As we enter the fifth week of the Third Gulf War, global oil prices are surging ever higher. Brent crude futures are up by more than 50% since the war began on February 28, 2026. In retaliation for U.S. and Israeli air strikes, with either explicit or tacit support from key Gulf Arab allies, Iran has largely succeeded in preventing oil tankers from traversing the critical Strait of Hormuz. Lacking any means to get their oil to customers in Asia, the Gulf Arab states have slashed production. Roughly 15% of normal global oil production is now off the market as the crisis continues. While President Trump has thus far managed to calm skittish oil markets and prevent more catastrophic price increases with public statements alternatively coercive and reassuring, we are now seeing signs that this “jawboning” strategy is no longer working.

As oil revenues in region collapse due to the closure of the strait, the economies of the gulf states are entering increasingly dire straits. Some gulf states are better positioned than others to weather the economic downturn, and these differences have little to do with geopolitical alliances. Iraq, for example, which enjoys comparatively friendlier relations with Iran than other neighboring Arab states, is the gulf state most vulnerable to the unfolding economic crisis. Economic pain is, of course, a critical aspect of the Iranian strategic calculus to force belligerent gulf states like the UAE and Saudi Arabia to rethink their support for the war and to goad neutral or friendly states like Iraq to more directly back the Iranian position.

Beyond the regional impact of falling oil production, Iran likely envisions two key benefits of the current oil crisis. First, while oil revenues are falling elsewhere in the gulf, higher global oil prices are already creating a financial windfall for the Iranian state. Even as other countries are prevented from shipping oil through the Strait of Hormuz, Iran is exporting roughly the same quantity of oil as it has in past years. These oil exports are now generating substantially higher revenue, both because collapsing global production yields higher global prices and because the corresponding decline in producer competition means that the primary buyer of Iranian oil, “teapot” refineries in Shandong, China, can no longer extract steep discounts at the time of purchase. Second, Iran likely believes that the global economic pain inflicted via the “closure” of the Hormuz passageway will shift global public opinion sharply against the United States and Israel for launching this war. With the critical caveat that the politics can shift rapidly and that a favorable ceasefire deal could persuade Iran to abandon the path of economic pain, history suggests that the Iranian strategy may well prove shrewd.

The most obvious historical analogue for the current moment is the “oil crisis” that followed the Yom Kippur War of October 1973. While the “second oil crisis” of 1979 was more directly linked to Iranian actions, as Iranian labor strikes during the Iranian Revolution led to a decline in production that sent global oil prices skyrocketing, these oil dynamics were secondary consequences of a revolutionary movement unfolding according to its own logic. In 1973, on the other hand, the Arab oil-producing states (OAPEC) deliberately wielded the “oil weapon,” restricting global oil production and raising global prices to punish U.S. support for Israel and force geopolitical changes by pitting European and Asian countries against their U.S. ally. If higher oil prices brought economic pain, then surely consumers around the world would begin to blame Israeli actions (and U.S. support for those actions) for their economic misery.

While the gambit obviously did not convince the U.S. to abandon Israel, it certainly “worked” to increase resentment of Israel elsewhere around the world. When OAPEC struck its blow, the embargo was received with fear and anger in the West and something closer to jubilation in the Third World, where producing and non-producing countries alike saw the collective action as a step toward reclaiming national sovereignty over natural resources from the strictures of colonial and neocolonial control. While the economic fallout certainly weakened the economies of the United States and Western Europe in the 1970s, however, the same Third World countries that celebrated the political symbolism of the embargo would bear an even higher proportion of the ensuing economic pain. The nature of the global capitalist economy makes “targeted” economic pain via commodity pricing virtually impossible. Instead, the countries that suffer the most from rising prices are simply those that were most dependent on the given commodity in the first place. Developing countries that did not produce their own oil fell increasingly into debt to fund their oil consumption needs, making them more dependent than ever, both financially and politically, on foreign banks and international agencies. 

Even as the oil shock sparked by OAPEC actions handcuffed developing economies around the world and intensified the economic pain of all but the small handful of oil-producing countries, however, global opinion shifted precisely as intended. In the United State, of course, an angry public blamed the greedy “oil sheikhs” of the Arab world for their economic misery. In Europe, however, France, Britain, and several other countries rushed to dissociate themselves from U.S. support for Israel in the hope that they might be spared from the oil embargo. Japan issued a statement in November 1973 endorsing the Arab stance against Israel and the U.S., the first major Japanese critique of the U.S. since WWII. While the sharp turn of global opinion against Israel at the United Nations cannot all be attributed to the oil crisis – the spotlight on Israeli occupation in the Gaza Strip and West Bank, the anticolonial consensus of the New Left, and the impact of decolonization on the membership of the U.N. were also critical factors – it is certainly striking that that the infamous “Zionism is Racism” UNGA resolution was passed just two years after the embargo began.

What lessons can we draw from the “oil crisis” of the 1970s and the potential fallout of a new global oil crisis that emerges from the war against Iran? First, economic pain is unlikely to be most severe in the countries directly targeted by Iran’s use of the “oil weapon.” Gulf oil production will likely accelerate rapidly when the immediate crisis has been resolved. More worrying is the fallout that comes from oil prices that remain elevated for several years and from the catastrophic disruption of liquid natural gas exports, which will result in fertilizer shortages, collapsing crop yields, and the global inflation of food prices. In all of these areas, economic pain will likely be far more severe in Asia, Africa, and Latin America than in the U.S., Israeli, and the Arab gulf states. Second, the victims of this economic pain will likely place the blame squarely on the shoulders of the United States and Israel. The war was spectacularly unpopular from the outset, and as the economic consequences of the war prove deeper and more enduring, resentment will likely grow. In fact, in contrast to the first oil crisis that began in 1973, we may very well find that coming shifts in public opinion in the United State much more closely mirror those of the rest of the world. American support for Israel after the Yom Kippur War was buoyed by overwhelming levels of preexisting public support. Today, however, U.S. support for Israel has already been collapsing for several years due to the conflict in Gaza. Moreover, while the Yom Kippur War was seen by most Americans as a clear case of Arab aggression against Israel, the current conflict in Iran looks to most like a war of choice, launched by the Trump administration with the full-throated support of Israel. Both factors quite likely mean that Donald Trump, Pete Hegseth, and Benjamin Netanyahu, rather than Iranian Supreme Leader Mojtaba Khamanei and IRGC spokesman Ebrahim Zolfaghari, emerge as the modern equivalent to the greedy Arab “oil sheikh” as scapegoats of the new oil crisis.