And yet, despite clearly having the upper hand, U.S. leaders’ rhetoric seems to be increasingly escalatory, if not downright panicked. Donald Trump and Defense Secretary Pete Hegseth have both indicated an openness to on-the-ground troop deployments, with U.S. force increases already being sent to the region alongside expanded air and naval assets. The timeline of the campaign has also been extended, with Trump claiming that four to five weeks of operations will likely be necessary in order to achieve victory. Hegseth, diverging from the president, is now claiming eight weeks is necessary. The overall objective against Iran is by no means clear, nor are we even certain what kind of regime change the U.S. is looking for—if that is indeed the goal.
Fossil fuel–intensive sectors, such as automobiles, semiconductors, manufacturing, aviation, and agriculture, will all face severe supply shocks as energy costs and other inputs jump in price. Bonds and financial assets will also come under increased scrutiny, with the likely effect being a credit crunch that limits liquidity and investment. The sorts of conditions that tend to lead to job losses will flow from these events, alongside other forms of economic insecurity. Akin to the stagnation crisis of the 1970s, the economy will face inflationary pressures and job losses concurrently, delivering a crisis that lingers far beyond the individual acts of the war.
Iran’s military strategy is now centered around attrition and disruption. Through drawn-out and unrelenting attacks, Iran is attempting to degrade both munition supplies and energy resources and cause strain through a thousand cuts. Security expert Kelly Greico at the D.C.-based Stimson Center recently estimated that for every $1 Iran spends on drones, the UAE spends “roughly $20–28 shooting them down.” The asymmetry in costs here is rather stark, and when replicated regionally, the level of anxiety emerging from America’s partners does indeed make sense.
Bahrain is now facing internal Shia, pro-Iran protests, which have historically led to Saudi intervention. The country’s energy sector has also been paralyzed through drone and missile barrages. Both the UAE and Qatar have had their energy markets and influencer-playground status shattered. Many residents have begun to flee, with some driving overnight to find safe flights out of the region. Luxuries and status symbols have been replaced with sirens and drone attacks, and energy market worries. These emerging shutdowns are only expected to increase in their severity in the coming weeks as shortages continue and shipments remain endangered. Qatar’s own Minister of Energy Saad Al Kaabi has warned that the region is weeks away from a comprehensive shutdown in production. Even if the war ended up concluding soon after these cuts, the ripples from this would endure for months.
These rising energy prices will almost certainly result in political backlash and opposition, both in the U.S. and abroad. Shortages and exorbitant prices will cause queues and declines in spending. Financial markets will be tasked with maintaining their balance sheets while also not completely stopping credit allocation. Debts and interest rates could rise as inflation and financial leverage become too much to bear. Countries will have to ration and actively choose which constituencies deserve more support. Electorally, it will be a disaster for many parties in power. And as the conflict further degrades markets stability, and as refugees flee a worsening situation, this potential for disruption will only grow fiercer. Friends and clients alike will indeed begin to react differently as their direct interests are threatened or upended, especially if in response to a war that was voluntarily launched with no long-term plan.
As Trump has indicated, the U.S. can sustainably pull munitions and supplies from other bases throughout Asia and North America for an extended period. But this reorientation of resources will take time and would need to cover large swaths of the Middle East, including their economic-industrial bases. Thus, what the U.S. faces here is a military conflict that needs to be ended before stockpiles and markets are whittled down to dust. Much of the Gulf is already clamoring for some kind of negotiated settlement.
The scope of war is expanding every day. American and Israeli attacks against Iran will continue apace, and their effects will indeed cause significant damage to Iranian leadership and the IRGC. But if Iran can sustain its attacks, more drones will manage to slip through defenses, resulting in casualties and upended lives. Critical infrastructure and trade nodes will be damaged, as will the region’s energy outputs. In the short term, we’ll likely see rising tensions over resources, with long-term risks of a global energy crisis. The U.S., as exhibited by today’s lackluster job report, is in no position to absorb a series of economic shocks or perpetuate a war that is only providing bad options. The war will not mitigate affordability issues, nor will it magically bring down health care costs and save lives. Simply put, at a time of intense insecurity and inequality, the Trump administration seems determined to continue with a war that is rapidly exacerbating America’s own internal crises.
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