The Middle East Conflict: War, Oil, and Global Consequences

The Quest Correspondents

A cartoon of Don and Ben in a Zulu village

Historical Background

The roots of the current war stretch back decades. In 1953, a CIA-backed coup in Iran reinstated Shah Mohammad Reza Pahlavi, aligning Iran closely with the United States and Israel. During the Shah’s reign, Iran supplied oil to Israel and cooperated militarily against Arab neighbors.

This alliance collapsed with the 1979 Islamic Revolution, when Ayatollah Ruhollah Khomeini established the Islamic Republic. Iran severed ties with Israel, handed the Israeli embassy to the Palestine Liberation Organization, and adopted a fiercely anti-Israel stance. Relations with the United States also broke down, marked by the hostage crisis and years of sanctions.

Since then, Iran’s support for groups like Hezbollah and Hamas, combined with US fears of nuclear ambitions and oil politics, has kept tensions simmering. The Strait of Hormuz, carrying nearly a third of global oil, has remained a flashpoint — any disruption here reverberates worldwide.

How the War Began

The current conflict erupted while negotiations on Iran’s nuclear programme were still underway. On 28 February 2026, a surprise joint attack by the United States and Israel struck Tehran and other Iranian cities. The strikes killed Supreme Leader Ayatollah Ali Khamenei, who has since been replaced by his son, Mojtaba Khamenei. This succession marks the first hereditary transfer of power in the Islamic Republic’s history.

Targeted bombings also eliminated several senior figures in Iran’s leadership, including Revolutionary Guard commanders and key ministers, leaving the country’s political and military structure severely weakened.

The Hormuz Question

The fighting quickly spilled into the Strait of Hormuz, a narrow waterway between Iran and Oman that carries about 25–30% of global oil and 20% of liquefied natural gas. Tankers and cargo ships were stranded, unable to pass safely. Insurance premiums soared, shipping companies rerouted vessels, and global supply chains began to strain.

The Strait’s importance cannot be overstated: it is one of the world’s most vital arteries of trade. Any disruption here reverberates across continents, fuelling inflation and energy insecurity.

Escalation into Lebanon

The war has not remained confined to Iran. It has escalated into Lebanon, where Israel has invaded the southern boundaries in pursuit of Hizbollah fighters. This has opened a second front, raising fears of a wider regional war and drawing in neighbouring states.

Accusations of War Crimes

Accusing fingers have been pointed at both Israel and the United States for crimes against humanity. Human rights organisations report that air strikes have hit civilian populations, including schools with children, causing massive deaths. These allegations are under investigation, but they add a moral reckoning to what is already a geopolitical and economic confrontation.

Pressure on the United States

The war has placed the US President under intense pressure at home and abroad. Critics argue the conflict is “killing the world economy” and demand an urgent end to hostilities. Allies are pressing Washington to broker a ceasefire, while domestic voices warn of rising costs and global instability.

Impact on the Global Economy

• Energy Prices: Brent crude surged above $100 per barrel, fuelling inflation worldwide.

• Growth Outlook: The IMF warns of slower global growth, especially for energy importers.

• Food Security: Rising transport and fertiliser costs are worsening food insecurity in low‑income countries.

• Investor Sentiment: Capital is flowing into safe‑haven assets like the US dollar, weakening currencies elsewhere.

Effects on South Africa

• Fuel Imports: As a net importer, South Africa is directly exposed to higher oil prices.

• Rand Pressure: The currency has weakened as traders seek refuge in the dollar.

• Inflation Risks: Elevated fuel costs are keeping inflation high, dimming hopes of interest‑rate cuts.

• Growth Outlook: GDP growth for 2026 is forecast at 1.5%, but risks are tilted downward if the conflict drags on.