Iran-centred fourth oil crisis fractures Western bloc and global order
Updated
Updated · Foreign Policy · May 4
Iran-centred fourth oil crisis fractures Western bloc and global order
10 articles · Updated · Foreign Policy · May 4
After a joint Israeli-US attack on Iran on 28 February, Tehran closed the Strait of Hormuz and Washington imposed a blockade, disrupting oil, supply chains and helium flows vital for semiconductors.
The report says Europe has resisted joining the war, Gulf digital and AI projects face uncertainty, and countries are accelerating non-dollar trade and alternative alliances as confidence in US protection wanes.
It frames the crisis as reversing the Western-led system shaped by the 1956, 1973 and 1979 oil shocks, while potentially strengthening China and Iran in a more fragmented, multipolar order.
As the petrodollar system crumbles, what will anchor the new global economy?
Can Europe forge its own path as the US-led world order fractures?
Is control over critical tech supply chains the new path to global supremacy?
Strait of Hormuz Blockade 2026: Unprecedented Energy Price Surge, Global Stagflation, and Geopolitical Realignments
Overview
In early 2026, escalating conflict between the U.S.-Israel coalition and Iran led to the closure of the Strait of Hormuz, a vital route for global oil shipments. This caused a sharp disruption in energy supplies, sending oil and fuel prices soaring and triggering widespread fuel shortages across Asia. The crisis sparked global stagflation, with inflation rising and economic growth stalling, while trade and key industries like aviation and manufacturing faced severe disruptions. Geopolitically, the crisis deepened divisions between Western allies and accelerated the rise of the BRICS+ bloc, which pushed for de-dollarization. In response, regions pursued urgent energy diversification, balancing short-term fossil fuel reliance with accelerated renewable and nuclear investments, amid a worsening humanitarian situation and ongoing diplomatic efforts led by China.