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 the superior US firepower: cheap drones and sea mines. With every day the conflict, and with it the closure of the Strait of Hormuz, continues, the global impacts and economic fall-out increase. The fate of the world economy now depends on whether and when a ceasefire emerges, a stalemate holds, or the conflict widens. The big question is: how big are the costs to the world economy?
This 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.
The Hormuz closed scenario is treated as the primary scenario given the current military situation. De-escalation and plateau are shown as reference trajectories. All three scenarios are identical through Day 14 of the war since prices have already adjusted to observed conditions.
This analysis is based on pure economics and does not consider market sentiments. The global stock markets, particularly in the US where recent gains have 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.