Resolution on Iran probably doesn’t mean “all clear”

Trend watch

The weekly air passenger count in the past seven days has stabilized at 17.4 million. That’s up 1.6% from 2025, which is on pace for an all-time high.

Meanwhile, there are some mixed signals within freight. On slide 8 (available to clients in the full report), volumes at five top U.S. ports were up in March but are down for the first quarter compared to a year ago. Similarly, rail traffic was down 6% during the first quarter. Yet motor vehicle rail carloads surged to a six-year high in March, which we highlight on slide 9 (available in the full report).

We’ll continue to include the personal tax refunds chart (slide 7, available in the full report) through the end of tax filing season.

Our take

The Middle East cease-fire appears to be holding and now includes a 10-day ceasefire between Israel and Lebanon. That prompted Iran to fully open the Strait of Hormuz for commercial shipping traffic, which triggered an almost-immediate $10/barrel drop in the price of crude oil, or more than 11% in single day.

That is very welcome news for global markets. However, we’d warn that this peace is on very shaky ground, especially given that these are a series of multilateral cease-fire agreements. In other words, one party pulling out – Iran, the Houthi, Hezbollah, Israel, or the U.S. – could reignite the conflict. To wit, it’s not clear whether this is a tactical maneuver by Iran and its allies rather than a strategic shift. In other words, does Iran really want to stand down, or is this another negotiating ploy to buy itself more time?

More importantly, it highlights that Iran can easily weaponize the Strait of Hormuz by harassing commercial ships, even with minimal firepower. It doesn’t need a large, sophisticated navy – it just takes some inexpensive drones and a handful of mines. This was the same playbook that the Houthi employed to effectively shutdown commercial shipping traffic in the Red Sea in late 2023 and into 2024.

Additionally, as we’ve noted here previously, the economic damage has already been done to the global economy. Assuming the Strait of Hormuz stays open, restarting the flow of crude oil won’t be fast or easy.

The first step would be clearing the massive maritime queue of an estimated 400 crude oil tankers trapped in the Persian Gulf, plus several hundred other vessels. Given the pre-conflict average was of 100 to 138 ships per day, it would likely take two weeks to clear the logjam.

Then there’s restarting crude production, including re-pressurizing fields and restarting wells that were shut-in, which is an estimated 9.1 million barrels per day (mbd). That’s not to mention the extensive rebuilding that must happen at over 40 crucial energy assets—including refineries, pipelines, and oil fields—damaged in the Persian Gulf region. Energy infrastructure in at least nine countries have hobbled producers like Saudi Arabia, United Arab Emirates, Qatar, and Kuwait.

Initial estimates put the rebuild needed to repair some of these facilities at more than six months, while others will likely take much longer.

Alas, just the impact on the global energy supply will linger for the remainder of this year and likely into next. Again, while the U.S. is largely insulated from an energy supply shock since more than 90% of our supply is sourced within North America, the secondary impact – through global supply chains and the global economy – will be more dramatic and lasting.

Equally, the push higher in inflation – replete with continued pain at the pump and the sour consumer vibe – will linger for months. While we believe that the U.S. economy will power through these challenges, mostly due to resilient consumers, the journey ahead probably won’t feel like a fun ride.

Bottom line

Unfortunately, the damage to the global economy due to the Iran war is already done. Restarting the disrupted global oil flow—from transport, production, and damaged infrastructure—will take months. As a result, global supply impacts are likely to persist into next year, with the U.S. buffered but still exposed through global economic spillovers. This will keep the U.S. economy feeling like it has one foot on the gas—driven by fiscal stimulus—and one foot on the brake, reflecting trade and tariff uncertainty, choppy job growth, and now the Iran situation.