Three ways the Iran war changed the global economy

Key Points:

• The Iran war has caused sustained increases in gas prices, mortgage rates, and shipping costs in the US, but some cost-of-living impacts may reverse if a ceasefire is reached; however, the conflict has also led to lasting changes in the global economy and energy markets.
• Iran has asserted control over the Strait of Hormuz, a critical oil transit route, by regulating ship passage and imposing tolls, forcing the US to coordinate escorted transits to maintain oil exports and demonstrating Iran’s increased geopolitical leverage.
• China showcased its influence on the oil market by reducing crude imports through stockpile use and shifting energy consumption behaviors, including increased electric vehicle use and switching to coal, suggesting potential long-term declines in oil demand.
• Oil production outside the Middle East has ramped up significantly during the conflict, with countries like Brazil, Guyana, Canada, Norway, and the US increasing output, while Middle Eastern producers develop alternative transport routes to bypass the Strait of Hormuz.
• OPEC faces internal challenges as the UAE left the group and Iraq considers its membership amid demands for higher production targets, risking a potential oil glut that could lower consumer prices but also reduce oil industry profits.