--- title: How the War on Iran Threatens the Global Economy description: A longer war with Iran risks disrupting energy flows, unsettling investors, and eroding the Gulf’s reputation for security and stability. canonical: https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/ author: Dina Esfandiary article:opinion: true article:content_tier: free article:published_time: 2026-03-11T10:15:00.000Z article:modified_time: 2026-05-19T07:44:55.119Z article:section: Ideas og:title: How the War on Iran Threatens the Global Economy og:description: A longer war with Iran risks disrupting energy flows, unsettling investors, and eroding the Gulf’s reputation for security and stability. og:url: https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/ og:site_name: TIME og:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt531f7ba155b7bb5c/69b0687463356238c6bb0392/GettyImages-2263868831.jpg?branch=production&width=2400&quality=75&auto=webp&crop=16:9 og:image:width: 1200 og:image:height: 675 og:image:alt: GettyImages-2263868831.jpg og:type: article twitter:card: summary_large_image twitter:title: How the War on Iran Threatens the Global Economy twitter:description: A longer war with Iran risks disrupting energy flows, unsettling investors, and eroding the Gulf’s reputation for security and stability. twitter:image: https://static.time.com/v3/assets/bltea6093859af6183b/blt531f7ba155b7bb5c/69b0687463356238c6bb0392/GettyImages-2263868831.jpg?branch=production&width=2400&quality=75&auto=webp&crop=16:9 ---  # How the War on Iran Threatens the Global Economy by [Dina Esfandiary](https://time.com/author/dina-esfandiary/), [Becca Wasser](https://time.com/author/becca-wasser/) and [Ziad Daoud](https://time.com/author/ziad-daoud/) Mar 11, 2026 10:15 AM UTC  A commercial ship is viewed anchored off the coast of the United Arab Emirates, in the Strait of Hormuz, Dubai on March 2, 2026. A commercial ship is viewed anchored off the coast of the United Arab Emirates, in the Strait of Hormuz, Dubai on March 2, 2026.Stringer/Anadolu via Getty Images by [Dina Esfandiary](https://time.com/author/dina-esfandiary/), [Becca Wasser](https://time.com/author/becca-wasser/) and [Ziad Daoud](https://time.com/author/ziad-daoud/) Mar 11, 2026 10:15 AM UTC Around two weeks into the American and Israeli war with Iran, the economic, political, and military costs of the conflict for the region and global economy are already significant, and mounting every day. Iran’s swift and broad retaliation against American military bases in the region, its waves of drone and missile attacks against the Gulf Arab states targeting hotels, airports, and energy infrastructure, and its de facto closure of the Strait of Hormuz are a cumulatively costly nightmare for the Gulf. The Gulf Arab states have invested heavily in building a carefully curated image as havens of stability and prosperity in an unstable Middle East. Booming, bustling cities, with activities, global sporting events, conferences, and dining options galore, and the promise of a better, easier life for all. While Europe and the United States suffer from economic and political uncertainty, the United Arab Emirates has attracted hundreds of thousands of expats [chasing](https://www.bloomberg.com/news/articles/2024-10-13/uae-dubai-jobs-boom-boosts-expat-population-strains-infrastructure) well-paying jobs, low taxes, and stability, especially after the Covid-19 pandemic. The Iranian attacks and the viral photographs and videos of flames rising from a hotel, an airport, a port in the Emirates, and the energy infrastructure in the region foreground a certain brittleness and threaten that sense of security and prosperity. And even if the war ends soon––which seems unlikely right now––the Gulf Arabs will need to grapple with its implications for years to come. ### **A great security challenge in the Gulf** The social contract between the rulers of the Gulf states and their nationals—and increasingly their majority expat populations––is that the rulers guarantee the livelihoods, comfort, and security of the population in exchange for support. Thus, the Emirates ruling families were quick to reassure the public. On the evening of Mar. 2, Mohammed bin Zayed, the president of the UAE, and Sheikh Hamdan bin Mohammed bin Rashed, the Crown Prince of Dubai and Defense Minister, strolled across the Dubai Mall to[ insist](https://gulfnews.com/uae/watch-uae-president-minister-of-defence-visit-dubai-mall-1.500461299#google%5Fvignette) their country was safe. The war highlighted the military and security vulnerabilities of the region. For years, the Gulf Arab states, with tiny populations, relied on an American security umbrella. They bought American weapons, hosted and underwrote American military bases, and—in some cases—sent their soldiers to fight alongside American troops in Afghanistan and against the Islamic State. When President Donald Trump returned to the White House, the Gulf states rolled out the red carpet: they welcomed him on his first major foreign visit, pumped additional oil onto the market after months of restraint, and pledged trillions of dollars in investments and procurement contracts, all to keep Trump on their side. But, when it mattered most, their lobbying to avert an American war with Iran was outweighed by Israel’s push for one. The Gulf Arabs had placed their faith in integrated air and missile defense, overcoming deep-seated security reservations to share real-time intelligence and radar imagery—even with Israel. They purchased air defense systems such as [Patriot](https://www.csis.org/analysis/patriot-ukraine-what-does-it-mean#:~:text=Costs%20can%20also%20be%20inferred,missiles%20is%20about%20%24400%20million) and [THAAD](https://comptroller.war.gov/Portals/45/Documents/defbudget/FY2026/budget%5Fjustification/pdfs/02%5FProcurement/PROC%5FMDA%5FVOL2B%5FPB%5F2026.pdf), each battery costing between $350m and $400m. Those systems were largely effective. Most incoming projectiles were [intercepted](https://www.nytimes.com/2026/03/06/world/middleeast/persian-gulf-states-air-defense-iran.html), but it wasn’t impenetrable. Iran exploited a brutal asymmetry: its one-way attack drones cost as little as [$20,000 to $50,000 ](https://www.cnbc.com/2026/03/05/iran-shahed-136-drone-cost-air-defense-gulf-war-us-israel-gulf-scorpion-strike-centcom.html)per unit, while the interceptors used to [destroy them](https://www.lockheedmartin.com/en-us/news/features/2025/ten-years-of-thaad-in-the-uae-a-decade-of-partnership-deterrence-and-innovation.html) run to $4.19m apiece. The Gulf states found themselves on the[ wrong side](https://www.bloomberg.com/news/articles/2026-03-02/iran-strikes-missile-math-20-000-iranian-drones-take-on-4-million-patriots) of the cost curve, their interceptor stocks running low by the sheer weight of Iran's opening barrages. And expensive fighter jets and helicopters scrambled to swat down cheap drones. Iran’s attacks also exposed the limits of Gulf Arab coordination. The war did paper over some of the tensions between Saudi Arabia and the UAE, but the two countries—and their neighbors—have struggled to mount a coherent collective response to Iranian strikes. Part of the difficulty is structural: joining American attacks would almost certainly invite fiercer Iranian retaliation against Gulf targets. The crisis also underscores the failure of their hedging strategy—aligning with the U.S., keeping Israel at arm’s length (except the UAE), and simultaneously engaging and seeking to contain Iran. That balancing act has failed to keep the Gulf out of the conflict. ### **Oil, gas and the Gulf economies** The economic costs are real. For decades, Gulf states cultivated reputations as[ dependable energy suppliers](https://www.bloomberg.com/news/features/2026-03-03/iran-war-oil-price-surge-put-global-economic-recovery-at-risk), deliberately stepping back from the weaponization of oil and gas after the 1970s. Even during the[ blockade of Qatar](https://time.com/4876089/qatar-settles-long-standoff/) by Saudi Arabia, the UAE, Bahrain and Egypt in 2017, Doha continued piping gas to the UAE. Iranian strikes on energy infrastructure, and the disruption now engulfing the Strait of Hormuz––through which 20% of the world’s oil and nearly 20% of the world’s liquefied natural gas supply travels––has shattered that tradition of restraint. Qatar Energy has warned that it can no longer guarantee deliveries of liquefied natural gas (LNG) to customers after an Iranian drone attacked the world’s largest LNG facility. Customers are already scrambling for alternative supplies. Disrupted energy flows are a major worry for the global economy. Iran knows that. And today, it has learnt that disrupting the Strait is easy and relatively cheap: low effort, high impact. This means it is likely to cross that red line again. The “Strait of Hormuz will either be a Strait of peace and prosperity for all or will be a Strait of defeat and suffering for warmongers,” Ali Larijani, the head of Iran’s national security council, [threatened](https://x.com/alilarijani%5Fir/status/2031346339095752934?ref%5Fsrc=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet) on X, Tuesday. Beyond hydrocarbons, the Gulf’s most successful diversification has been into logistics and transport. The war is disrupting aviation and ports across the region. Geography still favors Gulf hubs over their rivals, and if the fighting stops soon, the damage may be contained. A prolonged conflict would inflict serious harm on logistics networks. And then there is the unquantifiable cost of human lives. Indeed, a third potential economic cost of the war for the region is labor supply. The Gulf hosts the world’s highest share of foreign residents and workers, and sustained instability could prompt some to reconsider their futures there. Yet the risk may be overstated. In places such as Dubai, millions of expatriates have put down roots and appear more inclined to wait out the conflict. The cost this war will exact from the Gulf will ultimately depend on how long it lasts. If intense fighting ends within three to four weeks, the shock may prove temporary. A longer war, however, risks leaving deeper scars—disrupting energy flows, unsettling investors, and gradually eroding the Gulf’s reputation for security and stability. ```json [{"@context":"https://schema.org","@type":"OpinionNewsArticle","@id":"https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/","mainEntityOfPage":{"@type":"WebPage","@id":"https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/"},"headline":"How the War on Iran Threatens the Global Economy","datePublished":"2026-03-11T10:15:00.000Z","dateModified":"2026-05-19T07:44:55.119Z","description":"A longer war with Iran risks disrupting energy flows, unsettling investors, and eroding the Gulf’s reputation for security and stability.","url":"https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/","keywords":["Iran","Dubai"],"thumbnailUrl":"https://static.time.com/v3/assets/bltea6093859af6183b/blt531f7ba155b7bb5c/69b0687463356238c6bb0392/GettyImages-2263868831.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","author":[{"@type":"Person","name":"Dina Esfandiary","jobTitle":"Contributor","url":"https://time.com/author/dina-esfandiary/"},{"@type":"Person","name":"Becca Wasser","jobTitle":"Becca Wasser","url":"https://time.com/author/becca-wasser/"},{"@type":"Person","name":"Ziad Daoud","jobTitle":"Ziad Daoud","url":"https://time.com/author/ziad-daoud/"}],"articleSection":"Ideas","image":[{"@type":"ImageObject","url":"https://static.time.com/v3/assets/bltea6093859af6183b/blt531f7ba155b7bb5c/69b0687463356238c6bb0392/GettyImages-2263868831.jpg?branch=production&width=1200&quality=75&auto=webp&crop=1200:675&height=675","width":1200,"height":675,"headline":"GettyImages-2263868831.jpg","caption":"","creditText":"Stringer/Anadolu via Getty Images","representativeOfPage":true}],"publisher":{"@type":"Organization","name":"Time","url":"https://time.com/","logo":{"@type":"ImageObject","url":"https://time.com/images/logo.png","width":528,"height":156},"foundingDate":"March 3, 1923","sameAs":["https://www.facebook.com/time","https://www.instagram.com/time/?hl=en","https://twitter.com/time","https://www.pinterest.com/timemagazine"]}},{"@context":"https://schema.org","@type":"BreadcrumbList","itemListElement":[{"@type":"ListItem","position":1,"item":{"@id":"/section/ideas/","name":"Ideas"}},{"@type":"ListItem","position":2,"item":{"@id":"/tag/iran/","name":"Iran"}},{"@type":"ListItem","position":3,"item":{"@id":"https://time.com/article/2026/03/11/war-trump-iran-gulf-oil-gas-economy/","name":"How the War on Iran Threatens the Global Economy"}}]}] ```