Dr. Michael Batu is an associate professor in the department of economics at UFV.
On Feb. 28, 2026, the United States and Israel launched a series of strikes against Iran with the stated aim of regime change and crippling Iran’s nuclear program. In the days since the initial strikes, the conflict has continued to escalate, with Iran retaliating against Gulf Nations. Over a thousand people have lost their lives in Iran due to U.S. and Israeli strikes. Recently, Iran effectively closed the Strait of Hormuz, a vital chokepoint at the end of the Persian Gulf, which exports over a quarter of the world’s oil. This has led to concerns of how this could further exacerbate economic issues that are already present. Dr. Batu spoke with The Cascade and explained the global implications the closure of the Strait of Hormuz has as it supplies almost a quarter of the world’s oil.
“About 20 per cent of global oil supply goes [through] this narrow body of water. Now, since the operation began, there’s been fewer and fewer ships that are passing.”
Regarding Canada and how this could impact citizens, Dr. Batu speculates that if the closure is maintained, consumers will likely begin to see the effects in rising costs of shipping and gas, but also an increase in grocery prices and online retail services such as Amazon.
“Let’s say you’re buying stuff from China, coming here [to Canada] Of course, those items don’t swim in the ocean by themselves. They have to be [brought] into ships and those ships make use of petroleum [and] crude oil. So, shipping costs will go up, not to mention, food.”
However, it could turn into a benefit if Canada is able to sell its natural energy to balance out the strait’s closure.
“Energy prices are determined globally, not within Canada, so we can get the benefit from that. So higher crude oil prices would [be] good for Alberta, Saskatchewan, [and] Newfoundland, because these are the provinces that produce petroleum energy.”
Dr. Batu thinks that the next escalation in the war could be a targeted strike on Gulf Nations’ desalination plants, which provide the majority of drinkable water to countries such as Saudi Arabia, Kuwait, and Qatar.
“You know what [Iran is] going to do next? Water. These countries in the Middle East, they don’t have fresh water … they have these desalination plants all over. What [they are] going to do is put extract drones with those desalination plants and voilà, there’s no more fresh water here.”
On Mar. 8, the U.S. struck an Iranian desalination plant, cutting off drinkable water to over 30 villages. Later that day, Bahrain reported that an Iranian drone damaged a desalination plant in the UAE.
Furthermore, Dr. Batu was skeptical that the United States goal of regime change was even possible. Iranian Supreme Leader Ayatollah Khamenei was killed during the strikes, and there was an expectation that this would bring about Iranian surrender, as with Venezuela. However, as Dr. Batu explained, Iran’s theocratic regime cannot be dismantled so easily. The killing of Khamenei, while celebrated by many Iranians, has also made him a martyr for his supporters, and the recent appointment of his son as the new Supreme Leader has made the possibility of regime change appear distant.
“They took off the head, the regime still functions … If the mission of the objective is to eliminate the regime, and there are so many to eliminate, they’re gonna be there for a while.”
Batu further argued that the war could be looked at through the lens of political economy, pointing to the way the American military industrial complex has often profited from prolonged conflict. Stocks such as Lockheed Martin and Northrop Gumman have increased since the war.
“These companies are part of the military industrial complex of the United States. Whenever there are things happening like this, always follow the money. We can see that it’s in their best interest [and], I would expect this to continue on simply because these companies are profiting from it.”
As the war progresses, it will become clearer what the economic consequences of the closure will be.
