Oil tankers queuing off the Gulf of Oman. Empty jet-fuel depots in Frankfurt. A ten-million-rial banknote, printed last month in Tehran, that still struggles to buy a kilo of bread. As of this Thursday morning, the war in the Middle East has stopped being a diplomatic story and become something much harder for governments to spin — an economic one.
Speaking virtually to CNBC’s CONVERGE LIVE conference in Singapore on April 23, Fatih Birol, head of the International Energy Agency, put it in words that will echo through finance ministries for months: “We are facing the biggest energy security threat in history.” Thirteen million barrels per day of crude have already vanished from global supply, Birol said, and the Strait of Hormuz — the channel through which roughly a fifth of the world’s oil once flowed — remains under what the IEA now calls a “double-blockade,” with neither Iran nor the United States letting vessels pass.
A superpower-sized hole in the global oil market
Before the fighting, an average of 20 million barrels of oil and petroleum products moved through Hormuz every day. That is more than the combined daily output of the United States and Saudi Arabia. The chart below tracks how quickly that lifeline has narrowed since the first Iranian strikes in late 2025 — and how much crude has already been stripped out of the market Birol is now trying to stabilise.
Europe is feeling it first at the airport. Birol told CNBC that roughly 75% of the continent’s jet fuel used to come from Middle Eastern refineries. That figure, he said bluntly, is “basically now zero.” Carriers in France, Germany and the Netherlands are already rationing turnarounds, and Birol warned that if replacement imports from the United States and Nigeria do not arrive in time, governments may have to “take some measures in Europe to reduce air travel as well.” The IEA’s 32 member countries released 400 million barrels from emergency stockpiles in March; a second tranche is now openly on the table.
Tehran’s gamble: weaponising its own economy
The irony of Iran’s strategy is that the country closing Hormuz is also the country most dependent on it. More than 90% of Iran’s annual trade passes through the strait, and Oxford Economics warns that the US blockade could wipe out 70% of Iran’s export revenues. The International Monetary Fund now forecasts the Iranian economy will shrink by 6.1% in 2026, with inflation running at 68.9%. Food prices have already broken loose from the official numbers: bread and cereals are up 140% year-on-year, and cooking oils and fats up 219%.
The rial tells the same story in one line. A currency that stood at around 42,000 to the dollar before the 2025 flashpoint is now trading near 1.32 million. That is why Iranian banks, in March, started handing out a 10-million-rial note — the largest denomination in the country’s history. The chart below compares the main pressure points on household budgets in Iran today.
A decade to rebuild — if the war ends tomorrow
Iranian officials are beginning to admit, on background, how deep the hole is. Local media in Tehran this week reported that senior economic advisers have warned President Masoud Pezeshkian it could take “more than a decade” to repair the country’s shattered industrial base. Security consultancy Global Guardian puts the infrastructure damage bill at between $200 billion and $270 billion. Central bank governor Abdolnaser Hemmati is said to be pressing the president to restore full internet access and return to the negotiating table with Washington.
Not everyone is writing Tehran off. Amir Handjani of the Atlantic Council argues that Iran, after nearly five decades of sanctions, has built a shadow-trade apparatus capable of surviving even this. “So long as a peace agreement is reached with the United States that lifts sanctions,” he told CNBC, the country “can recover more quickly than many expect.” The counter-view, from Oxford Economics’ Lucila Bonilla, is grimmer: neighbours burned by Iranian strikes are already designing pipeline routes that bypass Hormuz altogether, and even under the most optimistic peace scenario the outlook is “just prolonged weakness and hardships for the people rather than recovery.”
What this means for the rest of us
“This is only helping to reduce the pain,” Birol said of the IEA’s emergency releases on the In Good Company podcast this month. “It will not be a cure. The cure is opening up the Strait of Hormuz.” Until that happens, expect higher pump prices in Europe, more coal back on the grid in Asia, a nuclear-power renaissance already being priced into equity markets, and — across the Gulf — a regime watching its own currency evaporate faster than its enemies’ patience. The war may have started as a question of borders and missiles. By this April morning in 2026, it has become a question of who can economically outlast whom.