THE Strait of Hormuz was a blur of U-turns and deviations on Tuesday as the US set about ensuring the blockade of Iran held firm.

While sanctioned and shadow fleet ships scrambled to test the full extent of the US resolve to enforce the US president’s current plan, mainstream shipping spent another day watching the news for signs of an end to this crisis. None was immediately forthcoming.

What has started to emerge, however, is a narrative of the conflict’s “scarring effects” despite a fragile ceasefire.

The Middle East and North Africa region is expected to have a sharply slower growth this year as oil-exporting countries grapple with the fallout from the Iran war, the International Monetary Fund said on Tuesday.

Even in a best case, there will be no neat and clean return to the status quo.

The global economy is at risk of growing at its slowest pace since the pandemic, and if conflict in the Middle East keeps oil prices at $100 per barrel for the rest of this year, that may not be the worst of it.

The IMF sees the global economy expanding by just 2.5% this year — the weakest pace since 2020 — and inflation is forecast to soar by 5.4% under an “adverse scenario” where petroleum spot prices held around their current level.

Even in the fund’s “most hopeful scenario”, spiralling energy costs, infrastructure damage, supply disruptions and a loss of market confidence meant growth would be less than expected.

But even that may end up being an overly rosy outlook. Were the oil price to average substantially more than $100 a barrel this year, it could plausibly push the world economy into recession. 

This is of course about more than oil, but the lack of tanker movements is now the leading indicator of economic pain to come.

With the Strait of Hormuz remaining mostly closed since the beginning of the conflict, about 17.7m barrels per day of mainstream seaborne oil supplies (excluding those from Iran), based on 2025 averages, have been curtailed from the market, according to Vortexa’s latest assessment.

With Iranian oil supplies now also blocked by the US military, we can add a further 1.8m barrels per day to the current shortfall, affecting mainly China’s imports.

The world is facing an unprecedented loss of oil supplies, and incremental liftings from elsewhere are insufficient to offset the shortfall.

The waivers of sanctions on Russian oil at sea is almost fully absorbed into the market, and any remaining Iranian oil on the water will begin to draw down from April onwards as the market starts feeling the tightness.

From here it’s a case of inventory draw downs and another round of Strategic Petroleum Reserves being tapped.

Until tankers start moving, all roads lead to higher prices, slower growth and longer-lasting effects on the global economy. The longer this lasts, the more likely a global recession is on the way. 

Richard Meade
Editor-in-chief, Lloyd’s List