As the U.S.-Israeli conflict with Iran enters its third week, the Trump administration is weighing the deployment of thousands of troops to protect the critical Strait of Hormuz. While global markets face volatility and the Indian rupee hits record lows, FedEx has surprisingly raised its profit outlook, signaling resilient demand. Meanwhile, Tehran is proposing a new maritime regime to levy transit fees on Western vessels in the strategic waterway.
Global markets and governments scrambled to respond to the economic fallout from the ongoing U.S.-Israeli war with Iran, now in its third week, as oil prices remained volatile, the European Union weighed emergency energy relief measures, and Washington considered military reinforcements to secure the Strait of Hormuz. Oil prices fell on March 20 as the United States and its allies moved to boost supply and restore shipping through the strait, though prices remained elevated and volatile. Iran, meanwhile, was considering legislation to impose transit fees and taxes on vessels passing through the waterway, a move that threatened to further complicate global energy flows. Financial markets from Mumbai to New York reflected the strain, with gold heading for its third consecutive weekly decline and the Indian rupee approaching an all-time low. The conflict, which began on February 28, 2026 with U.S. and Israeli strikes that killed then-Supreme Leader Ali Khamenei, has reshaped energy markets and geopolitical calculations across the globe.
Washington weighs troop deployments to secure the strait The Trump administration was considering deploying thousands of U.S. troops to the Middle East to secure the Strait of Hormuz and potentially Kharg Island, according to reporting by Reuters, as the war entered what analysts described as a possible new phase. Mohammad Mokhber, an advisor to Iran's supreme leader and a former acting president of Iran following the death of Ebrahim Raisi in 2024, stated that a "new regime" for the Strait of Hormuz would follow the war, one that would allow Iran to impose maritime restrictions on states that had sanctioned it. The Iranian parliament was simultaneously considering a bill to levy transit fees on ships passing through the strait, a measure that lawmakers framed as a response to Western economic pressure. Just under 100 ships passed through the Strait of Hormuz since the start of March, according to data analyzed by BBC Verify, underscoring the waterway's continued — if strained — operation during the conflict. The combination of potential Iranian restrictions and U.S. military posturing around the strait has kept energy traders on edge, even as prices pulled back slightly from recent highs.
The Strait of Hormuz has long been regarded as one of the world's most critical chokepoints for global energy supply, connecting the Persian Gulf to the Gulf of Oman. The waterway runs approximately 167 kilometers in length, with Iran on its northern coast and the Musandam Peninsula — shared by the United Arab Emirates and Oman — on its southern coast. Iran has periodically threatened to close or restrict the strait during periods of heightened tension with Western powers, though it has never done so. The current conflict began on February 28, 2026, when U.S. and Israeli forces launched strikes on Iran under Operation Epic Fury, killing Supreme Leader Ali Khamenei. Mojtaba Khamenei, his son, was appointed as the new Supreme Leader on March 9, 2026.
EU eyes tax cuts as energy shock reshapes European policy The European Union was exploring emergency energy tax cuts and subsidies to cushion the blow of the energy shock triggered by the war, according to Reuters. The measures under consideration reflected the scale of disruption that the conflict had introduced to European energy markets, which remain structurally dependent on Persian Gulf supply chains. The EU's deliberations came as policymakers across the bloc faced pressure from industry and consumers alike to act quickly to contain rising energy costs. FedEx, the U.S. logistics giant, offered a contrasting signal from the corporate world, raising its profit outlook and citing resilient global demand despite the conflict. The company's revised guidance suggested that, at least in some sectors, supply chains had adapted to the disruption more quickly than initially feared. The divergence between corporate resilience and government emergency planning illustrated the uneven economic impact of the war across different parts of the global economy.
Gold slides, rupee weakens as Fed hawkishness compounds war fears Gold was on track for its third consecutive weekly decline as of March 20, pressured by a hawkish U.S. Federal Reserve and a strengthening dollar, according to Reuters. The Indian rupee was approaching an all-time low, driven by fears over oil prices, though a partial retreat in crude from its recent highs offered some relief to currency traders. Indian shares showed signs of recovery after a steep drop, with the easing of oil prices from their peaks providing a degree of breathing room for equity markets. Oil prices themselves retreated on March 20 as the United States and allied nations moved to boost supply and work to reopen the Strait of Hormuz to normal shipping traffic, though bond markets continued to struggle amid hawkish rate repricing. The interplay between the war's energy shock, central bank policy, and currency pressures created a complex and volatile environment for investors across emerging and developed markets alike. Analysts noted that the situation remained highly fluid, with any escalation around the Strait of Hormuz capable of reversing the modest price declines seen on March 20.
Gold: third weekly fall, Oil: retreating from highs, Indian rupee: near all-time low, Indian shares: partial recovery after steep drop