Ships in the Strait of Hormuz near the beach of Bandar Abbas, Iran, June 17, 2026.
Amirhosein Khorgooi Reuters
Early signs of the Strait of Hormuz reopening have eased the most serious threat to global energy supplies, but the economic damage caused by nearly four months of war will take months to unravel, analysts warn.
The United States and Iran signed a memorandum on Thursday to open the Strait of Hormuz, ending a war that has upended global energy supply chains, pushed inflation higher and weakened growth prospects.
But even if shipping across the Strait normalizes, higher inflation is already largely “priced in” in many economies, Simon MacAdam, deputy chief global economist at Capital Economics, said in a note this week.
“It may take several months for higher energy and fertilizer prices to be passed down along food supply chains to end consumers,” MacAdam said. Prices for natural gas delivered to households typically lag the upstream market by about three months, he said.
Oil prices fell to around $80 a barrel on Friday, down from a peak of $118 reached in March, when the war was at its height. Goldman Sachs reduced its oil price forecast On Tuesday, it forecast Brent will average $80 at the end of 2026 and $75 in 2027, citing a faster-than-expected recovery in crude flows from the Persian Gulf.
It would take longer for rising energy costs and upstream supply disruptions to impact the downstream food and energy sectors. A backlog of ships awaiting transit through the Strait of Hormuz could further delay a full recovery in the flow of goods.
The World Bank, which last week lowered its forecast for global economic growth to 2.5%the slowest pace since the pandemic, expects global inflation to climb to 4% this year, from 3.3% in 2025, even if disruptions to oil flows ease in the coming weeks.
Fertilizer prices could rise as much as 38% this year as supply disruptions and shortages of key inputs from the Gulf ripple through agricultural markets, the report said.
Europe could face particular pressure as natural gas storage levels remain historically low, MacAdam said, expecting inflation in Europe and Japan to rise another 3 to 4 percentage points as prices for U.S. liquefied natural gas exports rise.
The European Central Bank was the first major central bank to raise interest rates last week, its first tightening movement in almost three years.
Meanwhile, the Fed, under new Chairman Kevin Warsh, has left short-term interest rates unchanged on Wednesday, but raised its forecast for personal consumption expenditure inflation to 3.6% by December, from 2.7% forecast in March. Nine of the 18 voting members expect at least one rate hike before the end of this year.
This trajectory highlights the extent to which the Hormuz crisis has changed the calculus of central banks trying to balance slowing growth and rising inflation.
The Bank of England also retained its key rates unchanged but warned that “even if the conflict is resolved quickly, there could be a logistical delay in restoring energy production and transportation.”
Guaranteeing everyone a certain level of safety margin in peacetime would provide a certain margin of safety, even in the face of a global contingency.
Matteo Lanzafame
Director, Asian Development Bank
Central banks that have taken a hawkish stance are unlikely to change course quickly, with fuel prices and inflation expected to remain high, said Alex Holmes, regional director of the Economist Intelligence Unit. Food inflation also faces additional pressures, he said, as a super El Niño phenomenon. threatens agricultural production in the coming months.
The crisis has also prompted governments to rethink their energy security strategies. Countries affected by disruptions should strengthen their energy stocks, direct resources toward ramping up domestic production, and seek alternative supply routes to reduce their dependence on a single choke point.
“Guaranteeing everyone some level of peacetime safety margin would provide that cushion, even against a global contingency,” Matteo Lanzafame, head of the Asian Development Bank, said during a virtual event Thursday.
