The Hidden Economic Cost of Iran’s Threat to Persian Gulf Energy Flows
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President Trump has chosen to act in response to the imminent threat posed by Iran’s advancing nuclear weapons program, its expanding ballistic missile arsenal, and its long-standing campaign of terrorism and regional destabilization. This report examines an additional and often overlooked consequence of that behavior: how Iranian geopolitical risk has inflated global oil prices and slowed economic growth for decades.
Because roughly a quarter of the world’s oil supply transits the Persian Gulf—much of it through the Strait of Hormuz—energy markets continuously price the risk that conflict, sabotage, terrorism, or maritime disruption could interrupt these flows. The result is what this report defines as the Iran Terror Premium—the persistent geopolitical risk component embedded in global oil prices that reflects the probability of Iranian-related disruption to Persian Gulf energy flows.