Hormuz reopening may not reverse economic damage already done, analysts say
10 reported
The U.S. and Iran signed a memorandum Thursday to reopen the Strait of Hormuz, ending a war that disrupted global energy supply chains, but analysts warn the economic toll from nearly four months of conflict will take months to unwind. Even if shipping normalizes, higher inflation has already been largely "baked in" across many economies, according to Simon MacAdam, deputy chief global economist at Capital Economics. Oil prices fell to around $80 a barrel on Friday from a March peak of $118, and Goldman Sachs cut its oil price forecast, projecting Brent to average $80 in late 2026 and $75 in 2027. The World Bank lowered its global growth forecast to 2.5% and expects inflation to climb to 4% this year, up from 3.3% in 2025, even if oil disruptions ease. Fertilizer prices could jump 38% this year due to supply disruptions, and Europe faces particular pressure because natural gas storage levels remain historically low. Central banks, including the European Central Bank, the Federal Reserve, and the Bank of England, have adjusted policies in response to the crisis, with the Fed raising its inflation forecast to 3.6% by December.
What’s reported
The U.S. and Iran signed a memorandum Thursday to open the Strait of Hormuz, ending a war that disrupted global energy supply chains.
The war lasted nearly four months.
Oil prices fell to around $80 a barrel on Friday from a peak of $118 in March.
Goldman Sachs cut its oil price forecast, projecting Brent to average $80 in late 2026 and $75 in 2027.
The World Bank lowered its global growth forecast to 2.5% and expects inflation to climb to 4% this year from 3.3% in 2025.
Fertilizer prices could jump 38% this year due to supply disruptions.
The European Central Bank raised interest rates last week, its first tightening move in nearly three years.
The Federal Reserve left short-term interest rates unchanged but raised its inflation forecast to 3.6% by December from 2.7% projected in March.
The Bank of England kept policy rates unchanged but warned of logistical delays in restoring energy production and transportation.
A super El Niño threatens agricultural output in the coming months.
Key figures
Simon MacAdam, deputy chief global economist at Capital Economics
Kevin Warsh, Chairman of the Federal Reserve
Alex Holmes, regional director at Economist Intelligence Unit
Matteo Lanzafame, director at the Asian Development Bank
Sources: CNBC
