A sign reflects the current gas prices at a filling station in Garland, Tex., on Monday.Tony Gutierrez/The Associated Press
At midnight, my gas station took a direct hit from Iran’s war strategy.
When I started filling my tank at 11:59 p.m. on Friday, the price was $1.40 a litre. But as the clock ticked and late Friday became early Saturday, the price on the electronic roadside sign suddenly jumped by 16 cents.
It happened at gas stations down the street, across the country and around the world.
The reason is the war in the Middle East, but above all how Iran has chosen to wage war. Its strategy has changed dramatically since the last time Israel and the United States attacked it, in June of 2025.
Then, Iran’s drones and missiles mostly targeted Israel – and most were shot down. Those that did get through, though they killed and injured a relatively small number of Israelis, did not change Israel’s strategic calculus. Nor did they deter the United States from joining the campaign.
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Iran now has a new approach. It’s targeting the economies of its neighbours across the Persian Gulf, which together are the world’s largest exporter of oil and natural gas. That means it is also targeting the global economy.
Tehran lacks the means to defeat the U.S. and Israel in a straight military clash. However, it has weapons that can threaten its neighbours’ main industry, thereby squeezing one of the world’s carotid arteries. Targeting the Gulf states – despite those countries having declared their neutrality before the war started – is a way of indirectly putting pressure on Washington.
Oil prices rose above US$100 a barrel late on Sunday night on fears of wider conflict, but retreated sharply on Monday afternoon after U.S. President Donald Trump told CBS News that the war is “very complete, pretty much.” (A few hours later, he muddied the message by saying that the U.S. had not yet “won enough.”)
The U.S. and Israel have the ability to drop a bomb or a missile anywhere in Iran. The Iranians have apparently not shot down a single American or Israeli manned aircraft, while the Iranian air force is largely destroyed, and its navy’s major ships are mostly sunk.
However, Iran has day after day hit back at Kuwait, Bahrain, Qatar, Oman, Saudi Arabia and the United Arab Emirates. These countries have considerably larger and more modern air forces than Iran, as well as extensive anti-aircraft and anti-missile defences. Iran has nevertheless been able to get through with some missiles, and many drones.
The Gulf states do not appear to be well prepared to deal with widespread drone attacks, nor are the Americans. Iran’s drones are cheap and simple technology – lawnmower engines with wings. It means that, in addition to being small and hard to spot, they’re easy to manufacture.
The Iranians have large stocks of cheap drones and can build more, whereas the Gulf states have limited supplies of very expensive interceptors, and limited ability to replenish their supply, since production lines in the U.S. are slow and far away.
IEDs – improvised explosive devices – are the weapons that wrecked the American-led attempt to pacify Iraq and Afghanistan. Iran’s drones are the IEDs of the sky.
The direct damage done by drones to infrastructure in the Gulf has been limited, but every day has brought new hits on sensitive targets, and new concerns about what the Iranians might hit tomorrow.
On Monday, Bahrain’s state oil company declared force majeure and suspended shipments after a strike on the country’s largest oil refinery. Force majeure means that a business is no longer liable for failing to meet contractual obligations, in this instance the obligation to ship oil. It was also invoked last week by producers in Kuwait and Qatar.
The Gulf states, with economies built on oil and gas but also tourism, banking, tech and above all trade, need peace and stability. That’s why all of them declared their neutrality. They recognize the Islamic Republic as the primary threat to their stability, and hence their prosperity.
The Strait of Hormuz, through which normally passes 20 per cent of the world’s oil, is only about 33 kilometres wide at its narrowest point. That’s less than the width of Lake Ontario. From the American side of the lake, you can clearly see the skyscrapers of downtown Toronto; from the Iranian side of the Strait of Hormuz, you can clearly see and target ships sailing through it.
It’s why almost no traffic is currently moving through the Strait.
It’s notable that the Americans have studiously avoided hitting Iran’s oil infrastructure. They could easily bomb or capture the country’s main oil terminal at Kharg Island, but have refrained from doing so.
In fact, the Trump administration is reportedly unhappy with Israel’s strikes on oil facilities in Tehran last week. Republican Senator Lindsey Graham publicly called on Israel to avoid any more destruction of Iranian oil infrastructure.
Both sides in this war have the tools to do a lot more damage to the other. Both now know it.
A longer, wider and more economically costly war is possible. But the path is also open for a quick end to the fighting. Each of the belligerents would claim victory – Israel and the U.S. for having degraded Iran’s military; the Iranian regime for having survived.