated to the Gulf.

Global South Under Pressure

Most Global South countries are net importers of:

• Oil
• Gas
• Food
• Fertilizer
• Industrial commodities

Higher prices can worsen:

• Current-account deficits
• Currency depreciation
• Capital outflows
• Inflation
• Debt stress

The source therefore warns of interconnected:

• Currency crises
• Energy crises
• Food crises
• Economic crises

across vulnerable developing economies.

Russia Back on the World Stage

The war may indirectly strengthen Russia’s strategic position.

Higher Energy Revenues

Higher oil and gas prices can increase Russian export earnings and provide Moscow with additional fiscal space.

Reduced Western Attention on Ukraine

If the United States becomes heavily engaged in the Gulf, military resources and advanced air-defence systems may become harder to allocate to Ukraine.

Low-Cost Strategic Cooperation with Iran

The source discusses limited Russian cooperation with Iran in areas such as intelligence, targeting data and missile technology.

This allows Moscow to exploit American strategic distraction without assuming the full risks of direct confrontation.

Where Does China Fit In?

China may also gain strategic opportunities from prolonged American concentration on the Middle East.

Greater Freedom in the Indo-Pacific

If US and NATO attention shifts towards the Gulf, Beijing may enjoy greater strategic room around:

• Taiwan
• South China Sea
• Western Pacific

Alternative Financial Networks

The source argues that prolonged conflict and sanctions may weaken confidence in the dollar-centred financial system.

This could strengthen Chinese efforts to expand alternative arrangements through:

• BRICS-related platforms
• Shanghai Cooperation Organisation
• Yuan-denominated trade

China’s Preference for a Surviving but Dependent Iran

According to the source, Beijing has little interest in sudden Iranian collapse if that collapse produces a strongly pro-US government.

A weakened but surviving Iran could become more economically and strategically dependent on China.

Opportunity for China’s Clean-Energy Industry

The conflict may also increase demand for alternatives to hydrocarbon dependence.

China dominates major segments of the global solar industry.

The source notes that China:

• Installs solar capacity at enormous scale
• Has more than 1,100 gigawatts of photovoltaic capacity
• Produces a large share of the world’s solar panels
• Dominates upstream manufacturing such as polysilicon, wafers and cells

This dominance gives China:

• Export power
• Economic leverage
• Technological influence
• Greater weight in climate diplomacy

A global energy shock could therefore strengthen long-term demand for Chinese renewable-energy technology.

Multipolar Oil Markets and the Petroyuan

The source also argues that Iran has challenged the dominance of the US dollar in global oil trade.

It discusses claims that Tehran sought to encourage some energy transactions through the Strait of Hormuz to be conducted in currencies other than the dollar, particularly the Chinese yuan.

If such trends expand, they could contribute to:

• Greater use of the yuan in energy trade
• Reduced dominance of the petrodollar
• Expansion of alternative payment systems
• Greater monetary multipolarity

The conflict therefore has potential implications not only for energy flows but also for the international monetary system.

Boots on the Ground?

The source argues that a large-scale US or Israeli ground invasion of Iran remains strategically unattractive.

Military victory through air power does not automatically translate into successful occupation or political transformation.

Scale and Risk of Ground Invasion

A sustained invasion would likely require:

• Hundreds of thousands of troops
• Heavy logistical support
• Long-term occupation
• Large financial commitments

Iran’s geography would make such a campaign exceptionally difficult.

The country possesses:

• Mountainous terrain
• A large population
• Experienced IRGC forces
• Militia networks
• Missile and drone capabilities

The military costs could therefore be extremely high.

Regional Escalation

A ground invasion could trigger simultaneous escalation across the region.

Iran and aligned actors could attack:

• US bases
• Gulf shipping
• Oil infrastructure
• Israel
• Regional US partners

Groups in Lebanon, Iraq and Yemen could open additional fronts, making the war increasingly difficult to contain.

Nuclear and Strategic Dangers

A ground invasion could also affect Iran’s nuclear calculations.

The source argues that Tehran could respond by accelerating efforts towards a nuclear-weapons capability or by escalating conventional attacks dramatically.

For Israel, a prolonged direct war could also increase exposure to large-scale missile and drone strikes.

Preferred Strategy of the US and Israel

According to the source, Washington and Tel Aviv currently prefer an air-and-sea-centric strategy.

This includes:

• Missile strikes
• Drone operations
• Naval operations
• Limited special-forces missions

The objective is to degrade Iranian military capabilities without assuming the enormous costs of a full-scale land invasion.

Kharg Island: Iran’s Oil Lifeline

Kharg Island occupies an exceptionally important position in Iran’s energy economy.

The source states that the island handles roughly 90 percent of Iran’s crude-oil exports.

Its terminals are capable of handling very large crude carriers that cannot easily operate along much of Iran’s shallow mainland coast.

Because of this, Kharg Island is both an economic lifeline and a strategically tempting military target.

Why Kharg Island Matters

The island has served as Iran’s main oil-export hub for decades.

Much of the crude shipped through Kharg is destined for Asian markets, particularly China.

Control or destruction of the island could therefore:

• Reduce Iranian export revenues
• Pressure the Iranian government
• Affect global oil prices
• Complicate China’s energy imports

The source cites historical intelligence assessments describing Kharg as critical to Iran’s economic survival.

Could the United States Occupy Kharg Island?

Any attempt to seize or occupy Kharg Island would carry serious military risks.

The island lies close to mainland Iran and would remain within range of:

• Short-range missiles
• Drones
• Naval attack craft
• Iranian coastal forces

US troops deployed there could therefore become highly exposed.

Logistical Problems

Resupplying forces on Kharg would also be difficult.

Nearby US bases are located in states such as:

• Bahrain
• Kuwait
• Qatar

Ships moving between these bases and Kharg would remain vulnerable to attack.

Iran’s Mosquito Fleet

The source highlights Iran’s use of small fast attack craft equipped with:

• Drones
• Missiles
• Rockets

Such forces could complicate naval operations around the island.

Civilian Risks

Thousands of civilians live on Kharg Island.

Any invasion or occupation would therefore create major humanitarian and legal complications.

Other Strategic Islands Around the Strait of Hormuz

Kharg is not the only strategically important island in the Gulf.

The source identifies several others.

Qeshm Island

Qeshm is the largest island in the Persian Gulf and is believed to contain important military infrastructure.

It also hosts desalination facilities important to Iran’s water security.

Abu Musa and Greater and Lesser Tunb

These islands are controlled by Iran but are also claimed by the United Arab Emirates.

Their location near the Strait gives them strategic importance.

Larak Island

Larak lies near Bandar Abbas and close to important tanker routes.

Its location makes it relevant to Iran’s maritime-control strategy.

Fracturing of the Global Order

The war’s significance extends beyond the battlefield.

It is accelerating trends already visible in the international system.

1. Energy Fragmentation

States are increasingly seeking alternative suppliers, trade routes and strategic reserves.

2. Financial Fragmentation

Alternative payment systems and non-dollar energy trade may gain momentum.

3. Great-Power Competition

Russia and China may benefit from US strategic overstretch in the Middle East.

4. Global South Vulnerability

Import-dependent developing states face the greatest exposure to higher food, energy and financing costs.

5. Weakening Globalisation

Rerouted shipping, higher insurance premiums and supply-chain disruptions increase the cost of global trade.

6. Renewed Strategic Importance of Chokepoints

The crisis demonstrates that modern economies remain heavily dependent on a small number of maritime corridors.

Lessons for the Global Economy

The conflict offers several important lessons.

Energy Security Is National Security

Countries excessively dependent on imported oil and gas remain vulnerable to distant geopolitical conflicts.

Supply-Chain Diversification Is Essential

Critical commodities should not depend on a single geographic corridor.

Strategic Reserves Still Matter

Oil, gas and food reserves remain important tools for managing geopolitical shocks.

Renewable Energy Has Strategic Value

The case for renewable energy is no longer only environmental.

Renewables can reduce dependence on vulnerable maritime energy routes.

Maritime Chokepoints Remain Critical

Even in an era of artificial intelligence and advanced digital technologies, the global economy still depends heavily on physical shipping routes.

Conclusion

Whatever the eventual military outcome of the Iran war, the source argues that the conflict is unlikely to eliminate Iran’s ability or willingness to exert pressure across the Gulf.

The war has damaged Iranian military and nuclear capabilities, but Iran retains leverage through missiles, drones, regional networks and, above all, geography.

The Strait of Hormuz remains the most consequential pressure point.

Its disruption has already demonstrated how quickly a regional conflict can become a global economic crisis.

In the first phase, attention centred on oil and gas prices.

It then expanded towards helium, semiconductor production, fertilizer availability and global food security.

The conflict has therefore revealed the fragility of a highly interconnected global economy.

Russia may benefit from higher energy prices and reduced Western attention on Ukraine.

China may gain opportunities in the Indo-Pacific, renewable-energy markets and alternative financial systems.

The Global South, meanwhile, faces the greatest danger from higher commodity prices, weaker currencies and widening current-account deficits.

The central lesson is that despite decades of discussion about resilience, technological progress and economic diversification, the global system remains extraordinarily dependent on a handful of strategic chokepoints. The Strait of Hormuz is one of the most important—and war in Iran has demonstrated just how rapidly its disruption can fracture the global order.