Donald Trump has once again chosen the strong way in his war against Iran, even if it further damages the global economy. Following the failure of negotiations between Washington and Tehran, twenty hours of discussions in Islamabad, Pakistan resulted in a deadlock. The American strategy is to deprive Iran of its export revenues, while Iran attempts to filter passing ships in the strait and impose an official right of passage.
French total energy company CEO Patrick Pouyanné prefers compromise to complete blockage, advocating for the strategic passage to reopen despite being under Iranian blockade and now American blockade. This situation raises concerns for the International Energy Agency (IEA), forecasting the largest decrease in oil demand since the Covid-19 pandemic in the second quarter of 2026. The Middle East war has caused the most severe oil supply shock in history, according to the IEA.
In response to the American blockade, China, which imports 80% of Iranian oil, has raised concerns. The Chinese Ministry of Foreign Affairs spokesperson called the American blockade “dangerous and irresponsible.” The American strategy to compel Iran to renegotiate also worries US regional allies, with Saudi Arabia and Gulf states fearing the war may expand to other vital maritime routes, particularly the Bab-el-Mandeb Strait.
The International Monetary Fund (IMF) has revised its growth projections downwards due to the Middle East war. Globally, growth was forecasted at 3.3% for 2026, now adjusted to 3.1% in the most favorable scenario, assuming the conflict ends before July. The impact varies widely across countries, with the US being the least affected and Russia gaining 0.3% growth, while most Middle Eastern countries fall into recession.
