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How the Iran war is reordering global power and economic stability
18 March 2026
Nearly one month into the war with Iran, the price of oil has surged more than 40%, more than 30,000 flights in or through the region have been cancelled and up to 3.2 million Iranians have been displaced. But the war is also exposing larger global trends and impacts. USSC experts have weighed in on key issues that will impact US allies long beyond the end of the conflict.
Disruptions to long-term economic security
Beyond the initial fuel price shock, USSC Director of Economic Security Hayley Channer spoke with SBS about the larger and longer-term impacts of the disruption to energy flows, saying, “Not only is supply disrupted, [but] shipping has to be rerouted, shipping insurance goes up and emergency conflict surcharges are introduced.” For Australia to build economic resilience to these disruptions, USSC Senior Fellow Dr John Kunkel recommends recasting the Future Made in Australia “to give greater weight to national security and economic security interests,” which is the crux of his recent report on this topic.
Japan leading the way for US allies
Japan has made significant strides in both managing their relationship with the United States and securing their own interests on a global stage. USSC CEO Dr Michael Green praised the Japanese approach to indicating broad support and sorting out the details later, telling the Australian Financial Review that this approach could benefit Australia, by saying, “We want to be part of it without having to specify.” Meanwhile, Japan has reported that Iran is ready to allow Japanese vessels through the Strait of Hormuz, which accounts for 90% of Japan’s oil shipments, a major win through effective diplomacy.
Weakened US force posture globally
Finally, the US depletion of key munitions will significantly limit US force posture globally. The United States has taken Terminal High Altitude Area Defense (THAAD) missile interceptors out of South Korea to use in fighting Iran, and production of key US munitions is less than 10% of the target production rate for some missiles, as USSC Research Fellow Tom Corben wrote last week. This re-distribution of resources and significant missile production shortfall significantly limits what the United States could do in other parts of the world, should conflict arise.
President Trump has said both Iran and the United States want to “make a deal” and said negotiators were having good discussions with Iran, but Iran denies any negotiations are taking place. It is unclear whether the United States will declare “mission accomplished” anytime soon, but even if they do, the broader impacts to economics, security and diplomacy will persist.
Mari Koeck
Director, Engagement and Impact
Lead photo sourced via Getty.
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In the news
AFR | Australia open to joining allies’ Hormuz push
The Albanese government is open to joining key allies in backing a new push to secure shipping through the Strait of Hormuz, a government source says, as foreign policy analysts say Australia should sign on or risk being sidelined.
USSC CEO Dr Michael Green was quoted in the article on this development, saying the crisis offered an opportunity to Australia to show leadership and strengthen its ties with other Indo-Pacific partners.
SBS | Why the Middle East war matters more to Australia than it seems
As missiles fly and tensions escalate across the Middle East, global attention has been focused on the United States, Iran and Israel — the powers shaping events on the ground. But far from the frontlines, countries like Australia are also being drawn into the crisis, forced to weigh in on a war they did not consent to but cannot ignore.
Hayley Channer, Director of Economic Security, and Dr Lavina Lee, Director of Foreign Policy and Defence, were both quoted in the article. Ms Channer addressed the long-term effects the war could have on global energy flows, while Dr Lee cautioned that any expanded role will depend on how the conflict unfolds on the ground, respectively.
SBS | Dire straits for Trump
The war in the Middle East is entering a dangerous new phase, with a global oil chokepoint at the centre of rising tensions, but just how far will NATO allies go to support Trump’s push to reopen the Strait of Hormuz?
USSC Director of Research Jared Mondschein spoke with SBS World News Weekly on NATO's response to the war in Iran and the political climate amongst the MAGA elite.
Upcoming events
What the Iran war means for the Middle East – and the world
In February 2026, the United States and Israel launched a surprise attack on Iran, killing former Iranian Supreme Leader Ayatollah Khamenei and triggering a wider conflict that now involves most of the Middle East. Missile strikes have killed hundreds of civilians across the region. The crisis has also caused severe economic disruption, with the closure of the Strait of Hormuz driving up consumer prices globally. Governments around the world, including Australia, are now grappling with navigating one of the region's most destructive conflicts in years — and how its effects could reverberate across the Indo-Pacific.
- What does this mean for the Iranian people?
- What are the key US objectives and how may this end?
- What are the implications for Australia and the Indo-Pacific?
To answer these questions, please join USSC CEO Dr Michael Green, Founding Director of Australian United Solidarity for Iran Dr Rana Dadpour, and Barrister and member of the National Assembly of Iranian Jurists Faraz Maghami in conversation with USSC Director of Research Jared Mondschein.
26 March 2026
6:00-y:00pm AEDT
The Michael Spence Building (F23) at the Corner of Eastern Avenue and City Road, The University of SydneyCost: Free, but registration is essential
Errol Flynn: The true story of Australia's Hollywood icon
Errol Flynn was the first Australian to become a Hollywood icon. His portrayal of Robin Hood in 1938 is one of the most legendary performances on the silver screen. In her new book, Errol Flynn: The true story of Australia’s Hollywood icon, author Patricia O’Brien examines Flynn’s larger-than-life persona and reveals the story behind the well-cultivated Hollywood myths.
USSC is delighted to host a special book launch event featuring Dr Patricia O’Brien, an adjunct professor at Georgetown University, in discussion with USSC Senior Lecturer in American Studies Dr Aaron Nyerges.
The panel discussion will be followed by a networking reception. Copies of the book will be available for purchase at the event.
31 March 2026
6:00-7:00pm AEDT
Level 5 Function Room, The Michael Spence Building (F23) at the Corner of Eastern Avenue and City Road, The University of SydneyCost: Free, but registration is essential
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Institute Building (H03)
University of Sydney NSW 2006