US-Israeli strikes trigger energy disruption, aviation shutdowns and a strategic supply shock, raising risks for Asia’s growth engines and Malaysia’s investment outlook.
BY TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, March 1 – History does not always announce itself. On February 28, 2026, it arrived before dawn.
The United States and Israel launched a coordinated military campaign against Iran — codenamed Epic Fury — killing Supreme Leader Ayatollah Ali Khamenei, prompting Iranian missile retaliation across six Gulf nations, closing the Strait of Hormuz and forcing the suspension of operations at Dubai’s airports.
Before oil markets could reopen, the risk architecture underpinning the global economy had shifted.
Iranian state media confirmed Khamenei’s death following an Israeli strike on his Tehran compound. IRIB announced, “The Supreme Leader of Iran Has Reached Martyrdom.”
Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in his office on Saturday morning during a US-Israeli attack.
The government declared 40 days of mourning. President Donald Trump said military action would continue “uninterrupted throughout the week, or as long as necessary.” Iranian state media reported at least 201 people killed and more than 700 injured nationwide.
Politically, the implications are significant but procedurally defined. Under Iran’s constitution, an interim three-member council assumes authority while the Assembly of Experts appoints a successor. Analysts caution against assuming institutional collapse. As Barbara Slavin of the Stimson Center told Al Jazeera: “There will probably be a council that will be set up to run the country. It may already have been running the country.”
If leadership transition introduces uncertainty, the more immediate disruption lies in energy flows.
Within hours, Iran’s Revolutionary Guard declared the Strait of Hormuz closed. The UK Maritime Trade Operations agency confirmed commercial vessels had been notified. Tankers anchored rather than transit, and war-risk insurance premiums were repriced almost instantly.
According to the US Energy Information Administration, roughly 20 million barrels of crude oil per day nearly one-fifth of global consumption — transit the Strait, alongside about 20% of globally traded LNG. Saudi Arabia and the UAE together possess bypass capacity of only about 2.6 million barrels per day, according to Columbia University’s Center on Global Energy Policy. A sustained closure would leave more than 14 million barrels daily without viable routing.
JP Morgan estimates Brent crude could rise above US$120–130 per barrel in a prolonged blockade. Bloomberg Economics notes oil historically increases about four percent for every one percent decline in supply. Brent had closed Friday at US$72.87.
As Samuel Ramani of the Royal United Services Institute warned, “That’s going to have severe inflationary effects for the global economy.” Energy shocks transmit quickly — through freight, manufacturing inputs, food prices and ultimately household purchasing power.
While energy markets braced for repricing, aviation experienced immediate disruption. Dubai International and Al Maktoum airports suspended operations as Iranian missiles crossed Gulf airspace.
More than 280 flights were cancelled and 250 delayed. Major carriers — including Emirates, Etihad, Qatar Airways, Turkish Airlines, Lufthansa, Air France and British Airways — halted or rerouted services. India’s IndiGo suspended Central Asia routes until March 28.
Dubai International is the principal aviation node linking Asia, Europe and Africa. Its shutdown disrupts cargo corridors, pharmaceutical supply chains and time-sensitive trade flows.
The UAE itself absorbed missile debris and civilian casualties — a significant breach for a state positioned as a neutral commercial hub.
Iran’s retaliation extended across the Gulf, targeting US-linked facilities in Bahrain, Qatar, Kuwait and the UAE, with impacts also reported in Jordan and Iraq.
Gulf governments confirmed interceptions and condemned violations of sovereignty. At the United Nations, Secretary-General António Guterres warned of “a chain of events that no one can control.”
For Asia, exposure is structural. Energy has always been a key driver of the global economy, and the countries most immediately affected by disruption at Hormuz are China, Japan and South Korea.
Professor Dr Shahreen Madros, at the UKM Graduate School of Business
For Asia, and for Malaysia in particular, the economic implications are being watched with acute concern. Professor Dr Shahreen Madros, Adjunct Professor at the UKM Graduate School of Business and a respected authority on strategic economics and business policy, spoke exclusively to TNS News as events unfolded, offering an analysis that cut through the noise with clarity and conviction.
“Energy has always been a key driver of the global economy. China, Korea, Japan — all depend on oil coming through the Strait of Hormuz. Personally, I think Japan and Korea are collaterals, but China is the main target for the final impact,’ he said
He noted that China’s energy security architecture relies significantly on Venezuelan and Iranian crude. With Venezuelan supply already constrained, prolonged disruption of Iranian flows would narrow Beijing’s diversification options.
“After Venezuela, Iran would be the final piece to hold back China’s economic growth — or curtailment, whichever way you look at it.”
Within ASEAN, divergence could be pronounced. Economies that are not oil producers and rely heavily on imported fuel would face sharper inflationary pressure and slower industrial activity. Over time, that would weaken employment prospects, compress household income and dampen demand.
“In the longer term, that means fewer job opportunities and less money circulating in the economy. Naturally, that spells difficult times for the masses.”
For Malaysia, the transmission channel is complex. Higher crude prices may support revenues at PETRONAS and provide some fiscal cushion. Yet sustained fuel inflation raises domestic cost structures across logistics, manufacturing and utilities.
“Our growth now depends quite a bit on data centres. This industry depends on easy access to cheap electricity and water. An increase in fuel prices will have a domino effect logistics, electronic parts and energy costs will rise. Global trade will slow down. I cannot see how it will not impact negatively on our economy.”
He cautioned that policymakers should prepare for a prolonged scenario rather than assume a short conflict.
“The government would be wise to look at our internal capacity for basic goods. Any form of importation will only see prices increase. Hopefully our leaders in the respective ministries are already taking steps now rather than waiting for eventualities.”
On the broader trajectory, his assessment was direct.
“Unlike Iraq, I think this war will be much tougher. The longer it is prolonged, the worse we will see its impact on the global economy.”
When oil markets reopen, direction is not in question prices are likely to rise. The more material variables are persistence and policy response. A sustained energy shock would complicate monetary easing trajectories for the US Federal Reserve, the European Central Bank and the Bank of England. Safe-haven flows may strengthen the US dollar and gold, placing pressure on emerging-market currencies including the ringgit.
The Strait of Malacca carrying roughly 16 million barrels daily toward Northeast Asia could face secondary distortion if Gulf supply remains curtailed.
What began before dawn on February 28, 2026 represents a structural test of the global economic system. The scale of its impact will depend less on the initial shock than on duration, market adjustment and policy coordination. The coming weeks will determine whether this remains a severe but temporary dislocation — or marks a more durable shift in global energy and trade dynamics.
- TNS NEWS