Bloomberg has published an impressively detailed article, The $108 Oil War: Can the Middle East Crash the World Economy? It has the heft of an analyst’s report and the range of its discussion adds to the seeming validity of its headline finding. It’s also noteworthy that the usual top oil forecaster, the commodities trading heavyweight Goldman, had not yet put out a projection about the impact of an Iran War on oil prices, although this Bloomberg piece may rouse them to do so.
Those of you who follow YouTube commentary may be surprised at the Bloomberg take, given that military experts and those in the region, like Alastair Crooke, forecast much higher oil price levels if Iran were to close the Strait of Hormuz for a more than a short period of time. So who has the better grip on what might unfold?
An examination of the Bloomberg story indicates that it anticipates a less ferocious response by Iran than it has promised and the prominent independent media commentators like Lawrence Wilkerson and Douglas Macgregor deem possible.1 We also believe that it underestimates the vulnerability of the global economy to an oil supply/price shock in a world of extended supply chains. Note that exposure does not necessarily translate into higher oil and energy prices but bigger economic and real world knock-on effects.
Note that despite considerable speculation that Netanyahu would succeed in his meeting on Wednesday in browbeating or even blackmailing Trump into greenlighting an attack on Iran, that does not appear to be imminent:
Following his 3 hour meeting with Israeli Prime Minister Netanyahu, US President Trump says there was nothing definitive reached.
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But this of course could also be continued deception as the US gets more of its military assets in place. However, it may also be that the US is up against the reality that its not-so-hot-to-begin-with air defenses are now too clearly depleted to risk a confrontation with Iran. From Responsible Statecraft:
For weeks the question animating the Washington D.C. commentariat has been this: When will President Donald Trump make good on his threat and launch a second round of airstrikes on Iran? So far at least, the answer is “not yet.”
Many explanations for Trump’s surprising (but very welcome) restraint have emerged. Among the most troubling, however, is that it is a lack of the necessary munitions, and in particular air defense interceptors, that is giving Trump second thoughts. “The missile defense cupboard is bare,” one report concludes based on interviews with current and former U.S. defense officials.
Even those who hope Trump chooses to avoid military action in Iran altogether should be taken aback to hear that eight months after the last extended U.S. military campaign ended (the defense of Israel during the 12-day war and Operation Midnight Hammer), American missile defense arsenals could still be in such rough shape…
But eight months should be sufficient to return stocks of some types of defense interceptors to less critical levels. If the missile defense cupboard is truly still bare, however, something else must be going on.
That something else, it turns out, is Ukraine.
Although President Trump and his advisers are quick to argue that the United States is no longer paying for the military aid supporting Ukraine’s ongoing war, this is only one piece of a larger story. In fact, the United States is still sending billions in weapons to Ukraine, often diverting new weapons intended for the U.S. military directly to Ukraine instead. The implications of this reality are far-reaching — for U.S. military readiness, the Pentagon’s ability to respond in case of a real threat to U.S. interests, and diplomatic efforts to end the war.
Thus US overextension may stay any operation against Iran for quite some time. We had stated that the US-Israel window to subjugate Iran might have passed permanently. But it is still possible that the determined hawks in Israel will regroup and attempt a re-run of the 12 Day War, attacking Iran on their own and forcing the US to run to Israel’s aid. So we’ll work thought the “what happens if an Iran war erupts” scenario, since it is not off the table.
Now to the Bloomberg report. It devotes comparatively little space on the discussion of the potential economic fallout of Iranian retaliation. And those who have followed Iran’s public statements, including its description of its likely responses if attacked, may find the Bloomberg characterization as the most dire scenario to be the most likely one. Keep in mind that as Daniel Davis has stressed, the nature of the US-Israel threat to Iran has changed. The fact that they are now explicitly seeking regime change (and for Israel, the breakup on the nation) means Iran has now recognized that it is under an existential threat, and thus has no reason to be moderate in its response.
From Bloomberg:
In the most extreme case, an escalation that hits energy infrastructure or key choke points would drive sustained price increases, reviving inflation risks and putting pressure on central banks to adopt a hawkish stance….
• A major regional escalation that targets energy infrastructure, such as that in Saudi Arabia or Iraq, or critical choke points, such as the Strait of Hormuz, would break the market’s assumption that oil keeps flowing.
• Oil prices could surge as much as 80%. As of early 2026 that would mean a climb from $60 to as high as $108. For the global economy that would mean slower growth, higher inflation and more hawkish monetary policy.
Tries to appear comprehensive, yet no mention of Russia or China
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.1 We are aware of the risk of groupthink among this comparatively small group of independent media commentators, particularly since they clearly watch each other and the hosts often ask them to comment on the statements made by each other. Alastair Crooke’s views are regularly taken as gospel, for instance. However, as we are seeing vividly with the war in Ukraine and particularly, the continued denialism about Russia’s progress and military dominance, any groupthink seems to be even stronger among those aligned with the establishment. Add to that prejudice against non-Europeans and an inability to grasp that countries that have accepted repeated violations of red lines, as Russia did with NATO expansion, might finally have been pushed too far and strike back decisively.
