The Long War: The quarter-by-quarter costs of a continuing Iran war

2026-04-02 · Source: Thomson Reuters Institute · Field: Business & Management — Corporate Strategy & Leadership, Operations & Process Management, International Business & Trade · Depth: Intermediate, medium

Summary

This analysis details the escalating economic consequences of a prolonged war with Iran, outlining quarter-by-quarter impacts from Q2 to Q4 2026. Q2 presents a "wound that heals" with reversible oil spikes and inflation, though insurance and risk premiums for Gulf maritime transit are permanently repriced. By Q3, the damage "scars" with sustained Brent crude at \$130 per barrel, leading to behavioral changes, increased recession probability, and cascading supply chain disruptions affecting industries like semiconductors and agriculture. Q4 signifies a "different body," where the global economy has permanently rewired trade routes, supplier relationships, and risk models, even if the war ends, due to sunk costs and the broken premise that critical chokepoints like the Strait of Hormuz are "too big to fail." Businesses are advised to plan for the war to last into Q3, model energy prices between \$120 and \$150 per barrel, and build optionality to mitigate these structural shifts.

Key takeaway

A prolonged Iran war will cause escalating economic damage, transitioning from reversible Q2 disruptions to permanent global rewiring by Q4 2026. By Q3, Brent crude could reach \$130/barrel, pushing recession probability above 50% and disrupting critical supply chains for semiconductors and agriculture. Businesses must plan for sustained energy prices of \$120-\$150/barrel and proactively diversify supply chains, as geopolitical risk repricing necessitates moving away from single points of failure.

Topics

• Iran War
• Global Economy
• Oil Prices
• Supply Chain Disruptions
• Strait of Hormuz

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Editorial summary, takeaway, and curation by AIssential. Original article published by Thomson Reuters Institute.