2026 Iran war economic shock
============================

The economic shock of the 2026 Iran war is a thread John Kiriakou tracked alongside the fighting, and which he treats as the war's most measurable consequence for Americans.

Worse than the 1970s, combined

By the fourth week, his assessment was that the damage had already passed the historical benchmarks: "this oil shock is already worse than the two oil shocks of the 1970s combined. And it's already worse on natural gas than the effect of the Russia-Ukraine war and the destruction of the Nord Stream 2 pipeline."

He has direct memory of the earlier shocks. Rationing was allocated by licence plate, "it depended on what the last number or letter of your license plate was. That was the day that you could get gas", and he recalls his father outside with a screwdriver, switching the plates.

The recovery time is the part he thinks is forgotten. Asked whether the American economy failed to recover from the OPEC crises until the mid-1980s, he confirms it and dates it precisely, the recovery began in 1983, when "we finally came out of the recession. We started to grow the economy again."

"An economic slowdown of choice"

Kiriakou cites Barron's as having reached the plain conclusion, "We're screwed. We're in a recession even if we don't admit it yet", and agrees with it. Beyond the immediate damage, his expectation is compounding: the four-week war had "wiped out the last year's worth of profits," and "we're going to keep losing for the rest of the year."

What distinguishes this recession from others, in his framing, is that it was elective: "this is an economic slowdown of choice. We decided to kill the economy. We decided to spike oil prices. And for what? Because Benjamin Netanyahu told us to."

The fertilizer chokepoint

The exposure Kiriakou thinks is systematically underreported is not fuel but food. "The Persian Gulf accounts for 65% of the world's fertilizer. So 65% of the world's fertilizer has to go through the Strait of Hormuz."

And the route does not clear the risk once it leaves the Gulf: "it then splits. Half of it goes east to Asia. Half of it goes west to the Bab-el-Mandeb, to then go through the Red Sea and the Suez Canal." With the Houthis armed and striking shipping, both halves are exposed, "this is going to be bad."

The commercial logic that closes a strait is, he notes, far below the threshold of actual interdiction. Drawing on his own background in banking and business: "if there's a 1% chance that your tanker is going to take a Houthi missile, you're not sending that tanker through there."

The price, and the depression question

By the middle of April 2026 the price had moved far enough to put a number on the shock. The economist Richard D. Wolff, on John Kiriakou's programme, put oil at "well in excess of $100 a barrel, whereas before it was around 60 to 70 dollars a barrel", a rise of half again, "and it is rising as we speak right now."

His forecast from that number was staged. The rise was "going to produce likely in the world a recession"; if it ran "a few more months," it would produce a global depression. Asked whether it could be as bad as 1929, he answered in his professional capacity: "it could. Will it? I don't know. Could it? Absolutely." The benchmark he attached to that was the length rather than the depth, the depression of 1929 to 1940 ran eleven years and peaked at 25 per cent unemployment, six times the rate at the time of the interview.

The pressure did not come from the oil price alone. Wolff stacked three things: the tariff regime, the energy shock, and the ordinary schedule of capitalist downturns, which by his count arrive every four to seven years and were due in 2026, a judgement on which he noted agreement with the head of JP Morgan Chase, "with whom I don't agree on anything else." Should the war resume, "then all bets are off." The strikes spreading across the United States that spring are treated under the 2026 strike wave.

Gas prices and a hyperinflation memory

With oil roughly at twice its pre-war price and possibly heading to $150 a barrel, the arithmetic put to John Kiriakou was that American pump prices around $3.85 to $4 a gallon could reach seven or eight, and in California, where he had recently seen $5.50 at an ordinary station and about seven at the airport, considerably more.

What it reminded him of was living through hyperinflation in Turkey: "I would get up in the morning and exchange, I wanted to exchange my dollars as late as possible, just a little bit at a time, because I'd get more lira later in the day."

He accepted the political framing that American presidential campaigns have turned on ten- or twenty-cent movements in the price of gasoline, and that this was "a lot more than that." The Republican line he expected in reply, "it's a small price to pay a little more at the pump to liberate 92 million Iranians", he rejected on the ground that "the Iranians don't want our liberation."

The consequences outside the United States are at Asian fuel reserves, 2026.

See also

- 2026 Iran war
- Strait of Hormuz
- Yemen
- John Kiriakou
