What people in power think the impact of the Iran war will be

The crux of the current crisis lies in two locations: the 24-mile-wide Strait of Hormuz near Iran and the White House, 7,000 miles away. This week marked a rare moment for global leaders to directly address the U.S. administration at the IMF and World Bank Spring meeting in Washington DC. Amid the discussions, a shared sentiment emerged—concerns about the unintended but unavoidable economic toll of the U.S. decision to escalate tensions with Iran.

Chancellor Rachel Reeves was among the most vocal critics, labeling the conflict a “folly” and “mistake” not attributable to her country. The atmosphere at key gatherings, such as the G20 breakfast, was notably somber. While the U.S. consistently projected short-term optimism, Asian financial experts voiced alarm over energy supply disruptions. “Real shortages of energy are a pressing issue,” one participant noted, highlighting the fragility of global supply chains.

“March was a tough month, but April is likely to be even tougher,” warned Kristalina Georgieva, IMF managing director. The World Bank’s president, Ajay Banga, added that poorer nations would bear the brunt of rising energy and food costs. Iraq, for example, has halted oil production and exports, which account for 85% of its revenue. Bangladesh, reliant on Middle East gas imports for domestic use, faces energy shortages. Meanwhile, Pacific Island nations, with limited storage capacity, depend on distant tankers for critical supplies.

Despite some hopeful developments, the threat to global food security persists. Urea prices have nearly doubled, creating a risk for agricultural output. While northern countries are currently planting crops, the true challenge may arise in June and July if fertilizers remain scarce. “A difficult cycle on food availability will begin if non-northern regions hit their planting season without supplies,” Banga explained.

The U.S. Treasury Secretary, Scott Bessent, remained confident in the administration’s approach. “A nuclear weapon hitting London would have a significant GDP impact,” he mused, framing the current conflict as a necessary trade-off. “Short-term economic pain for a few weeks is worth the long-term security gains.” This stance echoed the Trump administration’s broader message: the war will conclude swiftly, and the benefits outweigh the costs.

At the Willard Hotel, where the term “lobbying” originated, Bessent engaged with journalists, including myself. He defended the U.S. blockade of Iranian vessels, asserting that “ships shall not pass” under the current strategy. Simultaneously, he expressed optimism about ongoing talks with Iranian representatives, suggesting a path toward resolution. The world, however, remained wary, seeking to influence the outcome and prevent a broader economic downturn.