War in Iran drives oil past $120, threatens Finland

The United States-Israeli war on Iran and Tehran’s retaliatory strikes have upended global financial and energy markets, according to research from seven sources. The de facto closure of the Strait of Hormuz and damage to regional infrastructure have produced the largest disruption to the global oil market in its history, according to the International Energy Agency. About 25 to 30 percent of global oil and 20 percent of liquefied natural gas pass through the Strait of Hormuz, according to the same research, though other sources say about 20% for both oil and LNG. Brent crude oil price was $106 per barrel as of Monday morning, up more than 40% from $72 on February 27, and later surged past $120 per barrel following the closure of the Strait of Hormuz on 4 March 2026, according to research. Liquefied natural gas (LNG) prices have risen by almost 60% since the start of the war, according to Muyu Xu, senior crude oil analyst at Kpler. The biggest risk right now is the war in Iran; a long-term shutdown of the Strait of Hormuz would be a serious setback for Finland’s economy, according to Varma CEO Risto Murto, as reported by exelerating.com.

Finland's long-term economic stagnation and structural challenges compound the threat. Finland's living standard, measured by GDP per capita, has stagnated at the 2007 level, according to major media reports. Finland has fallen behind other Nordic countries, and in 2040, every fourth Finn will be over 65 years old, according to the same reports. The need to streamline and cut services is large due to public debt burden and defense spending, and Finland has a huge repair debt on transport routes and public and private buildings, because money is lacking or detached houses lose value – i.e., Finns lose their central wealth, according to major media. Large investments into pension funds are at risk of disappearing overseas if Finland’s economic growth doesn’t get a boost, according to Risto Murto, incoming CEO of Varma, as reported by yle.fi.

Declining living standards and a housing squeeze are also expected. According to Ilta-Sanomat, Risto Murto warned Finns to prepare for a decline in living standards and smaller homes. Housing spaciousness grew for a long time, but in large cities development has stopped or slightly reversed, according to major media. In the future, subsidized housing will likely be less available, and at least some will live more cramped, according to the same reports. In the 2010s, the old subjective right to full-time daycare was restricted, reflecting broader austerity.

Expert perspectives offer some nuance. According to Ilta-Sanomat, University of Helsinki economic history professor Jari Eloranta considers the comparison to the 1950s exaggerated and believes in a correction. According to the same source, Aalto University assistant professor Frank Martela reminded that well-being does not depend only on money. Researchers see community and simpler lifestyle as an opportunity to adapt to scarcer times, according to major media.

The detailed impact of the war on oil and LNG markets is severe. Iranian attacks on vessels passing through the Strait of Hormuz have dramatically reduced traffic in the channel, according to research. QatarEnergy suspended its LNG production on March 2 after an Iranian drone attack, and declared force majeure on all exports after the closure, according to research. Oil production of Kuwait, Iraq, Saudi Arabia, and the UAE collectively dropped by 6.7 million barrels per day by 10 March, and by at least 10 million barrels per day as of 12 March, according to research. About 84% of crude oil and 83% of LNG that passed through the Strait of Hormuz in 2024 was bound for Asia, according to the US Energy Information Administration. Energy importers in Asia and Europe are bearing the brunt of higher fuel and input costs, according to research. Low-income countries are especially at risk of food insecurity due to higher food and fertilizer prices, according to the same research. The maritime blockade triggered a grocery supply emergency across Gulf Cooperation Council states, with 70% of food imports disrupted by mid-March, and Iranian strikes on desalination plants threatened drinking water in Kuwait and Qatar, according to research. The war could shape the global economy in different ways, all leading to higher prices and slower growth, according to research.

Political and military dimensions of the conflict are profound. The coordinated attacks on Iranian military, nuclear, and leadership sites, including the reported killing of Supreme Leader Ayatollah Khamenei, represent a profound shock to Iran’s political system, according to research. US President Donald Trump’s direct address to the Iranian people, 'take over your government, it will be yours to take', makes regime change the explicit goal, according to Trump. Iran retaliated within four hours, hitting Israel, US bases in Bahrain, Kuwait, and Qatar, and civilian infrastructure across the Gulf, according to research. President Trump said the war could last up to four or five weeks.

Financial market reactions have been dominated by the war. Since the end of February, markets have been dominated by the impact of the war on energy prices and supply, according to Deputy CEO Markus Aho, as reported by exelerating.com. Varma’s investments remained stable in January–March 2026, with a return of -0.1%, according to research.

Economic spillovers to the UK are also projected. A temporary jump in energy prices would lead to a 0.3 percentage point increase in UK inflation and negligible impact on GDP for 2026, according to research. A one-year persistent shock would push UK inflation up by 0.7 percentage points and dampen output growth by 0.2% in 2026, according to the same research. If the shock persists, the Bank of England could be forced to raise interest rates back above 4%, according to research.

Uncertainties remain about the conflict and its economic effects. The war in the Middle East has caused serious disruption to the economies of the most directly affected countries, including damage to infrastructure and industries, according to research from seven sources. The exact current Brent crude oil price and its evolution over time are unclear, as reports vary between $106 and $120 per barrel. The precise percentage of global oil and LNG that transits the Strait of Hormuz is also disputed, with some sources citing 25-30% for oil and 20% for LNG, while others say about 20% of global oil and gas supplies. How long the conflict will last and the actual oil price trajectory remain unknown. If the conflict is short-lived, oil and LNG prices would fall back sharply with Brent crude reaching $65 per barrel by year-end, according to Neil Shearing and team at Capital Economics. In case of a longer war, oil prices could rise to around $130 per barrel in Q2, according to a Capital Economics report. The status of the reported killing of Supreme Leader Ayatollah Khamenei and its impact on Iran's political stability is also unconfirmed. How Finland's economy will specifically be affected by the war and the Strait of Hormuz closure is still uncertain.