Three weeks into the US-Israel military campaign against Iran, the direct financial casualties extend well beyond the oil market that has attracted most of the commentary, reaching into shipping costs, insurance rates, equity valuations, sovereign credit spreads and the inflation forecasts of central banks that have no military role in the conflict whatsoever.
Container shipping giants suspended operations through the Strait of Hormuz entirely following the initial strikes and have rerouted vessels around the southern tip of Africa, a diversion that adds roughly twelve to fifteen days to journey times and an estimated 20 to 25 percent to per-container freight costs on routes that pass through the Persian Gulf.
The Strait of Hormuz carries approximately 20 percent of global oil and gas, making it by some margin the most economically consequential chokepoint on Earth, and the US Development Finance Corporation’s $20 billion reinsurance facility was created specifically to give tanker operators and their insurers enough confidence to attempt escorts through the waterway.
Trump’s comment on Monday that countries “have already started to get there” in terms of providing naval escorts, alongside his acknowledgement that some partners are “less than enthusiastic,” provides a partial picture of the coalition dynamics being assembled to reopen the strait at least partially to commercial traffic.
The geopolitical implications reach into territories the US-Israel campaign did not originally envision: UAE exchanges reopened from a two-day closure after Iranian drone and missile strikes on the Gulf nation triggered their largest single-day declines since 2022, with Dubai’s benchmark falling nearly five percent and Abu Dhabi’s dropping more than three percent when trading resumed.
The Federal Reserve’s updated projections, raising PCE inflation to 2.7 percent for 2026 from 2.4 percent in December, reflect a central bank that has formally incorporated the oil shock into its baseline rather than treating it as a transitory risk to be looked through.
That adjustment has real consequences for the mortgage market, the corporate credit market and the consumer credit market simultaneously, as the rate path implied by the new dot plot compresses the refinancing relief that households and companies had been anticipating throughout the first half of 2026.
WTI crude’s 35 percent gain in the week the conflict began was its largest weekly advance since oil futures trading began in 1983, a statistical extreme that captures both the scale of the initial fear premium and the genuine supply disruption that was occurring in real time as tankers diverted and insurance rates spiked.
Goldman Sachs and Apollo Global Management both published research in the days following the initial strikes projecting that sustained oil above $100 would reduce US GDP growth by 0.3 to 0.5 percentage points over a twelve-month period, with the impact concentrated in transportation, manufacturing and consumer spending rather than distributed evenly across sectors.
The question now dominating macro strategy desks is not whether there will be economic damage from the conflict, since that is already priced into revised forecasts across most major institutions, but whether Netanyahu’s statement about Iran’s diminished military capacity signals a trajectory toward de-escalation within weeks or whether the conflict enters a more static phase that keeps oil markets on edge through the summer driving season and into the autumn.