US-Israeli War With Iran Triggers Global Economic Crisis

The United States and Israel launched Operation Epic Fury on February 28, 2026, a series of massive airstrikes that killed Iranian Supreme Leader Ali Khamenei and destroyed significant military infrastructure. Donald Trump initially sought regime change and the dismantling of Iran's nuclear program, but the conflict has evolved into a protracted war of attrition. Mojtaba Khamenei assumed the role of supreme leader, overseeing a more authoritarian government as the Iranian economy collapsed, with inflation reaching 84 percent.

Iran responded to the strikes by effectively closing the Strait of Hormuz, a critical chokepoint for one-quarter of global seaborne oil. This blockade caused Brent crude prices to rise over 20% and spiked US gasoline and diesel costs. To mitigate domestic prices, the US lifted some sanctions on Russian oil, inadvertently funding Russia's war in Ukraine. Furthermore, the redirection of US missile interceptors and aircraft carriers to the Middle East has left Ukraine with critical ammunition shortages and weakened US military readiness in the South China Sea.

Diplomatic efforts, including a June memorandum of understanding signed by Trump and Iranian President Masoud Pezeshkian, failed to secure a permanent resolution. On August 25, Treasury Secretary Scott Bessent launched Operation Economic Outcast to isolate Iran through expanded sanctions on gold and digital assets. In response, Iranian security chief Mohsen Rezaei threatened strikes on Persian Gulf energy infrastructure. The regional instability has prompted Turkiye, Pakistan, and Saudi Arabia to sign a separate defense agreement in Mecca.