Iran war revives pandemic-era shocks – and may go further

By the time this column appears, the world will feel very different from when my previous column appeared earlier this month. In just days, a conflict that some in Washington seemed to believe would quickly topple Iran’s leadership has instead become a potentially long and uncertain war, with little clarity on how or when it will end.The front lines will have shifted, more oil tankers will have been stuck at sea and more flights cancelled, and there will almost certainly have been further civilian deaths in what is, at its core, a war of choice. Events are moving faster than governments – or markets – seem able to absorb.We last felt this kind of shock in 2020, during the COVID-19 pandemic. Hong Kong, like many places, discovered how quickly an unseen threat could upend trade, travel and daily life. This time, however, the shock is man-made, radiating from the Gulf and Levant through the energy markets, shipping lanes and air routes. Where the pandemic closed borders for public health, this conflict is closing them for military and geopolitical reasons.Nowhere is this clearer than in the Strait of Hormuz. Iran’s new supreme leader has vowed to keep the strait closed to force other countries to intervene diplomatically and restrain Washington and Israel, while urging neighbouring states to shut US bases on their soil. However, Iran has reportedly allowed a limited number of ships from countries not directly involved in the conflict to transit the waterway following negotiations.Roughly one-fifth of the world’s oil passes through this narrow channel, so any major disruption affects the global economy. Shipping costs are climbing, and some vessels are detouring or waiting it out. With inflation still a concern, rising fuel and insurance costs are adding to price pressures.The focus, however, is no longer solely on the Strait of Hormuz. To force countries to lean on Washington and Israel to de-escalate, Iran has signalled that the Bab el‑Mandeb, another critical oil and trade artery, could also be drawn into the conflict.01:22Oil tankers set ablaze by Iranian drones as shipping vessels targeted in Middle East war