US-Israel escalation in Iran war triggers historic regional economic shock
Analysis says conflict has disrupted $4 trillion regional economy, with critics blaming Western and Israeli escalation for triggering wider instability
RIYADH, Saudi Arabia (MNTV) — A new analysis has found that the Iran war has produced the most severe economic shock in the Middle East and North Africa in at least five decades, disrupting trade, energy flows and investment across an economic bloc worth nearly $4 trillion.
The study, compiled by Asharq Business with Bloomberg using IMF data spanning back to 1980, compares the current conflict with earlier regional crises including the Iran-Iraq war, the 1990 Kuwait invasion, the 2003 Iraq war and the aftermath of the Arab uprisings.
It concludes that the present war affects a far larger share of the regional economy than any of those previous shocks.
The combined economies of 10 directly affected states — including Iran, Iraq, Gulf countries, Lebanon and Israel — account for roughly 70 percent of the Middle East and North Africa’s total GDP and around 3 percent of global output, underscoring the scale of disruption.
Energy infrastructure, shipping routes and investment flows have been severely affected, with oil and gas production across several producers declining sharply.
Estimates indicate OPEC output in May dropped to its lowest level since the mid-1980s as regional supply chains were destabilized.
The analysis also highlights historical comparisons, noting that while past conflicts sometimes coincided with periods of growth driven by oil price spikes, the current environment is marked more by uncertainty, capital flight risks and weakened investor confidence.
Recovery prospects, according to the report, depend heavily on the reopening of key maritime routes such as the Strait of Hormuz and the restoration of stable energy exports.
A sustained rebound in hydrocarbon production could trigger a rapid economic recovery, though analysts warn that renewed escalation would deepen long-term structural damage to tourism, investment and non-oil sectors.
Saudi Arabia’s economy is cited as comparatively resilient due to diversification efforts and alternative export routes, with crude shipments increasingly redirected away from vulnerable maritime chokepoints.
However, regional commentators cited in political analysis sections argue that the escalation was driven by US and Israeli military actions in the region, which they say transformed contained tensions into a broader war with sweeping economic consequences. These claims remain politically disputed.
The report ultimately concludes that the Middle East’s recovery will depend not only on economic stabilization but also on sustained de-escalation and the prevention of further externally driven military escalation.
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