The longer the Iran war lasts and the more damaging its economic fallout, the better off the global economy may be in the long run.
It’s a hard-to-square possibility, especially with the war’s large number of human casualties. War is ugly, cruel and deeply painful, and the economic harms of this one have hurt billions of people around the globe – many of them in devastating ways.
Nevertheless, the world could undergo some fundamental and necessary changes as a result of the war’s destruction. It is almost certain to harden and diversify its energy supply chain as a result, preventing a single 23-mile-wide waterway from becoming a chokepoint for the global economy and allowing Iran to shut off the global oil market. And the harder the economy falls, the greater the incentive to make those necessary changes.
OPEC may also be smaller or dismantled, potentially reducing oil and gas prices. The energy supply chain could be heartier, with pipelines that bypass the Strait of Hormuz altogether. And the world could accelerate its shift to renewable energy sources, reducing the world’s reliance on fossil fuels.
It’s not at all clear what kind of deal – if any – can be reached to end the war. Iran may not be weakened as much as the United States or Israel hope. It may continue to fund terrorism and threaten the lives and livelihoods of its enemies.
