Iranian drone strike on tanker in Persian Gulf heightens Hormuz tensions, market risk.
A tanker in the Persian Gulf, off the northwestern coast of Iraq, was struck by an Iranian naval drone on the 12th and is burning, according to reports cited by AP. The incident comes as tensions rise after Iran’s leadership signaled a hardline stance toward the United States and Israel.
Ayatollah Seyyed Mojtaba Khamenei, described as the new supreme leader, delivered his first official message four days after being selected, insisting Tehran would keep using the threat of blocking the Hormuz Strait as leverage against its adversaries. He warned that a “second front” would be considered and activated immediately if the situation demanded it, and he pledged to retaliate for what Iran calls aggression.
In Washington, former President Donald Trump weighed in on social media, saying the United States is the world’s largest oil producer and would profit from higher crude prices, while stressing that halting Iran’s nuclear ambitions is the higher priority for U.S. security and the broader region.
U.S. Treasury Secretary Scott Bessent, in an interview with Sky News, was asked whether there is a price point at which war against Iran becomes unaffordable. He replied that there is no such point, underscoring Washington’s willingness to sustain a conflict if it continues. Congressional briefings put the first six days of the operation at about $11.3 billion in war costs.
Israeli Prime Minister Benjamin Netanyahu, in his first comments to local media after the war began, said Israel aims to create conditions that could enable regime change in Iran, outlining a third objective in addition to deterrence and retaliation. Both Washington and Tel Aviv have shown little indication of seeking a quick de-escalation.
Economists warn the conflict could push the global economy into stagflation, even as higher energy costs filter through broad markets. Nobel laureate Joseph Stiglitz said in a podcast that the war raises inflationary pressures while growth slows, pointing to a suite of shocks from oil to food and tariffs that could threaten the U.S. expansion.
Beyond oil, the war is driving up other commodities. Nitrogen fertilizer, a key input for global agriculture, has surged: a metric by Trading Economics shows urea prices rising about 29 percent in two weeks, from roughly $458 per ton to about $593 per ton. Diesel and other farm inputs have also climbed, increasing costs for farmers just ahead of planting season.
The spillover is already visible in other major economies. Japan, which relies on Middle Eastern oil for roughly 90 percent of its crude imports, faces potential supply risks that could dent growth, with some projections suggesting that oil prices above $100 a barrel could shave real GDP in Japan by about 0.31 percentage points. In Europe, energy users and manufacturers are already adapting as wholesale gas prices surge, with industry groups noting sharp price spikes and production reductions.
Analysts warn that disruption of Hormuz could reverberate through global supply chains, complicating a period of already tight markets for energy and raw materials. If Iran’s leadership follows through on threatening to close or constrain Hormuz, imports of oil and related commodities could face further volatility, with potential knock-on effects for inflation, consumer prices, and factory supply lines worldwide.