Iran War at 100 Days: How the Middle East Conflict Is Driving Inflation, Spiking Oil, and Reshaping Global Finance

Iran War: 100 Days In — A Complete Account of the Economic Damage

When US and Israeli military forces launched operations against Iran on February 28, 2026 — in what the US has since declared constitutes 'major combat operations' rather than a limited strike — the initial market reaction was sharp but orderly. Stocks sold off globally, oil spiked, and analysts scrambled to model scenario outcomes. One hundred days later, the situation has proven more durable, more structurally disruptive, and more economically consequential than the consensus initially anticipated.

The International Energy Agency has not minced words in its characterisation: the Strait of Hormuz crisis it has triggered represents 'the largest supply disruption in the history of the global oil market.' A waterway through which approximately 20% of all globally traded oil and 20% of all LNG normally passes has been intermittently threatened, insured at war risk premiums, and subjected to both actual and threatened closure in a way that has fundamentally repriced energy globally.

The Oil and Gas Numbers

Brent crude oil, which traded at approximately $69/barrel on June 12, 2025 — the day before the initial June 2025 conflict between Israel and Iran — now sits near $95/barrel, a roughly 37% increase over twelve months. Analysts at Charles Schwab see oil remaining elevated through Q2 2026 due to the cumulative supply impact, with most projections suggesting a decline toward $70-75/barrel in 2027 as the market adapts — but only if the Strait remains open.

Natural gas prices have been even more dramatic. European gas prices surged 63% in the immediate aftermath of the February 28, 2026 escalation. Asian LNG prices jumped 54%. QatarEnergy declared force majeure on its Ras Laffan facility, temporarily removing approximately 20% of global LNG from the market. European gas prices briefly exceeded Asian prices — a historically rare inversion — before partially normalising as emergency supply measures were enacted.

Country-By-Country Economic Impact

United States: The US oil industry is one of the few clear economic beneficiaries of the conflict. Elevated crude prices boost Permian Basin and Gulf of Mexico production economics. However, inflation driven by higher fuel prices has complicated the Federal Reserve's task immensely. The May 2026 CPI reading reflects energy costs that are 35%+ higher than pre-conflict levels. The Fed's inability to cut rates — now pushed to 2027 by Goldman Sachs — is directly linked to Iran-conflict inflation.

United Kingdom: The UK's deep dependence on imported energy makes it particularly vulnerable. UK household energy bills are set to increase by 13% in July when the next Ofgem price cap takes effect. Economists at KPMG project UK inflation peaking at 3.6% in September 2026. UK gilt yields have touched 5% — the highest since 2008 — partly as a result of inflation fears. The political instability around Keir Starmer has been amplified by the economic pain of higher energy costs, with 67% of UK households reporting rising living costs in March 2026.

Canada: Canada is structurally advantaged as a major oil producer, with higher crude prices boosting energy sector revenues and provincial government coffers in Alberta and Saskatchewan. However, higher pump prices have contributed to the 2.8% March 2026 CPI reading — the largest monthly gas price increase on record — and complicated the Bank of Canada's task. The Bank's April statement explicitly cited 'the impact of the conflict between the United States and Iran and how the economy is responding to U.S. tariffs' as its two primary sources of uncertainty.

Australia: Australia faces a compounded challenge. As a major LNG exporter, higher energy prices bring revenue benefits through Woodside, Santos, and Beach Energy. But as an economy where government electricity rebates have just expired, domestic energy costs have surged 25.4% year-on-year. Three RBA rate hikes in 2026 are directly linked to the Iran-driven inflation overshoot. Australia's unemployment is rising, its housing market is diverging sharply, and its household finances are under the dual pressure of higher rates and higher energy bills.

India: India is among the most vulnerable large economies to the Iran conflict. As a country that imports approximately 85% of its oil needs, every $10/barrel increase in Brent crude adds approximately $20-25 billion to India's annual import bill and directly pressures the current account deficit and the rupee. The rupee's decline to near ₹95/dollar in 2026 is substantially driven by the elevated oil import bill. India also imported Iranian oil under exemptions before the current conflict; those supply channels are now completely disrupted, forcing India to source more expensive supplies from alternative markets.

The Strait of Hormuz: The World's Most Critical Chokepoint

The Strait of Hormuz is a 33-kilometre-wide channel between Oman and Iran through which approximately 21 million barrels of oil per day passed in normal conditions. It is the only sea route out of the Persian Gulf, and any sustained closure would remove not just Iranian oil but Saudi, Iraqi, Emirati, and Kuwaiti exports from global markets simultaneously. The economic implications of a full closure — modelled by Dallas Fed researchers — show it could add 3-4 percentage points to US PCE inflation in a single quarter.

President Trump stated on March 3, 2026 that the US Navy could escort commercial vessels through the Strait 'if necessary,' and has provided political risk insurance for maritime trade. War risk insurance premiums have nonetheless increased significantly since fighting began, adding to the cost of every cargo shipped through the region.

Looking Forward: Ceasefire Speculation and Oil Risk

Tentative ceasefire discussions between the US and Iran have periodically eased pressure on oil prices and global bond yields. UK gilt yields retreated from their 5% peaks partly on this basis. But critical unresolved questions — including the future of Iran's enriched uranium program and the Lebanon situation — mean a durable peace deal remains elusive. Charles Schwab's analysis notes that even if a ceasefire is reached, 'critical questions are still unanswered and the possibility for a wide range of potential outcomes remains.'