War in Iran shows no signs of slowing down, and its damage may be felt for years to come

Five weeks after the US and Israel launched a major air offensive against Iran, the “third Gulf war” continues on.

In that window, the conflict has expanded far beyond strikes. Iran’s leadership structure has been severely disrupted — including the death of Supreme Leader Ali Khamenei after nearly 40 years in power.

Across the Gulf, liquid natural gas (LNG) export terminals, airports, and energy facilities have been damaged. At sea, the closure of the Strait of Hormuz has cut off a key supply route for global energy markets.

The fallout has rippled into global markets. Oil prices (BZ=F, CL=F) have surged by more than 50% in recent weeks, with refined products like diesel and jet fuel rising even faster. Equity markets have turned firmly negative on the year as investors grapple with the growing risk of a prolonged regional conflict.

“Markets are no longer trading the hope of de-escalation, they are trading the probability of escalation,” Capital.com analyst Daniela Hathorn wrote in a recent client note. “Until there is credible evidence that the conflict is moving toward resolution, markets are likely to remain defensive, with volatility elevated and risks skewed to the downside.”

Read more: How to protect your money as Mideast turmoil fuels market volatility

In Iran, all signs indicate that the Revolutionary Guard Corps, an elite paramilitary force, has effectively taken control of the country.

Iranian President Masoud Pezeshkian and Foreign Minister Abbas Araghchi have signaled potential willingness to negotiate terms to end the conflict. But parliamentary speaker and former IRGC general Mohammad Bagher Ghalibaf has emerged as the driving public voice, contradicting statements from Pezeshkian and denying that Iran is engaged in any kind of talks with the US or Israel.

Read more: How oil price shocks ripple through your wallet, from gas to groceries

The US and Israel have continued to bombard the country. On Thursday, the US military severed a major bridge in Iran — one of the country’s flagship infrastructure projects — that connected the capital of Tehran to Karaj, a major industrial center. Other strikes have targeted military installations and energy facilities.

In a post on Truth Social, President Trump said the “biggest bridge in Iran comes tumbling down, never to be used again — Much more to follow.” The president also said in his national address on Wednesday that the US would bomb Iran “back to the stone ages.”

A bridge struck by U.S. airstrikes on Thursday is seen in the town of Karaj, west of Tehran, Iran, Friday, April 3, 2026. (AP Photo/Vahid Salemi) — A bridge struck by US airstrikes on Thursday is seen in the town of Karaj, west of Tehran, Iran, on April 3, 2026. (AP Photo/Vahid Salemi) · ASSOCIATED PRESS

Iran has lashed out across the Gulf, targeting the commodity export system and imperiling global trade from oil and metals to fertilizer and helium.

The Ras Laffan LNG export terminal in Qatar, the world’s largest such facility, has taken a large segment of its operations offline, and operator QatarEnergy has said it may need to declare force majeure on shipments five years out. Two major aluminum smelters, one in the UAE and one in Bahrain, have seen significant disruptions to their output. Oil refineries in Saudi Arabia and Kuwait have suspended operations after drone strikes.

In a March 25 client note, energy consultancy Rystad Energy estimated that the Gulf was facing a roughly $25 billion bill to repair key infrastructure.

Read more: What an extended war with Iran could mean for gas prices

“While some assets may be restored within months, others could remain offline for years,” Audun Martinsen, head of supply chain research at Rystad, said. “Beyond the status of the Strait of Hormuz, every day of damaged or shut-in infrastructure pushes pre-war production capacity further out of reach.”

The Strait of Hormuz — through which 20% of the world’s seaborne oil and LNG flows traverse — remains essentially closed, setting off an oil supply shock.

To the west, the Yemen-based Houthis announced in March that they were entering the conflict. This could threaten the 7 million barrels of oil per day that Saudi Arabia is redirecting to ship via the Red Sea.

MUSCAT, OMAN - MARCH 30: Oil tankers and high speed crafts sit anchored at Muscat Anchorage near the Strait of Hormuz on March 30, 2026 in Muscat, Oman. Several Chinese-owned vessels were reportedly able to transit the Strait of Hormuz today, the day after U.S. President Donald Trump said Iran would allow 20 ships to cross through the vital waterway. Maritime traffic through the Strait of Hormuz, which conveys about a fifth of the world's oil and gas, has mostly come to a halt after the joint U.S.-Israeli war with Iran that began on February 28. (Photo by Elke Scholiers/Getty Images) — Oil tankers and high-speed crafts sit anchored at Muscat Anchorage near the Strait of Hormuz on March 30 in Muscat, Oman. (by Elke Scholiers/Getty Images) · Elke Scholiers via Getty Images

“I don’t think you really compare this with any disruption in the past,” Gareth Ramsay, chief economist at BP, said at the recent CERAWeek conference. The disruption is “every analyst’s study piece, or worst nightmare that we thought could never happen.”

All of this has left the market guessing where the war goes from here.

In the hours after Trump’s Wednesday speech, oil prices soared and equity futures turned deeply into the red on the implication that the US will attempt to escalate the war before ending it.

The president signaled throughout last week that he may consider a US withdrawal without resolving the Strait of Hormuz, telling European and Gulf states to “take it, protect it, use it for yourselves.”

In a Truth Social post Friday morning, however, Trump wrote, “With a little more time, we can easily OPEN THE HORMUZ STRAIT, TAKE THE OIL, & MAKE A FORTUNE.”

Market strategists who spoke with Yahoo Finance have repeatedly pointed to difficulty in solving the largest Middle East conflict since the Iraq War. Even if the conflict were to end tomorrow, its damage and the fears it has instilled in the market will last for months, if not years, they said.

Steve Sosnick, chief strategist at Interactive Brokers, told Yahoo Finance that war isn’t like tariff negotiations, where the president can play fast and loose to look for leverage and preferred outcomes.

“You can’t get an oil tanker from the Persian Gulf to Singapore with the stroke of a pen,” Sosnick said.

Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake.conley@yahooinc.com.

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