Following US-Israeli military strikes on Iran, the Strait of Hormuz has been effectively closed since 28 February 2026. Roughly 20% of global oil supply and all of Qatar's LNG transits are exported through this narrow passage, which can be blocked with simple means even against superior US firepower: cheap drones and sea mines. With every day the conflict and the closure of the Strait of Hormuz continue, the global impacts and economic fall-out increase. The fate of the world economy now depends on whether and when a real ceasefire emerges, the stalemate holds, or the conflict widens.
More than forty days into the conflict, the economic data is telling two divergent stories. Futures markets have drifted back to $97/barrel for Brent (April 11 2026) in the expectation of an eventual resolution. However, the physical oil market tells a different story: Dated Brent (the price that Asian and MENA importers pay for actual delivered crude) stands at $132/bbl. That $35 premium reflects genuine scarcity, not market sentiment, and it changes the calculus of who bears the cost of this conflict.
The analysis calculates the marginal economic cost of every additional day of closure under consideration of four main drivers: oil price, LNG/TTF price, fertilizer supply shock, and shipping war-risk premiums. The outcome is presented in two figures: the direct price-driven cost (what price supply disruption alone implies via IMF coefficients) and the full economic impact, which applies a structural multiplier for investment freeze, confidence effects, and supply chain disruption grounded in World Bank and IMF research on oil shocks. A detailed economic impact background analysis can be read here.
This analysis is based on pure economics and does not consider market sentiments. The global stock markets, particularly in the US where recent gains had been driven mostly by AI expectations, might start to slide. In another scenario, Iran might escalate the conflict by not only targeting energy infrastructure, but also water infrastructure in the Gulf countries. Such events, including a sudden collapse of the Iranian regime, cannot be forecasted and are therefore not integrated in this modelling.
This analysis has been updated on April 12. The original analysis (March 14) is available in full below.
Updated 11 April 2026, Day 42
The real-world data at Day 42 confirms the model projections. The Dallas Fed's Q2 GDP nowcast stands at -2.9% annualised. US CPI rose 0.9% month-on-month in March, with the year-on-year rate at 3.3% and rising. The EIA has revised global demand growth down from 1.2 to 0.6 mbd as import-dependent economies throttle consumption. Diesel in Europe trades near $200/bbl. Jet fuel at $195/bbl. Urea is up 50% above pre-war levels. These refined products were underweighted in the Day 14 calculations. They have since emerged as a significant additional cost vector, particularly for Europe, Australia, and the UK.
The Day 42 model adds two layers to the Day 14 calculations: regional physical price tiers reflecting the physical-to-futures premium by geography, and refined-product channels covering diesel, jet fuel, LPG, and naphtha. Impact estimates for MENA, South Asia, South-East Asia, and NE Asia are materially higher than previously modelled. Americas estimates are revised down, as physical scarcity premiums do not reach those markets. Under the phantom ceasefire scenario (the path financial markets appear to be pricing as most likely), global GDP impact rises from -2.89% ($3.18T) at Day 14 to -3.24% ($3.57T) at Day 42. A prolonged closure now puts $4.81T at risk. Full escalation would reach $6.95T.
This analysis covers pure economic modelling and does not incorporate market sentiment, geopolitical event risk, or sudden regime changes. A detailed background analysis of the economic transmission channels is available in the full economic implications article. The original Day 14 analysis, including the daily cost model, conflict duration calculator, country map, and country-level data table, is preserved in full below.
Day 42 observed market data
Brent futures
$97 / bbl
Day 42 close
Dated Brent (physical)
$132 / bbl
+36% over futures
Diesel (Europe)
~$200 / bbl
Refined product
Jet fuel
$195 / bbl
Refined product
Urea (fertilizer)
+50%
vs pre-war level
US CPI (March)
+0.9% m/m
3.3% y/y
Dallas Fed Q2 GDP
-2.9%
Annualised
EIA demand growth
0.6 mbd
Revised from 1.2
Futures vs physical price divergence
The defining feature of Day 42 is the widening gap between Brent futures and the physical market. Futures pricing reflects expectation of eventual resolution. Physical pricing reflects the reality of supply chains operating under closure conditions. Asian and MENA refiners bidding for actual cargoes pay $132/bbl while European traders sell futures contracts at $97. That $35 divergence is the reason why the earlier futures-based model underestimated the impact on import-dependent regions.
Updated scenario comparison
The Day 42 model refines four scenarios, distinguished by when and how the conflict resolves. The phantom ceasefire, in which a nominal ceasefire is declared but the physical market premium persists as supply chains remain disrupted, is treated as the most likely current path. Structural multipliers reflect investment freeze, confidence collapse, and supply chain disruption beyond the direct price channel.
| Scenario | GDP loss | GDP loss ($T) | Inflation |
|---|---|---|---|
| Strait reopens May (optimistic) | -2.19% | $2.41T | +1.71pp |
| Phantom ceasefire (most likely)most likely | -3.24% | $3.57T | +2.13pp |
| Prolonged closure (ceasefire collapses) | -4.38% | $4.81T | +3.20pp |
| Full war escalation | -6.32% | $6.95T | +4.27pp |
Structural multipliers: phantom ceasefire 2.0x, prolonged closure 2.7x, full escalation 3.0x. Day 14 calculations had phantom ceasefire at -2.89% GDP / $3.18T. Day 42 update includes physical price tiers and refined-product channels.
Economic trajectory by scenario
These charts show the 180-day path for each scenario, anchored to observed physical and futures price data through Day 42. The phantom ceasefire trajectory reflects a nominal ceasefire around Day 55 while the physical premium persists well beyond, driving cumulative losses above the simple-resolution case. All trajectories share the same observed data through today.
Inflation impact by scenario
All four scenarios generate significant inflationary pressure, driven by crude oil costs, LNG prices, diesel and jet fuel, fertilizer, and shipping war-risk premiums. The phantom ceasefire scenario was estimated at +1.73pp in the Day 14 model. With confirmed physical price tiers and refined-product channels, the Day 42 estimate rises to +2.13pp. Full escalation reaches +4.27pp, sustained over the 180-day modelling window.
Most exposed economies
The most exposed economies combine high Hormuz dependence, limited domestic energy alternatives, and high food/refined product import reliance. Jordan and Lebanon face near-total dependence on Gulf crude for both energy and imported goods. Singapore's exposure reflects its role as a regional refining hub that is entirely dependent on Gulf feedstocks. Bangladesh, Djibouti, and Pakistan face compounding shocks from both crude and LPG/diesel import channels.
| Country | Region | Hormuz dep. | GDP impact | vs Day 14 | Inflation |
|---|---|---|---|---|---|
| Jordan | MENA | 95% | -6.35% | -1.46pp | +6.84pp |
| Lebanon | MENA | 98% | -6.14% | -1.40pp | +6.83pp |
| Singapore | SE Asia | 99% | -5.44% | -0.73pp | +4.89pp |
| Egypt | MENA | 30% | -5.13% | -0.87pp | +5.64pp |
| Bangladesh | South Asia | 95% | -4.96% | -0.57pp | +7.14pp |
| Djibouti | SSA | 95% | -4.96% | -0.71pp | +7.62pp |
| Morocco | MENA | 85% | -4.80% | -1.05pp | +5.95pp |
| Pakistan | South Asia | 80% | -4.61% | -0.65pp | +6.79pp |
Sources: SolAbility Hormuz Economic Impact Model, Day 42 update (11 April 2026). Day 42 market data: Bloomberg, EIA, Dallas Fed. GDP impacts are 180-day cumulative under phantom ceasefire scenario. Iran excluded as war participant.
Country-level impact: world map
65 countries modelled under the Day 42 update. Colour intensity reflects the 180-day cumulative GDP loss under the phantom ceasefire scenario. MENA and South Asia concentrate the deepest losses. Net exporters (grey) lose revenue as the closure blocks their export routes despite rising prices. Hover over any country for full detail.
Country data table (65 countries)
Full country-level data from the Day 42 model. Sort by any column. Filter by region or search by country name. GDP figures are 180-day cumulative under phantom ceasefire scenario.
Reference
Original analysis: published Day 14 of the conflict
15 March 2026
This article is part of SolAbility's ongoing analysis of the economic impact of the Iran war. Related analyses: GDP and inflation implications | Why a ceasefire won't fix the oil crisis | Renewable energy shield
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