Business Intelligence Analyst Kareem Shehadeh-Rifai argues that the ongoing Iran war is increasingly becoming intertwined with a much larger economic crisis facing the United States and other major powers. In his assessment, Washington is already under severe financial pressure, with US debt approaching $40 trillion and interest rates making the cost of refinancing that debt increasingly difficult.
In his talk with JP Global host Ayaz Khan Lohani, Shahidi argues that the United States may ultimately need an economic recession to create room for the Federal Reserve to reduce interest rates. Lower rates would allow Washington to refinance its long-term debt at a lower cost and ease pressure on the US Treasury. He suggests that this economic calculation may be an important, though controversial, factor in understanding Washington’s approach to the conflict with Iran.
According to Shehadeh, the military confrontation is simultaneously creating another major problem: energy prices. Oil prices have already risen sharply, while strategic reserves are limited. If the conflict expands and Iran follows through on threats to target regional oil infrastructure, the consequences could be far greater. Disruptions involving the Strait of Hormuz, Bab el-Mandeb and the Red Sea could affect global energy supplies and international trade.
Shehadehi questions the strategic benefit for the United States of becoming deeply involved in another major Middle Eastern war. He argues that US military planners were aware of the risks associated with the region’s critical shipping routes and the possibility of escalation. In his view, the question remains: what does Washington ultimately gain from prolonging the conflict?
He also links the war to Israel’s domestic political situation. Shahidi argues that Prime Minister Benjamin Netanyahu has strong political incentives to demonstrate that Israel is winning its confrontation with Iran, particularly amid political pressure at home. He believes some Israeli and US interests may therefore be converging around continued pressure on Iran.
The analyst also points to a wider economic problem affecting multiple countries. Russia is facing pressure because attacks on its territory have reportedly affected oil refineries and production. Iran faces pressure from restrictions on its oil exports. European countries face their own debt and energy challenges, while Egypt remains heavily dependent on imports to meet basic needs. Gulf states such as Saudi Arabia, Qatar and Kuwait could also face serious economic consequences if energy exports are disrupted.
Against this backdrop, Shehadeh describes China as potentially the most strategically cautious major player. Rather than becoming isolated, Beijing could use the crisis to strengthen economic and diplomatic relationships across Eurasia and the Middle East while avoiding direct military involvement.
The proposed Venezuelan oil deal promoted by US President Donald Trump is also discussed as a possible alternative source of energy. Shahidi, however, cautions that Venezuela cannot immediately replace disrupted supplies. Rebuilding oil infrastructure and ensuring that refineries can process Venezuelan crude could take years.
Shehadeh ultimately argues that the consequences of the war could extend far beyond the battlefield. If oil prices rise toward $130–$140 a barrel, he believes the resulting inflationary pressure could contribute to a global recession. For the United States and Europe, that could create both serious economic risks and pressure for central banks to reduce interest rates.
The broader picture, therefore, is one of interconnected crises: war, energy insecurity, high interest rates, enormous government debt and geopolitical realignment. The longer the Iran conflict continues, the more difficult it may become for Washington and its allies to control its economic and strategic consequences.
