'War-risk premium' now a global burden

The United Nations Charter was drafted after the world experienced the unbearable consequences of powerful states using war as a tool of policy. Its core premise was simple: Force should not become the default method of diplomacy. However, the recent escalation involving the United States and Israel against Iran once again forces the world to confront an uncomfortable truth.

When Washington acts first and justifies its actions later, international law is often seen as negotiable rather than mandatory. UN Secretary-General Antonio Guterres warned at the start of the crisis about the danger of a "wider conflict" and urged de-escalation and an immediate ceasefire. An independent UN fact-finding body has since stated that the attacks "run counter to the UN Charter".

Article 2(4) of the UN Charter clearly says that states must avoid threatening or using force against the territorial integrity or political independence of any other state. Article 51 was drafted as a narrow exception for self-defense, not as a standing doctrine for preventive war. Stretch that exception too far, and the rule itself begins to collapse. That is what is at stake here. A system in which powerful states redefine "imminence" whenever convenient is not a rules-based order. It is a permission structure for permanent instability.

Washington's justification is revealing. US Secretary of State Marco Rubio said, "We knew that there was going to be an Israeli action, we knew that that would precipitate an attack against American forces, and we knew that if we didn't preemptively go after them before they launched those attacks, we would suffer higher casualties."

That formulation matters because it goes beyond a claim of immediate self-defense. It effectively argues that one state may lawfully strike another because it anticipates that an ally's action will trigger retaliation. If accepted, that logic would not contain war; it would universalize it. Every rival power could invoke the same reasoning tomorrow.

And the war is no longer abstract. Hundreds of people have been killed inside Iran and beyond, and millions more displaced. In terms of economic ramifications, war in the Middle East is not just a regional event. It travels almost instantly into freight rates, tanker insurance, oil benchmarks, diesel prices, food inflation and electricity bills. Reuters has reported that maritime war-risk premiums in the Gulf have risen by over 1,000 percent in some cases, while insurers have repriced voyages through the region almost daily.

The Strait of Hormuz remains one of the world's most sensitive energy choke points. The US Energy Information Administration has said that in the first half of 2025, total oil flows through the strait averaged 20.9 million barrels per day, accounting for about 20 percent of global petroleum liquids consumption.

Markets are reacting not only to current damage, but also to fears of future damage. The price of international benchmark Brent crude oil has fluctuated recently between $80 and around $100 per barrel, and the International Energy Agency said on March 11 that it would release 400 million barrels of oil from emergency reserves — the largest release in the multinational organization's history.

In other words, markets are already pricing in not just supply disruption, but the possibility that normal commercial traffic and strategic reserves may need to substitute for the stability that diplomacy has failed to maintain.

The diesel issue may be even more politically significant than the crude oil story. Reuters has reported that disruptions in Hormuz threaten up to 20 percent of global seaborne diesel trade. Diesel is important because it is the fuel that moves food, powers logistics and keeps industrial economies going. When diesel supplies tighten, inflation does not remain limited to traders' screens. It appears in bus fares, fertilizer costs, supermarket prices, domestic cooking fuel and factory margins. In poorer and import-dependent economies, these shocks become social and political tests.

This is why the debate cannot be reduced to whether one agrees or disagrees with Tehran. The deeper issue is whether the world is willing to normalize a precedent by which major powers can initiate hostilities, escalate them, and only then debate legality.

In Washington, accountability still lags behind military action. On March 4, the US Senate prevented a bipartisan effort that would have required Congress to approve going to war against Iran. Currently, the discussion in Congress is less about who is responsible and more about whether lawmakers can regain a constitutional role after the fact. This delay shows a common pattern of government secrecy, a focus on national security, and political division. The standards for using force are often lower than the standards for holding those responsible accountable.

There is also a greater geopolitical cost. The more flexible Washington's interpretation of lawful force becomes, the more easily other states will cite that flexibility in their own areas of rivalry. Once the UN Charter's ban is seen as situational, the line between deterrence and prevention, or between defense and discretionary violence, begins to blur everywhere.

Energy-importing economies do not vote for wars in distant capitals, but they suffer the consequences through higher freight bills, current-account pressures, imported inflation and slower growth. As the burden is transmitted via supply chains, poorer households bear the brunt first and most severely. A "war-risk premium" is simply a technical term for a profoundly undemocratic reality: the many bear the costs of decisions made by the few.

The choice before the international community is, therefore, more urgent than it seems. One path legitimizes preventive war, undermining the UN Charter, and causes the global economy to cycle through insecurity and inflation repeatedly. The other refocuses on diplomacy, reestablishes legal limits, and recognizes that energy security should not be held hostage to military conflicts. In an interconnected world economy, adhering to the UN Charter is not just idealism. It is a matter of self-preservation.

The author is a scholar in the Department of Journalism of Hong Kong Baptist University in Hong Kong.

The views do not necessarily reflect those of China Daily.