The long-term strategic effects of the Iran war

Michael Green

The author is the CEO of the U.S. Studies Centre at the University of Sydney and the Henry A. Kissinger Chair at the Center for Strategic and International Studies. 

Even the best strategists are notoriously poor at predicting the long-term impacts of crises. I worked on the 2002 White House National Security Strategy, which predicted that the attacks of 9/11 would make terrorism the defining challenge of our time and a force for cooperation among major powers (I did not write that part). That proved to be wrong. Barack Obama’s 2010 National Security Strategy similarly predicted that the global financial crisis and climate change would bring rivals closer together — also wrong. Humans often seek logic amid chaos but tend to overestimate the historical significance of traumatic events.

So how should we anticipate the longer-term effects of the current military campaign and energy crisis in the Middle East? It is difficult to be certain, but the impacts could persist for years and even shape a generation. What is already clear is that economic, political and geopolitical consequences will last for at least several years.

First, the energy crisis triggered by the war will persist regardless of how the conflict evolves. Early in the war, markets assumed Iran would not risk its own exports by closing the Strait of Hormuz, but under severe pressure, the regime did exactly that. The damage to energy infrastructure in Qatar, Saudi Arabia and Iran will take years to repair. Risk premiums on oil and gas transiting the Gulf will rise, and buyers will increasingly seek diversification of supply, extending the psychological impact even further. The Gulf has also been a major source of fertilizer, helium for semiconductors, plastic precursors and sovereign wealth capital, so disruptions will feed directly into higher global prices. Oil prices are unlikely to return to the prewar level of $72 per barrel this year or next.

This will have significant domestic political consequences, especially at a time when inflation dominates elections in most democracies. In Australia, the far-right One Nation Party, once dismissed, is now polling at 28 percent, surpassing the center-right coalition. In Britain, Nigel Farage’s Reform Party is similarly gaining ground and now polls ahead of the Conservative Party.

In the United States, however, the war has hurt the right. Trump began the conflict with only about 40 percent support, the lowest initial support for any war in modern U.S. polling. He also made little effort to consult Congress, allies or the American public before acting. Public sentiment on inflation and the economy is deeply negative, with a 41-point gap between those who disapprove of his economic performance and those who approve. Republicans were already expected to lose the House in the November midterms and now face a struggle to retain the Senate. Because voting is not compulsory, turnout differences matter: 75 percent of Democrats who voted in 2024 say they will vote again, compared with only 50 percent of Republicans. If Democrats regain control of Congress, Trump’s agenda — from tariffs to immigration — will face major setbacks. While far-right movements are rising in Australia and Europe, they are fragmenting and weakening in the United States. Vice President JD Vance’s political standing appears to be declining, while the more centrist Marco Rubio is gaining visibility.

The geopolitical effects of the war remain uncertain. Even before the conflict, there was a broad trend of China, Russia, Iran and North Korea— the “CRINKs” — aligning to support authoritarianism and expand their respective spheres of influence. In response, U.S. allies, particularly in Asia, were strengthening cooperation to preserve deterrence, although tensions between Washington and Europe had already complicated that trend. The war, however, has exposed limits to the CRINK alignment, showing it is not a true collective security arrangement.

Russia has reportedly provided targeting support to Iran and benefited from higher energy prices and relaxed sanctions, gaining short-term advantages that increase risks for Ukraine and European security. China has taken a more cautious approach, likely because its oil shipments continue to pass through the Strait of Hormuz and because it anticipates postwar reconstruction opportunities in the Gulf. At the same time, the severe weakening of Iran’s military capabilities and regional influence represents a setback for both China and Russia, especially if U.S. military resources can later shift back toward Asia.

I do not agree with those who argue that the war has ended the U.S. strategic pivot to Asia, though that outcome will depend on future decisions in Washington and Tehran. The situation could change significantly if the United States escalates further — for example, by deploying ground forces to Kharg Island or seeking Iran’s enriched uranium — rather than moving toward a de facto ceasefire and reopening of the Strait.

The war has also strained cohesion among democratic allies, particularly across the Atlantic. NATO allies were already angered by Trump’s stance toward Europe and his earlier rhetoric on Greenland, as well as broader ideological tensions with European governments. They were not consulted before the conflict and have suffered significant economic and security consequences. This will weaken but not break the trans-Atlantic alliance.

Asian allies are likewise concerned about the diversion of U.S. attention and military assets to the Middle East. Japan and Korea are also economically affected by higher energy prices, much like European economies. However, the March 19 summit in Washington demonstrated that the Trump administration still prioritizes strong ties with Asia. Japan’s leadership emphasized solidarity among U.S. allies while urging a swift end to the conflict and stabilization of energy markets. Expectations in Beijing or Pyongyang that alliances in Asia might fracture are likely to be disappointed.