The United States and Israel's joint military campaign against Iran has reached its 12th day, with missiles, drones and airstrikes continuing to strike targets across the region. The conflict, which escalated sharply following joint U.S.-Israeli strikes on Feb. 28, has killed more than 1,000 people and triggered the largest oil supply disruption in history, according to economists. The closure of the Strait of Hormuz has sent global energy markets into turmoil and raised alarms about the stability of the broader world economy.

U.S. oil prices briefly reached $119 a barrel early Monday, and average gasoline prices in the United States climbed to $3.48 per gallon, up 50 cents from $2.98 before the war began. Economists warn that if oil reaches $125 a barrel and gas hits $4.25 a gallon, the U.S. economy could tip into recession. Prediction market Kalshi placed the odds of a recession this year as high as 35% on Monday, up from roughly 20% in early February. University of Michigan economics professor Justin Wolfers said the economy has been 'on the precipice of recession for quite some time' and that an oil shock could be sufficient to push it over.

In Britain, Prime Minister Keir Starmer has navigated pressure from U.S. President Donald Trump to offer unconditional support for the Iran strikes. Starmer allowed the use of British bases for what the government characterized as defensive operations but stopped short of deeper military involvement, citing international law and British national interests. Labour MP Matt Western, writing in a personal capacity, drew comparisons to Harold Wilson's refusal to commit British troops to Vietnam and noted that the U.S.-UK relationship has seen significant divergence on foreign policy multiple times since World War II, including during the Suez crisis and the Falklands conflict.

Analysts warn the conflict carries risks of stagflation — a combination of rising inflation and slowing economic growth — that could prove particularly damaging given already fragile conditions in major economies. The U.S. economy added only 116,000 jobs in all of 2025, the lowest total outside a recession since 2002, leaving it more vulnerable to an oil shock than during the 2022 price spike that followed Russia's invasion of Ukraine. The Federal Reserve could face pressure to raise interest rates even as growth slows, a scenario that economists say would compound financial strain on households and businesses alike. How long the Strait of Hormuz remains closed is considered the central variable in determining whether the economic disruption deepens into a prolonged crisis.