The Biggest Losers of the Iran War So Far: How the Conflict Spilled Past Iran's Borders

The whole world is currently reeling from the effects of the Iran War. Fuel prices are jumping and stock markets are plummeting like two sides of a demonic seesaw. It has been not quite a month since the first attacks were launched, but even in that short a span, the war’s impact has spilled far past Iran’s borders. From drone strikes and spiking oil prices to supply chain disruption and looming food shortages, it seems no corner of the globe has been left untouched.

The unsettling part is that there is currently no telling whether the conflict will last another week, another month, or, god forbid, another year. The longer it runs, the more pain piles up on the worst-affected regions, pain that ranges from a minor ache to screaming economic agony.

This is not a story about the three belligerents alone. It is a story about everyone else, the bystander nations and economies caught in the blast radius of a war they did not start and cannot end.

Key Takeaways

The Iran War, less than a month old, has already pushed global fuel prices up and stock markets down, with effects far beyond the three belligerents: the US, Israel, and Iran.
Every Gulf state — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE — has been hit by Iranian retaliatory strikes; tens of thousands have fled Dubai and just shy of two dozen GCC civilians have been killed, around three hundred injured, most of them foreign workers.
Strikes on Gulf desalination plants threaten civilian water survival; a leaked 2008 US Embassy cable warned that destroying one plant could force Riyadh to evacuate within a week.
Iran’s closure of the Strait of Hormuz — through which roughly 20 percent of the world’s oil passes — has disrupted global energy flows and could shrink Qatar and Kuwait’s economies by as much as 14 percent if the war runs through April.
India faces a compounding fuel, remittance, and aviation crisis; the rupee hit an all-time low, and a $50 billion annual remittance stream from Gulf workers is at risk.
A drone strike on the UK’s Akrotiri base in Cyprus marked Iran’s first successful hit on EU-adjacent soil, drawing European warships and raising fears of a Greek-Turkish escalation on the divided island.
Lebanon may be faring worst of all: renewed Israel-Hezbollah fighting has killed nearly a thousand Lebanese, displaced over a million, and threatens a 10 percent economic contraction.

As the conflict continues to spiral, the nations described below are, so far, suffering the most.

The Gulf States: Strikes, Water, and a Shattered Illusion

Outside of the three belligerent nations, the most obviously impacted countries have so far been Iran’s neighbors in the Gulf. Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates have all been on the receiving end of retaliatory air strikes by Iran.

Consider Dubai. Over the decades, the city built a reputation as a hub of global finance, a luxurious tourist destination, and a home away from home for anyone rich enough to afford it and willing to overlook the Emirates’ facilitating a genocide in Sudan. Now residents and tourists alike monitor their phones for text notifications warning of potential missile threats in their area.

The UAE has taken the brunt of Iranian drone strikes since the beginning of the month, and the illusion of Dubai as a luxurious safe haven has been shattered. The ruling sheikhs have scrambled to censor social media influencers sharing content that, in their words, “contradicts official announcements or that may cause social panic,” and they insist that the sound of missiles being intercepted midair is “the sound of safety.”

Over the last three weeks, tens of thousands of residents and tourists have left Dubai. Those unable to flee have weathered the storm as best they can. If attacks continue, the tourism economy will most likely keep contracting, sharply cutting income for locals, for the large population of migrant workers, and for international businesses headquartered in a city that built its entire reputation on the idea that it was untouchable.

Water as a Weapon: The Desalination Threat

The Gulf’s desalination plants supply tens of millions of people with drinking water. The region is a hot, dry desert and relies on these plants to turn seawater into something humans can actually drink. Already, Kuwait and the UAE have reported missile-related damage to desalination plants, and two plants in Bahrain have been struck, hitting some thirty villages’ supply of fresh water.

Deliberately targeting desalination infrastructure would be a serious escalation. As Abdullah Baabood, an Omani academic at Waseda University in Japan, put it, “striking them risks turning a military confrontation into a direct threat to civilian survival.” Any significant damage to the Gulf’s ability to produce water for its residents would be a catastrophe so vast that the only fitting descriptor would be “Biblical.”

To put it in concrete terms, consider a leaked 2008 cable from the US Embassy in Riyadh. It warned that, at that time, a single desalination plant provided the Saudi capital with more than 90 percent of its drinking water. If that plant were destroyed or even significantly damaged, the entire capital would have to evacuate within a week. As the cable put it, “the current structure of the Saudi government could not exist” without the plant.

For Bahrain and the rest of the Gulf Cooperation Council, the damage to these plants is not an inconvenience. It is an existential threat.

Justifications, Casualties, and Escalation

Iran insists it is not bombing its neighbors for the hell of it. Tehran claims it is justifiably targeting US installations in the region — embassies, military bases, and air defense systems used to protect American interests. But it has not limited itself to military targets or US-operated sites. Since the 28th of February, oilfields, desalination plants, ships, and ports across the GCC have all found themselves on the wrong end of a drone strike.

These pieces of infrastructure are vital. Beyond fresh water, they provide food and energy and support economic activity for millions.

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As this account was being prepared, the US and Israel escalated further by attacking Iranian operations at the underwater South Pars field, a massive natural gas reserve whose ownership is shared by Qatar and Iran. In a word, this was bad. Iran retaliated almost immediately, striking Saudi, Emirati, and Qatari oil terminals and oil fields, shutting down Qatari operations and forcing Gulf nations to confront an uncomfortable new reality: that they might have to step into the conflict themselves.

Iran has apologized to its neighbors for the ongoing attacks, maintaining that its true target is American assets. But even if that were true, it would do little to undo the damage already done to infrastructure, diplomatic relations, and human lives. Precise figures are hard to come by at this stage, but general counts suggest just shy of two dozen civilians across the GCC have been killed in Iranian strikes so far, with around three hundred injured.

The majority were foreign workers supporting families back home in places like Pakistan, Afghanistan, and Bangladesh. Whatever the official line from Tehran, the outcome is the same: those dead civilians are not coming back.

The Strait of Hormuz and the Economic Squeeze

Iran has barred entry to the Strait of Hormuz — the 21-mile stretch of ocean passage through which some twenty percent of the world’s oil passes — for all but what it calls “non-hostile ships.” Individual vessels have been granted passage, and Iran’s own ships are still exporting upwards of one million barrels a day. But the rest of the world must press through negotiations to secure passage, a process still ongoing.

The impact on the global economy is already massive. Resource extraction, refinement, and exports from the region have been majorly disrupted and in some cases halted altogether. While some Gulf states are anticipated to fare better than others, Qatar and Kuwait’s economies are expected to contract by as much as 14 percent if the war continues through April. Investments and investment proposals by the UAE, Qatar, and Saudi Arabia on the order of trillions of dollars may be reviewed and possibly rescinded as the region’s priorities shift.

Imports are a parallel worry. The Gulf imports about 85 percent of its food, and the strait’s closure has forced the region to lean on its food stocks, which will last around five months. With no resolution on the horizon, the world is bracing alongside the Gulf for the continued fallout.

India: A Fuel Nightmare

While the headlines have focused on the bombs falling in the Persian Gulf, there has been less discussion of the implications for South Asia. India and its neighbors are, thankfully, not subjected to the same nightmare fuel unfolding in the Gulf. Instead, they are facing down another kind of nightmare: a fuel nightmare.

India imports more than 85 percent of its domestic oil needs, and about half of those imports must pass through the Strait of Hormuz. The closure, and the corresponding spike in oil prices, is putting incredible pressure on the Indian economy. Pankaj Srivastava, senior vice president at the Norwegian energy research firm Rystad Energy, has stated that even a few dollars’ increase in oil prices per barrel will “weigh on the balance of payments and could put further pressure on the rupee.”

Beyond crude, India faces a significant shortage of liquefied petroleum gas. Indian homes and restaurants rely on this resource, forty percent of which is imported from the Middle East. The strait’s closure has driven restaurants to slash hours and trim menus as shortages of fuel and cooking oil take hold. In response, Mumbai has temporarily lifted its ban on restaurants burning coal, backsliding on its air-quality and pollution-control standards — though, to New Delhi’s credit, it is generally good form in geopolitics to make sure your people do not go without food.

India’s Stranded Workers and a Plunging Rupee

The upheaval is rippling well beyond fuel. Each year, Indian workers living in the Gulf send a whopping $50 billion back home to support their families. Now they find themselves living in something that is not quite a warzone yet, but certainly not the island of stability the region once was. And they cannot simply up and leave now that missiles are flying.

Jet fuel prices in India have spiked since January, and insurance rates for any craft entering the Middle East, by air or by sea, are at an all-time high. Some of that rising cost is being passed to consumers as fuel surcharges on already expensive tickets. Even those who can afford to leave fear they will not be able to support themselves and their families once gone.

Many are stranded regardless of finances. In peacetime, the Gulf is by far India’s largest aviation corridor; roughly half of all flights to or from India rely on Gulf airspace and airports, much of it serving the roughly 9 million Indian nationals across the GCC. Now the combination of the conflict and the closure of Pakistani airspace to Indian flights means thousands of flights between India and Europe have been cancelled or rerouted, stranding passengers and adding hours of costly airtime.

India is not alone. Much of South and Southeast Asia is in the same boat. Thailand has directed office workers to work from home one day a week to cut commuting costs, and the Philippines — which imports 98 percent of its oil from the Gulf — has declared a national energy emergency. For India itself, the rupee saw its sharpest one-day plunge in four years last week, hitting an all-time low of 93 paisa to the dollar and looking like it may fall further.

Facing these mounting crises, the Indian government now confronts the choice of whether to turn to Russian oil to bridge the gap.

The Cyprus Situation: A Frozen Conflict Reawakens

Cyprus has been torn between the Republic of Cyprus in the south and the Turkish Republic of Northern Cyprus — a state recognized only by Turkey — since 1974. Despite its small size and internal division, the island holds outsized strategic importance for its European allies. Its location in the eastern Mediterranean gives NATO a foothold in the Middle East. The UK established two military bases there in 1960 and has maintained a presence for decades.

In the war’s early days, a drone launched from Lebanon — likely by Hezbollah, but possibly by an IRGC unit stationed in the area — slipped past British defenses to hit the base at Akrotiri, damaging a runway. There were no injuries, but it was still a big deal. The attack marked the first time Iran has successfully struck an EU nation, albeit technically the sovereign soil of non-EU Britain, and Europe responded with predictable alarm.

The UK has now begun allowing US forces to use its bases on the island, and on the tenth of March the HMS Dragon charted a course from her home base in Portsmouth to the eastern Mediterranean. Visiting Cyprus shortly after the strike, French President Emmanuel Macron declared that “when Cyprus is attacked, it is Europe that is attacked,” and pledged additional warships to bolster the island’s anti-drone and anti-missile defenses.

Cyprus, meanwhile, was understandably furious at this violation of its airspace by Iranian forces aiming at British targets. Some civilians took to the streets to demand the removal of British forces. After all, if Britain is not holding up its end of the bargain — providing security for the Cypriot people — why continue to host them?

Cyprus and the Turkish Shadow

Nicosia reconsidering the value of British forces is, perhaps, a loss for Britain’s standing in the region. But even if Cypriots wanted to, kicking British forces off the island would not be straightforward. Any further boiling over of the war poses another acute risk: the possibility that it could be used to justify a Turkish military buildup on the island.

Cyprus is a frozen conflict zone, split between the Republic of Cyprus government in the south and the Turkish Republic in the north. The population has been deeply divided between those politically and culturally aligned with Greece in the south and those aligned with Turkey in the north since the 1950s, when tensions escalated into a series of internal conflicts. After decades of violence, during which the opposing sides received support from the Greek and Turkish governments, a tense peace took hold when the UN established a “Green Line” dividing the two sections of the island.

Broadly, the British presence in the south is meant, at least in part, to serve as an insurance policy against further Turkish incursion against the Cypriot government. In the wake of the Iranian strikes, Turkey smells blood in the water.

According to a recent analysis by Gönül Tol, a Senior Fellow at the Middle East Institute, “Turkish officials fear that the growing military buildup in the Eastern Mediterranean could further tilt the regional balance against Turkey.” Greece and Turkey have both responded to the strike on Akrotiri by reinforcing their presence on the island. Ankara has deployed half a dozen fighter jets to the northern half, ostensibly for protection against further Iranian attacks, while Athens has deployed missiles, F-16s, and two frigates to the Republic of Cyprus. Both sides have their hackles raised, and some form of escalation is not totally outside the realm of possibility.

From Nicosia’s perspective, none of this is good. Cyprus has been targeted in a conflict it wants nothing to do with, its ally failed to prevent that targeting, and the island is now hosting more of the very military assets that got it targeted in the first place. In a televised address after the strike, Cypriot President Nikos Christodoulides stated: “Our country does not participate in any way and does not intend to be part of any military operation. We remain committed to the humanitarian role that we have served all this time.

Always as part of the solution and never as part of the problem. We do what we have to do responsibly.” Because the attack came from Lebanese airspace, Christodoulides has remained in contact with Lebanese President Joseph Aoun to discuss the situation.

Lebanon: Possibly Faring Worst of All

The Lebanese government has struggled for years to keep the Iran-aligned paramilitary group Hezbollah in check. Despite ceasefire and disarmament agreements, Hezbollah remains a significant player in the region.

This became obvious at the beginning of March, when — in retaliation for the death of Iranian Supreme Leader Ali Khamenei — the group retook strategic positions it had previously yielded to the Lebanese Armed Forces south of the Litani River, near the border with Israel, and launched barrages of missiles, rockets, and drones against Israeli territory. The attacks triggered an Israeli response that has left nearly a thousand Lebanese citizens dead. According to a March 19th UNICEF report, at least one hundred and sixteen of those killed were children.

The same report details disruptions at hospitals, dozens of attacks on emergency medical service workers, school closures, and the danger faced by those forced to flee their homes. The war has displaced over a million Lebanese civilians, along with a number of Palestinian and Syrian refugees living in Lebanon, leaving families to shelter in cars and tents as shelters overflow.

Lebanon’s Economic Reckoning and Israel’s Vow

The reignited hostilities would have been a major headache for Beirut even without the death toll and humanitarian crisis. Dragged back into war, the nation is bracing for an economic contraction of as much as ten percent, having barely recovered from the previous round of fighting in 2024.

The Lebanese government has repeatedly appeared weak and ineffective in its attempts to disarm Hezbollah in the sixteen months since that last war. After the group launched its attacks on Israel at the start of this month, Lebanese Prime Minister Nawaf Salam declared Hezbollah’s military activity illegal and demanded the militia relinquish its weapons. Hezbollah, predictably, responded with the equivalent of “come and take it,” and threatened a confrontation with the Lebanese government once the war with Israel ends.

Israeli leaders have vowed to continue their offensive until Hezbollah is disarmed. Officially, the ongoing strikes are intended to destroy “terror infrastructure” and prevent Hezbollah’s return to the area. Bridges crossing the Litani River, connecting southern Lebanon with the rest of the country, have already been destroyed, after Israel’s military claimed they were being used by Hezbollah.

Israel’s maneuvers are paired with rhetoric promising even more destruction, signaling that this campaign will likely extend beyond the US-Israeli hostilities with Iran. Israel’s Finance Minister Bezalel Smotrich — a man not noted for his calm rhetoric — said in early March that the south of Lebanon will “become like Khan Younis,” referencing a Gaza city that has by now been largely reduced to rubble.

Continuing Fallout: Russia, the Horn of Africa, and East Asia

The regions above are not the only ones affected. Others are having far more mixed experiences. Take Russia. The US has waived sanctions on Russian oil exports until at least April 19th in an attempt to soothe global markets.

That, combined with the spike in oil prices, has already helped stabilize a Russian economy that had been looking increasingly fragile. Even another month of sanctions relief and high prices would be enormously beneficial for the Russian war effort in Ukraine, which has absorbed an incredible amount of resources over the last four years. Yet the economic boost does not change the fact that Moscow looks weak in its inability to militarily back its Iranian allies. After failing to help its allies in Armenia in 2023, Syria in 2024, Iran in 2025, and now Venezuela and Iran again in 2026, the Kremlin no longer looks like even a remotely credible security partner.

Then there is the Horn of Africa, which could be a whole video in itself. The UAE, Qatar, and Saudi Arabia have been heavily involved in the region in recent years, providing funding, weaponry, and mediation for various factions while advancing their own agendas. Now the situation has changed. Ethiopia, Sudan, and Somalia face something of a power vacuum as their patrons in the Gulf turn their attention to more pressing matters.

Sudan may be particularly affected. While the Sudanese government’s forces are backed by Turkey, Egypt, and Saudi Arabia, the RSF paramilitary group relies primarily on the UAE, both for supplies and for laundering the gold produced by mines under its control. With the Emirates’ attention focused much closer to home, the militia is likely to face a significant drop in external support.

Finally, there are the nations — mostly in East Asia — that stand to be badly impacted but have not quite got there yet. Japan, Taiwan, and South Korea, among others, rely heavily on Middle Eastern fuel; roughly 90 percent of the oil and gas passing through the Strait of Hormuz is bound for Asian nations. Most East Asian states have enough fuel reserves to last a few more weeks, but if the strait does not reopen soon, everything from heavy industry to street vendors could face temporary or longer-term closures.

Japan holds more than eight months of oil in strategic reserves, and Brunei and Malaysia can produce and export their own, but many Asian states could run out within four weeks. Nations across the region are imposing mitigation policies; among them is South Korea’s Prime Minister Kim Min-seok, who is setting up an emergency economic task force to prepare for “worst-case scenarios.”

The war between the US-Israel coalition and Iran is now nearly a month old, with little indication that an end is remotely in sight. For those involved, and for the many who wish they were not, things could yet get worse before they get better.

Presented by

Simon Whistler

Simon Whistler is one of YouTube's most prolific educational creators. WarFronts is his deep dive into military history and conflict analysis.

Frequently Asked Questions

Which countries have been hit hardest by the Iran War so far?

Outside the three belligerents — the US, Israel, and Iran — the Gulf states have been most obviously impacted, with every member of the GCC struck by Iranian retaliatory fire. India faces a severe fuel and economic crisis, Cyprus was hit by a drone strike on the UK’s Akrotiri base, and Lebanon may be faring worst of all, with nearly a thousand dead and over a million displaced.

Why are the Gulf’s desalination plants such a critical vulnerability?

The Gulf is a hot, dry desert region that relies on desalination to turn seawater into drinking water for tens of millions of people. Plants in Kuwait, the UAE, and Bahrain have already been damaged. A leaked 2008 US Embassy cable warned that destroying a single plant supplying over 90 percent of Riyadh’s water would force the capital to evacuate within a week, making such strikes an existential, not merely military, threat.

What is the significance of the Strait of Hormuz closure?

Roughly 20 percent of the world’s oil passes through the 21-mile strait, which Iran has closed to all but “non-hostile ships.” The disruption has spiked global oil prices, halted some exports, and could shrink Qatar and Kuwait’s economies by as much as 14 percent if the war runs through April. About 90 percent of the oil and gas transiting the strait is bound for Asian nations.

How is the war affecting India specifically?

India imports more than 85 percent of its oil, about half of it through the Strait of Hormuz, so the closure has driven up fuel prices and triggered a liquefied petroleum gas shortage that has restaurants cutting hours. The rupee hit an all-time low of 93 paisa to the dollar, a $50 billion annual remittance stream from Gulf workers is at risk, and thousands of flights have been cancelled or rerouted, stranding nationals abroad.

What triggered the renewed Israel-Hezbollah fighting in Lebanon?

In retaliation for the death of Iranian Supreme Leader Ali Khamenei, Hezbollah retook positions south of the Litani River and launched missiles, rockets, and drones at Israel in early March. Israel’s response has killed nearly a thousand Lebanese, including at least 116 children per a UNICEF report, displaced over a million people, and Israel has vowed to continue striking until Hezbollah is disarmed.