Germany told Washington it would not help secure the Strait of Hormuz, a refusal that BMI says reflects a broader shift away from a U.S. centered order.
BMI, the research and data analytics unit of Fitch Solutions, released the analysis on July 13, arguing the U.S. Iran conflict is the fifth major shock to the global economy since 2020, following the Covid 19 pandemic, Russia’s invasion of Ukraine, the Gaza war and President Donald Trump’s tariff campaign. The firm said these shocks are pushing governments toward stronger defense spending and more resilient supply chains.
The pattern is already visible. German Chancellor Friedrich Merz said Berlin would not join military efforts to keep the strait open while the war continues, and Defense Minister Boris Pistorius put it more bluntly: “This is not our war, we have not started it.” French President Emmanuel Macron took a similar position. Japan, despite drawing roughly 90 percent of its crude oil through the strait, also declined to send naval vessels despite direct pressure from Trump, though Prime Minister Sanae Takaichi said Tokyo remains open to non military contributions.
BMI lowered the probability of its base case, a scenario in which negotiations between Washington and Tehran produce a nuclear agreement, to 55 percent from 60 percent. It raised the odds of a prolonged, messier standoff to 45 percent, citing renewed strikes despite a memorandum of understanding meant to end hostilities.
The firm expects the standoff to widen the gap between Washington and its European allies, reinforcing Europe’s push for its own defense industry, energy sources and technology, and raising doubts in European capitals about how long term Washington’s NATO commitments will hold.
In Asia, BMI said governments will keep diversifying energy sources but expects Gulf producers to remain dominant because of lower production costs and existing export infrastructure. It also pointed to concern among Indo Pacific allies that Washington’s Middle East focus could pull attention from China, a worry already prompting Japan to deepen defense ties with regional partners; Tokyo and Seoul have held leader level summits this year with Canada, Indonesia, the Philippines, Italy and France.
BMI said China could gain diplomatically by presenting itself as a steadier partner to Gulf states, though instability in Iran threatens years of Chinese investment there. Russia, by contrast, gains little: falling oil prices and continued battlefield strain in Ukraine outweigh any advantage from Western attention shifting toward the Gulf, and Moscow risks losing Tehran as a partner if Iran eventually mends ties with Washington.
Beyond the major powers, BMI expects middle powers, including India, Japan, Saudi Arabia, South Korea, the United Arab Emirates, Australia and European economies, to deepen cooperation with each other to reduce dependence on both Washington and Beijing. The firm added that new investment in pipelines, rail links and alternative ports cannot fully substitute for chokepoints like Hormuz, which will remain central to global energy and container trade for years to come.
