War Diary Day 31: Economic shockwaves deepen in absence of diplomatic off-ramps to Iran war – World
It seems that the coming days are likely to be shaped by the interaction between continuation of military actions across multiple fronts, scarce de-escalation pathways and growing economic pressures.
On the 31st day of the US-Israeli war on Iran, the economic dimension of the war continued to become more pronounced as the conflict remained locked in a high-intensity, multi-domain phase, with exchanges continuing across Iran, Israel, and the wider region.
Inside Iran, US and Israeli strikes continued to target the civilian infrastructure besides military and strategic targets, including hits on research facilities and air defence systems.
The goal seems to be to degrade both Iran’s operational military capability and technological depth.
Moreover, there have been attacks on energy sites, leading to power outages in major urban centres such as Tehran and Karaj.
Despite these pressures, Iran’s retaliatory capacity remained intact, with continued missile and drone launches targeting Israeli industrial zones and infrastructure, as well as assets in Gulf countries.
In Israel, the impact of these strikes has become more visible with a second confirmed hit on the Haifa Bazan oil refinery — one of the country’s most critical energy facilities — in addition to the damage reported in industrial zones in the south. The cumulative effect of repeated strikes on such targets is beginning to strain infrastructure.
The Israel Defence Forces warned civilians near the Neot Hovav industrial zone to remain indoors due to fears of a hazardous materials leak after an impact on one of the plants in the zone.
The northern front
The northern front has also remained active, with continued fighting in southern Lebanon where Hezbollah has maintained pressure through ground engagements and anti-armour operations across multiple sectors. Reports of Israeli casualties and equipment losses underline the attritional nature of this theatre, while Israeli forces have stepped up operations to expand a buffer zone along the border, including through clearance operations in border villages.
Hezbollah’s activity suggests that the front will remain a key pressure point and will continue to limit Israel’s ability to concentrate resources elsewhere.
The Gulf and maritime domain
Across the Gulf and maritime domain, tensions have remained centred on the Strait of Hormuz and related energy routes. Iran has signalled its intent to regulate passage through the strait amid reports of strikes targeting a key pipeline in the United Arab Emirates.
These developments reinforced uncertainty in global energy markets, as a result of which oil prices have remained elevated. International financial institutions have, meanwhile, warned of broader economic fallout if disruptions were to persist.
Limited traction of peace efforts as kinetic activity continues
US military posture in the region has continued to evolve, with additional special operations forces, airborne units, and Marine elements being deployed. These developments indicate that preparation is under way for a range of contingencies that could include limited ground operations or actions aimed at seizing strategic points such as key islands or critical infrastructure.
While Washington has reiterated its preference for a diplomatic resolution, official statements have continued to emphasise military objectives focused on degrading Iran’s air, naval and missile capabilities.
Diplomatic efforts, including those involving Pakistan, reportedly with backing from China, have yet to produce a breakthrough.
Tehran has maintained its position that it is not engaged in negotiations under current conditions, whereas US messaging has continued to combine offers of dialogue with threats of expanded strikes, particularly if maritime routes are not reopened.
This situation highlights the limited traction of ongoing attempts for peace because of continued kinetic activity.
On the economic front
Economically, the conflict is entering a more consequential phase as oil prices have surged beyond earlier thresholds.
It’s worth noting that despite sustained attacks, Iran’s export levels look to have held up, which is being interpreted by some as a signal that Iran has been retaining leverage in the energy domain. At the same time, repeated strikes on Israeli and regional industrial infrastructure are adding to the cumulative costs.
With no off-ramps in sight, the global markets are beginning to factor in the risk of prolonged disruption.
The reading of the situation at the end of day 31 suggests that the coming days are likely to be shaped by the interaction between continuation of military actions across multiple fronts, scarce de-escalation pathways and growing economic pressures. In particular, attention will be focused on developments around the Strait of Hormuz and the potential for further widening of the conflict if current trends persist.
Header image: A first responder inspects the wreckage of a vehicle at the site of an Israeli airstrike in the southern Lebanese village of Hanouiyeh, east of Tyre, on March 30, 2026. — AFP
