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From regional strike to global shockwave: Economic fallout of West Asian war

By Vikas Meshram* 
Politics in West Asia has for decades been trapped in a vortex of tension, distrust, and strategic rivalry. After years of maritime blockades, economic sanctions, diplomatic pressure, and covert operations, the United States and Israel have now launched a large-scale military strike on Iran. Carried out with missiles and fighter jets, the operation has pushed the region to the brink of a wider war. Iran responded swiftly with retaliatory missile strikes targeting Israel and several American military bases across the Gulf. Countries such as Kuwait, Qatar, Bahrain, Saudi Arabia, and the United Arab Emirates are now witnessing heightened tensions and serious security concerns.
What began as a confrontation between two adversaries is rapidly reshaping the political dynamics of the entire region. Armed groups aligned with Tehran, including Hezbollah in Lebanon and the Houthi movement in Yemen, have reportedly initiated attacks against Israeli targets. The conflict is thus evolving into a multi-front confrontation, drawing in state and non-state actors and increasing the risk of a prolonged and unpredictable war.
Reports indicate that more than two hundred people have lost their lives in the initial strikes, including several senior Iranian officials. Among those reported killed are Iran’s Supreme Leader Ayatollah Ali Khamenei, Defence Minister Amir Nasirzadeh, and the head of the Islamic Revolutionary Guard Corps, General Mohammad Pakpour. In southern Iran, a strike on a school allegedly killed more than eighty civilians, underscoring the devastating humanitarian cost of the conflict. These incidents have triggered widespread anger within Iran, intensifying calls for retaliation.
The developments have raised serious questions about the strategic calculations behind the operation. Discussions are emerging over whether intelligence gathered during ongoing diplomatic engagements may have played a role in the timing of the strike. Some analysts argue that alternatives—such as pursuing calibrated political pressure or supporting internal reform—might have avoided the risks inherent in targeting top leadership. The assassination of senior officials could prove to be a grave miscalculation, potentially escalating the conflict beyond control.
Public opinion within the United States appears divided. Recent surveys suggest that only about one-third of Americans support military action against Iran. Opposition leaders have criticized the administration for not adequately consulting Congress before launching a major military operation. As a result, Washington now faces the dual challenge of defending its decision both domestically and internationally.
The conflict has also heightened concerns among countries with citizens living and working in the region. Several governments are exploring evacuation plans and opening land borders to facilitate the safe departure of their nationals. Advisories urging citizens to move to safer zones indicate that policymakers are preparing for the possibility of a prolonged confrontation.
American military installations across West Asia have become potential flashpoints. The Al Udeid Air Base in Qatar serves as a critical headquarters for U.S. Central Command, coordinating operations across a vast area stretching from Egypt to Central Asia. In Kuwait, Camp Arifjan, Ali Al Salem Air Base, and Camp Buehring remain strategically significant due to their proximity to Iraq. The Al Dhafra Air Base in the United Arab Emirates hosts advanced U.S. aircraft, while Jebel Ali port near Dubai functions as a major logistics hub for the U.S. Navy.
In Iraq, the Ain al-Asad airbase continues to play a key operational role and has previously been targeted by Iranian missile strikes in 2020. The airbase near Erbil in northern Iraq also serves as an important coordination center. Saudi Arabia’s Prince Sultan Air Base and Jordan’s Azraq airbase are similarly vital for regional operations. With rising hostilities, these installations face heightened risks.
The crisis has also exposed divisions within the Muslim world. While some governments appear aligned with the United States and its allies, others have called for restraint and renewed dialogue. Saudi Crown Prince Mohammed bin Salman is reportedly in consultation with regional leaders as he monitors developments. The conflict could reshape alliances and alter the balance of power in the region.
One of the most serious consequences may be its impact on the global economy. If Iran were to block the Strait of Hormuz, nearly a quarter of the world’s oil supply could be disrupted. This narrow waterway is among the most critical arteries of global energy trade. Even the perception of risk could trigger sharp increases in oil prices.
For India, such a scenario would carry significant economic consequences. As one of the world’s largest importers of crude oil, India would face a steep rise in its import bill if prices were to increase by ten to twenty dollars per barrel. Higher fuel costs could fuel inflation, raise transportation expenses, and push up food prices. Central banks might then face pressure to tighten monetary policy to contain inflationary pressures.
Another pressing concern for India is the safety of its citizens in the Gulf region. Nearly nine million Indians work across West Asia. Any large-scale escalation could pose formidable logistical challenges for evacuation efforts. Prolonged instability could also affect remittances, which constitute a vital source of foreign exchange for India.
Nearly half of India’s crude oil imports pass through the Strait of Hormuz, making any disruption a direct threat to its energy security. Instability in the Red Sea region could further complicate global supply routes and increase shipping costs.
At the broader international level, the conflict raises troubling questions about adherence to international law and the stability of the rules-based order. The world is already grappling with the Russia–Ukraine war and the Israel–Gaza crisis. Another major war in West Asia could further strain global trade, supply chains, and economic recovery.
In this volatile context, the United Nations Security Council must act urgently to de-escalate tensions. Diplomatic engagement, mediation, and sustained dialogue remain essential to prevent the crisis from spiraling further. Countries such as Oman and Qatar may be well positioned to facilitate back-channel negotiations.
For India, the immediate challenge lies in maintaining a carefully balanced foreign policy. New Delhi has longstanding strategic ties with the United States, Israel, Iran, and the Gulf states. An openly partisan stance could carry long-term costs. Strengthening energy security, expanding strategic petroleum reserves, and accelerating the transition toward alternative energy sources should therefore be urgent priorities.
Ultimately, the conflict in West Asia is unlikely to remain confined to the region. Its political, economic, and humanitarian consequences will reverberate globally. In such a fragile environment, restraint, dialogue, and international cooperation offer the only viable path forward. For the sake of global stability and human security, halting escalation and restoring peace must become the foremost priority.
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*Freelance journalist

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