Every major war has two fronts. The first is military. The second is financial. And while the first is visible on maps, in briefings, and in satellite images, the second runs through the gas station checkout, through the electricity bill, through the price of bread, fertilizer, airline tickets, and ocean freight. Today, it is this second front that is becoming the main one. The military confrontation around Iran, drawing in the United States and its allies, has already ceased to be a local crisis. It is now a global tax on energy, logistics, and food. And, as is almost always the case in world politics, that tax is distributed unevenly.
The paradox of this moment is that the American economy, despite all the noise around rising prices, remains far better protected than the economies of Asia, Africa, and parts of Latin America. The United States is entering this crisis as the world’s largest oil producer: according to the EIA, in 2025 U.S. production reached a record 13.6 million barrels per day, while crude oil exports stood at about 4 million barrels per day. That does not erase the inflationary blow to households, but it radically changes the scale of vulnerability: a country that just a decade and a half ago trembled at every Middle Eastern shock now faces one no longer as a pure hostage, but as one of the beneficiaries of high prices.
But the world outside the United States is built differently. The International Energy Agency reports that in 2025 nearly 15 million barrels of crude oil per day passed through the Strait of Hormuz - about 34 percent of global oil trade. Almost 90 percent of the LNG passing through the strait was headed to Asia. For Asian importers, this is not a statistic, but the anatomy of dependence. In 2025, supplies through Hormuz accounted for about 27 percent of all Asian LNG imports. In other words, when the strait ceases to be a reliable artery, Asia faces not merely higher quotations, but a direct strike on its energy system.
Why America Pays More but Suffers Less
Since the end of February, the oil market has begun pricing in not just risk, but fear of a physical shortage. The EIA reports that Brent crude was around $61 per barrel in January 2026, rose to $72 in February, and averaged $103 in March. In its April outlook, the agency expects a peak of roughly $115 in the second quarter. Even now, after U.S. President Trump announced the indefinite extension of the truce with Iran, Brent remains around $98, significantly above its prewar range. That is the price of the geopolitical premium, instantly built into every truck, plane, container, and tractor.
For Americans, this means more expensive gasoline, diesel, and transportation. The average gasoline price in the United States exceeded $4 per gallon at the end of March for the first time since 2022, and by mid-April gasoline averaged $4.16 while diesel stood at $5.67. Politically, that is highly sensitive. But at the macroeconomic level, the United States has cushioning. First, domestic production. Second, reserve mechanisms. Third, a deep financial market and a strong dollar. Fourth, a rare circumstance in an age of war: the U.S. stock market did not collapse, and in April the Nasdaq and S&P were rising amid the continuing artificial intelligence boom. Put simply, war makes gasoline more expensive, but it does not break the American model as a whole.
In the developing world, everything is different. There, expensive oil does not merely fuel inflation - it quickly turns into a currency crisis, a hole in the budget, and political anxiety. In its April 2026 review, the IMF has already cut its global growth forecast to 3.1 percent, and for emerging market and developing economies to 3.9 percent, down from 4.2 percent in January. In its baseline scenario, the Fund expects energy prices to rise by 19 percent in 2026 and oil prices by 21.4 percent. In an adverse scenario, global growth slows to 2.5 percent, inflation rises to 5.4 percent, and in an even harsher one the world edges dangerously close to the threshold of a global recession. This is no longer a separate Middle Eastern war. It is a rehearsal for a global stagflation shock.
Hormuz as the Cash Register of World Politics
The most important number in this crisis is not $98 per barrel, and not even the forecasted $115. The most important number is 20 percent. Roughly that share of global oil and gas is tied to a strait that remains the planet’s main energy bottleneck. IEA chief Fatih Birol has bluntly called the current crisis the most severe energy shock in history, more serious than the shocks of 1973, 1979, and 2022. It is a harsh formulation, but an accurate one: what is at stake today is not simply expensive commodities, but a physical breakdown in the system that delivers energy to the consumer.
The market has already shown how this logic works. According to the IEA, in March global oil supply plunged by 10.1 million barrels per day, to 97 million barrels, while exports of crude oil and condensate through Hormuz fell by 14.2 million barrels per day. This is not merely price volatility on a Bloomberg screen. It means tankers brought to a halt, refineries sitting idle, disruptions in raw material supplies for power plants and processing, and a 31 million barrel decline in inventories in Asian importing countries in March alone. When volumes of that scale disappear from the market, poor countries do not argue with the price quote - they are simply pushed out of the bidding.
Europe: Not Shortage, but Expensive Resilience
In this war, Europe finds itself neither in the most vulnerable position nor in a comfortable one. Formally, its dependence on Hormuz for LNG is noticeably lower than Asia’s: the IEA estimates that in 2025 only about 7 percent of Europe’s LNG imports passed through the strait, while for Asia the figure was around 27 percent. But Europe’s problem lies elsewhere. The EU entered 2026 already burdened with costly energy security after the Ukrainian crisis, and the new Middle Eastern blow does not so much wipe out Europe’s energy balance as make it even more expensive. According to the European Commission, since the beginning of the war the EU’s additional fossil fuel bill has grown by roughly 22 billion euros. That is an enormous sum even for a wealthy bloc, especially against a backdrop of high interest rates, weak industrial growth, and overstrained budgets.
Today, the European economy is paying not so much for a physical shortage of fuel as for the price of insurance against such a shortage. Germany is already saying there is no acute shortage of jet fuel, while at the same time intensifying supply monitoring and preparing for the summer season as a stress test for aviation and logistics. European airlines are warning of cancellation risks if fuel bottlenecks persist. And that already means a chain reaction for tourism, freight transportation, and the entire service sector.
Politically, Europe is responding in the usual way - subsidies, temporary tax relief, targeted support, and flexible state aid rules. The European Commission has already proposed loosening the state aid regime so countries can compensate sectors for rising fuel, fertilizer, and electricity prices. France has estimated the direct cost of the crisis at 4 to 6 billion euros and is freezing 6 billion euros in spending to stay within its budget framework. The problem is that Europe is once again entering a familiar trap: every new energy shock strengthens not the continent’s industrial competitiveness, but its dependence on budgetary crutches. For a bloc that is already losing to the United States on energy costs, this is no longer a temporary measure, but a symptom of structural weakness.
At the same time, the shock is distributed unevenly even within the EU itself. The oil trading divisions of major companies like Shell, BP, and TotalEnergies are making billions from volatility. But the industrial consumer in Germany, Italy, Poland, or the Netherlands receives not profit, but another surge in costs. And here the same injustice emerges again as in the rest of the world: capital that knows how to hedge chaos wins, while the real sector pays.
China: A Giant That Can Maneuver, but Cannot Cancel Geography
China looks more resilient than most Asian economies, and there are reasons for that. First, Beijing has a broader range of suppliers and more room to maneuver. Second, it has administrative tools, strategic reserves, and the ability to redirect purchases quickly. In March, Chinese oil imports stood at about 11.77 million barrels per day, down only 2.8 percent year over year, meaning the war has not yet brought down China’s supply system. Moreover, China is actively offsetting lost volumes by increasing purchases from Russia, West Africa, and Latin America.
But China’s resilience should not be mistaken for immunity. It is not immunity, but the ability to buy time. In 2025, around 80 percent of the oil and petroleum products headed to Asia moved through Hormuz, which means that even Beijing cannot fully ignore this chokepoint. China has already made clear that a blockade of Hormuz runs against the interests of the international community. For Beijing, this is not diplomatic rhetoric, but cold calculation: any prolonged destabilization of the strait drives up the cost base of Chinese industry, freight, export competitiveness, and ultimately growth itself. Reuters has stated plainly that the war calls into question China’s ability to maintain its previous export pace and preserve its record trade surplus, because expensive energy erodes the purchasing power of its external markets.
There is another important nuance. China today does indeed look less vulnerable on crude oil, but it has sensitive segments, above all LPG, petrochemicals, bunker fuel, and parts of refining. China’s LPG imports in 2026 have already fallen by roughly a quarter compared with last year. In addition, the war has altered the demand structure for certain crude grades: Chinese refineries have begun competing more aggressively for heavy low-sulfur blends because the привычные flows of Middle Eastern crude have been disrupted. This means higher premiums, more expensive refining, and pressure on petrochemicals - and through them on plastics, packaging, industrial chemicals, and export manufacturing. In other words, the Chinese economy is not collapsing, but its margins are gradually tightening.
Southeast Asia: The Region Where an Oil Shock Quickly Becomes Political
If Europe pays in money, and China pays through shrinking margins and rising strategic risks, then Southeast Asia pays in every possible way at once: inflation, subsidies, currency pressure, and political anxiety. It is one of the most import-dependent and at the same time one of the most socially sensitive regions in the world. Fossil fuel subsidies in Southeast Asia reached a record $105 billion, 60 percent above the previous peak. That means the region already had a chronic dependence on administratively suppressing prices even before the current war. The new oil shock has merely reopened this old wound.
The Philippines became the first country in the region to declare a national energy emergency. This was followed by a shutdown of the wholesale electricity market after prices surged sharply in March: across the spot market as a whole, by 58 percent, and in some zones even more. For a country that already has some of the highest electricity tariffs in Southeast Asia, this is an extremely dangerous social signal. Because in Manila, Cebu, or Davao, an energy shock quickly turns into protest against expensive transportation, expensive food, and a weak state response.
Indonesia, the largest economy in ASEAN, is still holding the line thanks to the scale of its budget, but the cost of holding it is rising fast. Jakarta has allocated about 381.3 trillion Indonesian rupiah, or roughly $22.4 billion, for fuel and electricity subsidies. At the same time, Bank Indonesia has been forced to keep its rate at 4.75 percent because of inflation risks linked to the war. This is a classic example of how a commodity shock tears economic policy apart: on the one hand, the population must be supported; on the other, the currency and prices must be stabilized; and on the third, growth must not be strangled by overly tight monetary policy.
Thailand, Vietnam, and Malaysia are moving along the same trajectory, but with different instruments. Thailand is preparing tax breaks and fuel subsidies. Vietnam has already suspended fuel taxes at times, losing about 7.2 trillion dong per month. Malaysia has raised energy subsidies to around 4 billion ringgit per month. Formally, this helps soften the social blow. But in substance it means that every week of the crisis shifts even more private costs into public debt, deficits, or underfunding in other areas. The region is not solving the problem of expensive energy. It is merely stretching it out over time and transferring it into the budget.
There is also the region’s strategic response: an accelerated turn toward biofuels. Reuters reported that, amid the spike in oil prices, Vietnam and Indonesia are stepping up biofuel programs in an effort to replace at least part of their imported hydrocarbons. But this creates a new dilemma: if biofuels become more expensive alongside palm oil, corn, and agricultural feedstocks, the region inherits the old food-or-fuel problem in new packaging. Yes, this maneuver reduces import dependence, but at the same time it can drive food prices higher. For poor societies, that is almost always more politically dangerous than simply expensive gasoline.
If Europe, China, and Southeast Asia are placed into one overall picture, the result is clear. Europe suffers like a wealthy but already exhausted importer - it has money to cushion the blow, but almost no cheap energy left. China suffers like an industrial giant - it can reroute flows, but it cannot endlessly neutralize rising logistics and raw material costs. Southeast Asia suffers like a socially sensitive, import-dependent region - there, every jump in oil prices almost automatically becomes a budget problem and a potential domestic political crisis. That means the war around Iran is changing not only the oil market. It is changing the global hierarchy of resilience: those who can finance expensive security win, and those who must buy energy every month at someone else’s price lose.
Pakistan: When Geopolitics Turns Into Austerity
Pakistan is the clearest example. Reuters and regional sources reported that the country, which depends on imports for more than 80 percent of its oil, was forced to raise gasoline and diesel prices for the second time in a month, while spot LNG jumped to $20-30 per mmBtu. For an economy with a chronic balance-of-payments deficit, this is almost a perfect storm: imports become more expensive, the currency weakens, pressure on the budget rises, and electricity generation comes under strain at the same time. It is no coincidence that Islamabad is discussing new LNG purchases only on the condition that prices be at least somewhat acceptable for the power sector. This is no longer a question of consumer comfort. It is a question of whether the entire system remains governable.
To understand the scale of the problem, a simple calculation is enough. If a country imports oil and petroleum products worth about $15 billion a year, then even a 20 percent increase in the cost of that basket adds roughly $3 billion to its external bill. For Pakistan, that is not a technical adjustment, but a figure comparable to an emergency support package. In crisis economies, war first appears in the Brent price and then, with almost no filter, passes into the budget deficit, higher tariffs, and a new appeal to donors.
Bangladesh and Sri Lanka: When the Gas Bill Matters More Than Diplomacy
Bangladesh is even more vulnerable. Dhaka is seeking more than $2 billion in new financing to sustain fuel and LNG imports, and after Qatari supplies were suspended the authorities were forced to buy spot cargoes at higher prices, impose gas rationing, and shut down several fertilizer plants. For an economy in which industrial employment and the export textile model rest on cheap energy, this is a path to a double shock: first a blow to the balance of payments, then a blow to industrial output.
Now let us translate this into the language of household economics. If the imported fossil fuel bill for Bangladesh could rise by $4.8 billion, as analysts estimate, that is equivalent to about 1.1 percent of the country’s GDP. For a rich economy, that is an unpleasant complication. For a poor one, it is the macroeconomic event of the year. It means pressure on the currency, higher transportation and electricity costs, more expensive food processing and mineral fertilizers. And that means more expensive food. In countries where households spend a disproportionately large share of income on basic consumption, inflation of 3-5 percent is still bearable, but a 10-15 percent jump in the fuel-and-food basket quickly becomes a social issue.
Sri Lanka, which not long ago went through its own debt collapse, is once again being forced to ration fuel. Reports speak of additional restrictions, closures of schools, universities, and government offices on Wednesdays, reduced transportation, and higher electricity tariffs. What looks from Washington like an unpleasant external shock once again becomes, for Colombo, a reminder of how close the line between the economy and the street can be.
India: A Big Market, a Big Cushion, but Also a Big Risk
India looks stronger than its neighbors, and that is precisely what makes it especially interesting analytically. Before the war, the country received more than 40 percent of its imported oil from the Middle East, covered about 60 percent of domestic LPG demand through imports, and roughly 90 percent of those supplies normally passed through Hormuz. In March, India’s crude oil imports fell by 13 percent compared with February, while Middle Eastern oil supplies collapsed by 61 percent, to 1.18 million barrels per day. The region’s share in imports fell to a historic low of 26.3 percent, while Russia quickly increased its share to roughly half of total supplies. This is a brilliant example of how a large buyer can partly escape the shock through geography, diplomacy, and procurement flexibility. But even India cannot fully neutralize the price effect.
The most dangerous channel for India is not only oil, but also fertilizers. The country receives more than 40 percent of its urea and phosphate fertilizers from the Middle East, and around half of its DAP and urea imports come from the region. Three Indian plants have already cut urea output because of LNG shortages. For an agrarian power, this is a direct bridge from a Middle Eastern conflict to food inflation. When a farmer does not receive fertilizer on time, or receives it at a price 30-40 percent higher, the war moves from the sea lane to the rice field.
The Real Bill Arrives Not at the Pump, but in the Food Basket
It is fertilizers that may prove to be the most underestimated bomb in this crisis. The head of the UN International Trade Centre warned that for the developing world the threat of fertilizer shortages is even more serious than expensive oil and gas. About one-third of global fertilizer trade passes through Hormuz. Bank of America estimated increases of 30-40 percent in some fertilizer prices. If this dynamic lasts even for a single season, developing countries will face not merely expensive imports, but lower yields, weaker food security, and another round of inflation.
This is the central injustice of the current crisis. The United States may complain about expensive gasoline, but the average American consumer is still protected by higher income, social infrastructure, the depth of the credit market, and the scale of the domestic energy system. In the poor world, the same oil price increase does not eat into vacations or discretionary spending. It eats into food, children’s education, medicine, the ability to get to work, and the ability of small businesses to stay afloat.
Why There Are Fewer Protests in the United States Than There Should Be
There is also a political dimension. The American public reaction to foreign wars is always delayed until the war starts to hit domestic living standards in a tangible way. But the current crisis in the United States is softened by several shock absorbers at once. First, the country itself produces colossal volumes of oil. Second, the dollar and U.S. assets remain the world’s safe haven. Third, financial markets are still inclined to believe that even a major Middle Eastern shock does not kill the technology cycle tied to AI. Fourth, unlike South Asia, the United States does not live in a state of direct logistical dependence on Hormuz. That is why the political cost of war inside America remains lower than its global cost.
But that does not mean Washington pays nothing. It pays through inflation, more expensive fuel, complications for the Federal Reserve, the risk of a stagflation fork, and rising global irritation. The IMF says plainly that even the baseline war scenario breaks the trajectory of global disinflation, and in the harsher versions central banks will have to tighten policy at the moment when growth is already weakening. That is the worst possible combination for any global economy.
Who Wins, and Who Only Thinks They Win
Sometimes the argument is made that expensive oil benefits exporters. Formally, yes. But only up to a certain point. Reuters, citing UN representatives, noted that the gains for developing energy producers will be short-lived. The reason is simple: many of them export raw materials, but import expensive petroleum products, equipment, food, and capital goods. In addition, physical supply disruptions, insurance, freight, the risk of strikes on infrastructure, and payment problems eat away at part of the price premium. A high oil price in wartime is not a gift from the market, but a toxic price with a massive discount on sustainability.
Even efforts to bypass Hormuz quickly produce only limited results. Saudi Arabia’s East-West Pipeline, the UAE’s Habshan-Fujairah line, and the Iraq-Turkey corridor are all important workaround solutions, but together they are not enough to fully replace normal maritime circulation. The market can survive a local disruption. It survives much more poorly in a prolonged state of detours, when every ton of raw material requires additional insurance, additional time, and additional political coordination.
The Main Conclusion: War Exports Inflation Down the Ladder of Global Inequality
The entire global economy today resembles a building where the fire started on the upper floors, but the water is flooding the basement first. A military initiative taken in the logic of American security and the Middle Eastern balance of force has, in economic terms, become a mechanism for shifting costs onto those least able to bear them. It is not Washington, but Dhaka, Colombo, Karachi, Kathmandu, Manila, and Nairobi that are paying the harshest price for a blocked oil artery.
That is precisely why the current conflict cannot be discussed only in the language of strategy, deterrence, or diplomacy. It is also a conversation about global justice. When Brent rises from $61 in January to $103 in March, and then remains near $100 even amid a truce, that is not merely market news. It is the transfer of millions of people from poverty into destitution. When the IMF cuts its forecasts and the UN warns of fertilizer shortages, that is not technocratic noise. It is an early warning that the next global crisis may come not from the banking sector, but from the kitchen, the field, and the power grid.
If one looks at this soberly, the main result has already arrived. America has once again proved that it can afford a foreign policy escalation more easily than almost anyone else. But it has also shown something else again: every time Washington starts a war in the strategic heart of the global energy system, the real bill comes first of all to those who made no decisions, held no negotiations, and gave no orders. The world pays the price for America’s war. And, as always, the poor pay it first.