When “Winning” Destroys Value: The Iran War and What It Means for Hawaiʻi

Conditions and sourcing as of March 31, 2026. Sources include Reuters, AAA, the Jerusalem Post, and JoongAng Ilbo.

Japan and South Korea together represent a large share of Hawaiʻi’s international visitor spending. Both economies are absorbing an energy shock right now, driven by a conflict that closed the Strait of Hormuz and sent US gas prices above $4 a gallon nationally. If you run a hotel, a restaurant, or a tour operation in Hawaiʻi, that is not a distant geopolitical story. It is a direct hit to your forward revenue picture.

To understand why, it helps to ask a question that most strategic analysis skips: which system are we optimizing for? What looks like success at one level often destroys value at every level below it. That gap between local wins and system-level losses is the central problem with how this conflict has unfolded.

A framework for reading what happened

Most economic and strategic thinking treats value as something a single actor captures: market share, territory, leverage, favorable terms. But that view is incomplete. Value is always created or destroyed within a system of relationships. When one actor pursues gains through control, coercion, or extraction, the costs are externalized onto other parts of the system. The gains are local and short-term. The losses are systemic and compounding.

This is what researchers in value theory call the distinction between self-enhancing and self-transcending value flows. Self-enhancing flows move inward: one actor captures resources, secures control, improves its own position. Self-transcending flows move outward: an actor contributes to the stability, capability, and productivity of the larger system it depends on.

Both matter.

The problem arises when self-enhancement is pursued without regard for what it does to the system that makes the gains possible in the first place. In systems terms, unchecked inward capture generates external entropy (value-destruction): eroded trust, fragmented relationships, degraded institutions, and cascading instability.

What the Strait of Hormuz situation illustrates

When the Strait of Hormuz was open before this conflict, it moved roughly 20 percent of global oil and gas trade freely. The U.S.-Israeli military campaign against Iran prompted Iran to close it, which is now the central fact of the crisis.

The stated objectives of the campaign were regime change in Iran, prevention of nuclear development, and restoration of regional order favorable to U.S. and Israeli interests. These are self-enhancing goals at the state level, and they are coherent within that frame. The problem is the larger system (i.e., the supranational system). The Strait is not just a U.S. strategic asset.

Japan gets approximately 75 percent of its oil shipments through it. South Korea depends on the Strait for roughly 70 to 80 percent of its crude imports. Qatar’s liquefied natural gas, on which post-Ukraine Europe depends heavily (due to Russian sanctions), routes through it. When the Strait closes, those countries face an existential supply problem that has nothing to do with their own choices.

Allied responses have moved in two directions simultaneously. In Europe, Spain denied U.S. aircraft access to its bases and Italy refused use of the Sigonella air base in Sicily, prompting Trump to tell European partners to secure their own oil and Hegseth to declare that responsibility for the Strait should not fall solely on the U.S. Navy.

In Asia, Japan and South Korea face a harder dilemma: their security alliance with the U.S. pulls one way, their energy survival pulls the other. Both countries are already exploring alternatives, including Russian crude and rerouted supply chains, to reduce Strait dependence.

What looks like strategic boldness at the national level is, at the higher system level, entropic (destructive). Eroded alliance commitments. Degraded institutional trust. Energy infrastructure now controlled by a more empowered adversary. A chokepoint that can now be used as a sanctioning tool by Iran rather than by the U.S.

What this means for the U.S. broadly

The immediate pressure is already visible: gas prices above $4 a gallon nationally as of this writing (2026, March 31), stock market volatility, and bond market stress. These are short-term signals.

The longer-term damage is institutional. Dollar hegemony and the SWIFT-based sanctions system are durable only as long as the network effects and trust that support them hold. When close allies are told to secure their own energy, they build the capacity to do so outside the dollar system.

That is not a distant risk. It is the logical response of any country facing a supply crisis it did not create.

In the short term, the defense sector in Hawai'i may see near-term gains from increased military spending. But that has a political horizon. If congressional composition shifts in 2026 or a new administration takes a different posture toward military engagement in 2028, the contracts and spending that feel stable now face real headwinds. That longer arc matters but does not drive the immediate picture for most businesses.

What this means for Hawaiʻi

Hawaiʻi is exposed to several of these risks in concrete, near-term ways.

Tourism is the most direct channel. Japan and South Korea together represent a large share of Hawaiʻi’s international visitor spending. Both economies are now absorbing energy cost shocks, weakening currencies relative to the dollar, and broad economic uncertainty. When households in Tokyo or Seoul feel financially squeezed, discretionary international travel contracts quickly. Hawaiʻi’s recovery of Japanese visitors after COVID took years. A sustained economic contraction in Northeast Asia driven by energy costs would extend that pressure further.

Energy and supply costs are the second channel. Hawaiʻi imports roughly 90 percent of its goods and depends heavily on petroleum for electricity and transportation. Oil price shocks from a partially closed or toll-gated Strait translate directly into higher electricity rates, higher food prices, and higher costs for every business that moves goods across the Pacific. Small businesses in retail, food service, construction, and fishing absorb those costs with very little margin to spare.

The third channel is subtler but significant. Hawaiʻi’s positioning as an Asia-Pacific hub for commerce, diplomacy, and education depends on the U.S. being seen as a credible, stable regional partner. A U.S. that initiates a conflict disrupting regional energy supplies and then tells its closest Asian allies to manage the consequences on their own is a less effective anchor for that positioning. Relationships built over decades with Japanese, Korean, and Southeast Asian institutions do not disappear overnight, but they become harder to maintain when the broader geopolitical signal is one of disengagement.

The constructive question

The framework here is not primarily a critique (i.e., normative). It is a diagnostic (i.e., positive). If inward-capture strategies generate entropy at the supranational system level, the corrective is not simply restraint. It is the active, outward-directed work of rebuilding trust, restoring shared institutions, and creating conditions for reciprocal exchange. Systems theory calls this negentropy: the investment that counters disorder and makes future value creation possible.

For Hawaiʻi, the practical implication is diversification against specific dependencies: away from any single tourism market, away from petroleum-based energy generation, and toward regional relationships that can sustain commerce regardless of what Washington decides next. The instability being created at the geopolitical level is not resolving quickly. The useful question for local businesses, institutions, and policymakers is what a more resilient system looks like when a stable global order can no longer be assumed as a given.