Iran War day 17 : Rising focus on economic impacts

 Economy-related dimensions

The economic fallout of the Israeli-US war on Iran, now entering its third week, is becoming clearer. Seasoned Washington-based reporter Laura Rozen noted on Mar. 15, “[US President Donald] Trump [is] putting his economic advisors, energy and interior secretaries on the Sunday shows, rather than his national security advisor, secretary of state, intelligence officials, or military leaders. What does that tell you?”

• Iran has intensified warnings aimed at Gulf Arab states. Tehran has urged residents near major Emirati ports to evacuate their homes, claiming that US forces are using such facilities to support strikes against Iran and thus signaling that they could become future targets of Iran. A similar warning was reportedly issued for several districts in Doha on Mar. 15.
  
  
• According to Bloomberg estimates, if the Strait of Hormuz remains closed to most commercial traffic for around two months, Qatar and Kuwait could see GDP contractions of up to 14%. This is while the economies of Saudi Arabia and the United Arab Emirates (UAE) could shrink by roughly 3–5%, partly offset by alternative oil export routes.
  
  
• Riyadh relies on Red Sea ports as alternative export terminals whereas Abu Dhabi has infrastructure that allows it to load tankers on the Gulf of Oman. Yanbu in the Kingdom has not yet been targeted, whereas only some oil facilities in Fujairah in the UAE have reportedly been slightly damaged. A shift in these dynamics could inflict far more severe economic pain on Saudi Arabia and the UAE.

Iranian military officials have warned that any attack on the economic and energy infrastructure of Iran will immediately result in strikes on economic and energy infrastructure in the region which either has American shareholders or cooperates with the United States.

• This warning was reiterated following the Mar. 13 US bombing of military facilities on Iran’s Kharg Island, where the vast majority of Iranian oil exports are loaded.
  
  
• Despite the recent US attack, oil facilities at Kharg Island remain operational. Tanker-tracking data and satellite imagery indicate that Iran continues loading and exporting crude from the island’s terminal.
  
  
• Brent oil jumped above 100 USD per barrel as trading resumed in the early hours of Mar. 16, the highest since June 2022. This comes as the war continues to disrupt shipping and energy flows through the Strait of Hormuz. Notably, some industry experts speculate that current futures contracts may be misleading, highlighting possible US Federal Reserve intervention in a bid to project lower prices. In this vein, physical oil for grades such as Dubai crude is reportedly trading at around 140 USD per barrel, suggesting a vast premium between paper and physical oil.

Military and security-related dimensions

Iranian sources say 18 vessels have been struck in and around the Strait of Hormuz since the war erupted on Feb. 28, including oil tankers, container ships and bulk carriers.

• Washington claims that roughly 6,000 targets in Iran have been struck and that most of Iran’s missile launch and drone capacity has been destroyed. Heavy Israeli and US strikes continue across multiple regions, including Tehran, western cities such as Hamadan and Dezful, and central cities such as Isfahan and Qom. Tehran strongly rejects Washington’s claim about the number of sites that have been hit.
  
  
• Iran has continued its missile strikes against Israel, reportedly launching smaller salvos roughly every 90 minutes on Mar. 15 in order to maintain constant pressure while gradually depleting Israeli interceptor stocks. Some observers charge that Israel may have as little as 40-50 Arrow interceptors left.
  
  
• Reports of missile impacts in central Israel have continued, with Iranian sources claiming the use of newer systems such as the solid-fuelled Sejjil missile.

In parallel, regional tensions continue spilling over into Iraq, where Iran-aligned Shiite armed groups continue launching attacks on US military and diplomatic sites—including the Baghdad embassy.

• The US on Mar. 14 reportedly bombed several locations in Baghdad. According to the Washington Post, the Trump administration unsuccessfully attempted to kill the head of Kata’ib Hezbollah, one of the most powerful Shiite armed groups and among Iran’s closest allies in Iraq.
  
  
• The wave of US strikes in recent days, including on positions of the Popular Mobilization Units (PMU), is generating a political backlash and placing the Iraqi government under growing pressure.
  
  
• At the same time, extremist threats may be re-emerging in Iraq. Some analysts warn that weakening security structures amid the Iran-Israel-US conflict could create opportunities for the Islamic State group (IS) and other actors to regain momentum.

Domestic security measures in Iran remain severe.

• Authorities report hundreds of arrests on accusations of espionage or cooperation with Israel, including individuals accused of filming strike sites or transmitting information about military locations.

Political dimensions

Uncertainty continues surrounding the health of Iran’s new supreme leader, Ayatollah Mojtaba Khamenei. While some US officials speculate that he may be seriously injured, Turkish Foreign Minister Hakan Fidan has asserted that he is “alive and functioning” although the extent of any injuries remains unclear.

Despite the Trump administration’s apparent efforts to forge a multinational coalition to police the Strait of Hormuz and protect tanker traffic, Iranian officials continue to frame the war as shifting regional dynamics in their favor.

• Pro-government narratives argue that the conflict has reinforced Iran’s central role in Gulf security architecture and demonstrated that no regional security framework can function without Tehran.
  
  
• Iranian commentary also claims that the war has weakened US influence in the region, exposed the vulnerability of Gulf Arab development models reliant on external security guarantees and undermined strategic initiatives such as the Abraham Accords.
  
  
• From Tehran’s perspective, the war will not automatically lead to Iran’s regional isolation. Instead, it could push Gulf Arab states to reassess their reliance on Washington for security and eventually move toward a more regionally-centered security arrangement, which would inevitably include Iran. In this vein, some observers charge that the Saudi security partnership with Pakistan has purportedly proven capable  of moderating Iranian strikes.
  
  
• Echoing this dynamic, Iranian Foreign Minister Abbas Araghchi on Mar. 15 tweeted, “Touted US security umbrella has proven to be full of holes and inviting rather than deterring trouble. [The] US is now begging others, even China, to help it make Hormuz safe.” Araghchi added, “Iran calls on brotherly neighbors to expel foreign aggressors, especially as their only concern is Israel.”