A fire at an oil facility in Fujaira, UAE, after interception of an Iranian drone. Iran is perfectly positioned to squeeze the global economy from both sides of the Arabian Peninsula © Amr Alfiky/Reuters

An asymmetric war that brings the global economy to a standstill could exhaust the US and force a ceasefire

By VALI NASR, Professor at Johns Hopkins University

Financial Times

Two weeks into the war, Iran’s strategy is coming into sharper focus. It initially set out to absorb American and Israeli strikes while retaliating against Israeli cities and US bases with drones and missiles in an attempt to deplete their stockpiles of interceptors. The long-term plan was to preserve larger and more lethal missiles for the second phase of the war.

But Iran has also deployed a parallel — and potentially more effective — strategy: waging war on the global economy. Iranian missiles and drones attacked oil and natural gas facilities in Qatar, Saudi Arabia and the UAE along with oil tankers in the Gulf, and restricted passage through the Strait of Hormuz, in effect closing it and leading to spikes in oil prices.

In his State of the Union address on February 24, days before the war started, US President Donald Trump barely mentioned Iran. But he dwelled extensively on gas prices, inflation and the state of the economy. Iranians understand that bombs and missiles may go unnoticed by many Americans, but gas prices and inflation will not.

They have been proved right. As the conflict spread to the Gulf, energy prices surged, rattling global markets. Although Iran had warned of exactly such a scenario, the US was caught off-guard. Its unpreparedness only accentuated fear of an impending crisis.

But Iran is not going after energy supplies alone. Its drones and missiles have deeply impacted other vital industries in the Gulf, from tech companies to airlines. It has attacked Amazon’s data centres, Dubai’s airport and port facilities in a number of Gulf countries. Disruption to shipping through the Strait of Hormuz also impacts container traffic carrying commodities and industrial products such as petrochemicals and the fertiliser necessary for agriculture.

In war, geography matters as much as technology. Iran commands the entire northern shore of the Gulf, looming large over energy fields on its southern shore and all that passes through its waters. Its Houthi allies are perched at the entrance to the Red Sea and along the passage to the Suez Canal; Iran is thus perfectly positioned to squeeze the global economy from both sides of the Arabian Peninsula.

Those in command of Iran today are veterans of asymmetric wars in Iraq and Syria. They are now applying the same strategy to fighting the US on the battlefield of the global economy. Drones, short-range missiles and mines setting tankers and ports on fire can have the same effect IEDs had in Iraq, only with greater impact — disrupting global supply chains and sending oil prices higher.

Iran’s missile attacks against a depleting stock of Israeli interceptors helped push the US and Israel towards a ceasefire the last time the two attacked in June 2025. Waging war on the global economy could, however, produce a different outcome this time.

Iran could sustain its counteroffensive more easily and for far longer. Furthermore, a ceasefire alone will not lift the shadow of risk that Iran has imposed over the Gulf, which is now experiencing its nightmare scenario. That is why Iranian leaders are saying they will not accept a ceasefire until Washington fully grasps the global economic cost of waging this war. Businesses, investors and tourists may not return to the Gulf states if they assume that war could resume again.

Unless the US is prepared to invade Iran to remove the Islamic republic’s leaders and then stay there to ensure stability and security, confidence in the Gulf will only return if the US and Iran arrive at a durable ceasefire. The pressure is building on Washington to seek one. It is not just Gulf states that want an end to the fighting, but also countries across Asia, Africa and even Europe, all of which fear serious economic crises unless the fighting stops soon.

In recent days, the US and Israel have increased the pace and intensity of their bombing campaign on the assumption that they can force Iran to collapse or surrender. The Iranian regime is in turn prepared to wage asymmetric warfare on the global economy for long enough to persuade Washington to view a political settlement as the only option.

Iran says it will only accept a ceasefire with international guarantees for its sovereignty, which would probably mean a direct role for Russia and China. It may also demand compensation for war damages and a verifiable ceasefire in Lebanon. The US would then have to agree to some form of the nuclear deal it left on the table in Geneva in February and commit to lifting sanctions.

Iran’s leaders entered this war with the goal of ensuring it will be the last one. Either it breaks them or radically changes the country’s circumstances. They are betting on surviving long enough and squeezing the global economy hard enough to realise that goal.