The Gulf War: Hidden Vulnerabilities and Strategic Failures

23 Apr 2026 11:54 AM

Disruption to the supply of oil, on the present scale, is teaching new lessons about the vulnerability of modern economies.

History will not be kind to this war. Its shape is sculpted by blunder. Its aftermath will be characterized by the political and economic cost of failure to achieve any war aim worth fighting for. Bad judgements were made of the resilience and war aims of the Iranian IRGC regime. There was no preparation for the IRGC offensive against the Gulf states. There was an imaginative failure to anticipate how Iran would weaponize the Gulf (and Red Sea) as analogous to a ‘nuclear option’. And there was outright forgetfulness of the US population of the Middle East and the 20,000 seamen trapped by the war, for whom no rescue plans were prepared.

But there is an overarching failure that cannot be laid at the door of Donald Trump and his team. It is the decade long perpetuation and deepening of the strategic vulnerability of the global economy to supply chain disruptions – notably choke points like the Gulf but not limited to it.

War is, at its most inhuman, a Supply Chain disruption. It interrupts the normal flow of the economy in ways that last for years. As a supply chain crisis, war shares common features with pandemics and debt crises, albeit potentially more severe. Shared features there may be, but from the beginning of the War, the Gulf appeared as different. Almost instantaneously red lights started to flash on economic radar screens signalling seemingly unrelated wide-flung disruptions. There were no lags and little commonality between the many local crises unfolding. That was new.

Western Australia ran out of petrol. Michael O’Leary said fewer jets would fly fewer routes less cheaply. Pacific Islanders ran out of electricity, which depended upon diesel for production. The Philippines declared a national emergency. The Japanese rushed to release strategic oil reserves (and are about to do so again). So did the US – but made the reserve barrels so expensive that little (40%) of the offer was taken up. The Koreans, who have 26 ships stuck in the Gulf, discovered that its petroleum reserves would run out in 26 days.

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