Long-lasting changes from Iran War

Investment Analysis Clubs Macro Economic Trends and Risks
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Supposedly, the attack on Iran is coming to an end. I’ll believe it when I see it because the news changes every day.

Although the attack and Iran’s response lasted a short time (compared with many wars) the results could be long-lasting.

https://www.nytimes.com/2026/06/16/business/economy/iran-war-oil-trade.html

The Iran War Permanently Altered the Global Economy

The global order has been altered, and economies are unlikely to simply pick up where they left off before the U.S. and Israel began bombing Iran.
By Patricia Cohen, The New York Times, June 16, 2026

…
Over the longer term, this energy shock — the second in just four years — is likely to accelerate a transition to renewables like solar and wind as well as nuclear power…

On the other side of the Atlantic Ocean, Brazil, Venezuela, Colombia, Argentina and Guyana are building their oil production capacity as the world looks for alternative suppliers…

China is leagues ahead of the rest of the world in producing wind turbines, high-voltage cables, transformers, solar panels, batteries, software to manage energy flows and more.

China’s increasing role ensuring that other countries have a dependable supply of energy amplifies its strategic influence and importance.

The Trump administration’s aggressive push to halt renewables energy projects — even paying companies to cancel wind farms — means the United States is essentially withdrawing from this global competition and ceding the industrial and technological advantage to its biggest rival.

The economic advantages are reinforced by geopolitical ones. The war has deepened the wedge between the United States and longtime allies in Europe, providing another opening for China to enlarge its role as an international leader…

Iran has pushed to impose fees on ships that pass through the narrow waterway, even though such a plan could violate international agreements. Even if new payments are not codified, Iran has shown it can disrupt trade any time it wants, which raises risks and costs…

The World Bank just revised its economic outlook, lowering its forecast. It now expects global growth to decline to 2.5 percent this year from 2.9 percent in 2025.

Inflation is also starting to roar. In the United States, it rose for the third month in row, hitting an annual rate of 4.2 percent in May. And instead of planning for the next drop in interest rates, Wall Street is expecting the Federal Reserve to increase rates at least once this year. Last week, the European Central Bank raised rates to 2.25 percent. “The war in the Middle East is generating inflation pressures,” the bank said…

Asian economies, slapped hardest by the crisis, have already inundated the Asian Development Bank for emergency loans as they seek to rescue their economies and finances from the impact of the Iran war… [end quote]

Wendy

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I certainly hope so! The only thing better than ending the war now, would have been not starting it in the first place.

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Are most consumers tapped out? That becomes the central question. However they get there, job losses or debt.

If the consumer is tapped out, we will see a great slow down in the inflation rate. We do not know yet.

Right now, the table has been flipped over.

Netanyahu and Trump are playing good cop, bad cop in Lebanon. We won’t give in an inch to Iran. Iran is trying to show a strong hand. With China and India paying fees to Iran, the BRICs are under pressure to disband in all but name. Gold and other reserve currencies are harder to promote.

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Would you WANT a nuclear armed Iran to prove your position? You do not get another alternative. Does not matter what happened with tearing up the O deal with Iran. That was years ago. We have to deal in now.

Besides treaties with the Indians were not done O’s way.

My Dad protected me from this stuff. It only gets uglier. Awful stuff. But that is reality.

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Get real. Given your logic, JTT wanted a nuclear armed Iran when he decided to tear up the deal.

Of course I don’t want a nuclear armed Iran. That’s secondary to me not wanting a world where the US has jeopardized alliances and has agreed to hundreds of billions of dollars to Iran. What kind of nuclear program can Iran build with $300 billion?

I’m so tired of the “you want a nuclear armed Iran” rhetoric. It’s so very flawed…and lazy.

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It is not flawed. Iran last year had 60% enriched materials and would be rushing again to do that again. That is real.

I am damned tired of my left denying things to make political points out of bad arguments.

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Do you remember when we were negotiating with Iran right before Operation Midnight Hammer and Operation Epic Fury? We could’ve offered the exact same deal, before losing 14 service members and seriously damaging the global economy. We’re literally in the same place as we were before the war…except we’ve lost a lot.

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Many of us want to talk about the realities, not your political talking points.

Realities
Iran was going nuclear, but now they are not.
Iran was feeding proxies against all of the Muslim countries, and Israel now they are not.
Iran closed down the Strait and is now going to bother China and India with fees. An advantage to the US.

Political
Wah wah wah with a mishmash of nonsense to win the next election. In a parliamentary system, there is honesty, or you are out of power. In our system, if the lies are big enough, you might win. Keep trying.

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Ummm, this is an MOU to provide time to discuss all the things you mentioned, nothing has been agreed to…except opening the strait during 60 days of continued negotiations. That’s the reality. In exchange the US ends its blockade.

Israel isn’t happy with this deal and will most likely continue in Lebanon. That will violate the first article of the MOU…

Come back to reality.

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The first part of that is correct. The blockade is ending.

Israel and Trump want a lot more out of this. They will go for what they can get. Bad cop good cop.

Iran wants a lot more out of this. Mostly it will be denied.

This is perhaps the only thing Trump gets right. It is not the US economy.

The consumer is s/he tapped out? If we get that answer we get to know if Trump is in trouble with the US economy. That is what matters.

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I mean - have you read the MOU? We had to give up a lot of what Iran would ask for, just to get them back to the negotiating table. We’re releasing them from sanctions on selling oil, gas, and petroleum products - and releasing them from all the related sanctions on financial services, insurance, and other matters pertaining to those sales. That’s a really huge chunk of sanctions relief. On top of that, the MOU calls for the release of Iranian frozen assets - not only will we end the freeze, but we’re committed to cooperate in the permits and licenses needed to move all those assets back to Iran or their chosen designee.

Those are our upfront concessions. That’s just to get them to come back to the table. They didn’t have to agree to any nuclear concessions to get those.

That takes a huge swatch out of their wish list. They’ve already got the assets unfrozen, and they’ve already got sanctions lifted on the biggest chunk of their economy. Given that, it’s hard to see how there could be any deal which ends up denying too much of their remaining wish list - because we have to give them something to get them to agree to nuclear restrictions, and we already them a big chunk of the carrots before the talks even start.

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Have you heard Trump this morning? He is ready to bomb Iran. Iran is ready to bomb Israel. Israel is ready to bomb Iran.

Have I wasted my time? No. Of course not. You do not read every contract on earth that will never be applied. Do you?

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It’s an MOU, not a contract.

Honestly, I don’t pay attention to his incoherent ramblings anymore. With the number of times he’s waffled between a deal being nigh and threats to blow Iran off the face of the earth, I can’t believe anyone would put much stock in what he says.

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I never said it was.

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No, he’s not. He’s ready to threaten to bomb Iran. Because he thinks that will help. The Iranians know that we need this deal more than they do - both because anyone with eyes can see the strategic mistakes that the U.S. has made and because we already agreed to give them the sun and moon and stars just to get them to the table.

Trump mistakenly thinks that if he proclaims loudly and dramatically that he’s willing to walk away and start bombing again that it might actually convince people that this is the case. He’s wrong. No one who’s paying attention thinks that it’s in Trump’s interests - at all - to go back to a hot war. He knows that if you’re in a negotiation and you’re not willing to walk away, you’re going to get reamed. But he wasn’t smart enough to realize that this was always going to happen and therefore refrain from getting into this position. Now that he’s in this position, he has no card left to play other than to posture about being willing to go back to fighting.

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You keep thinking we need this deal. Why do we need this deal? You never explain that.

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I’ve explained it numerous times. If we don’t have this deal, the Strait stays closed. Prices for oil and gas and fertilizer and a host of other indispensible factors of production for the worldwide economy stay insanely high. Physical shortages start to shut down key sectors of many countries, especially in Asia. Not just oil, but natural gas and helium. Inflation escalates, interest rates rise - and the world goes into a global recession. That’s what an indefinite closure of the strait brings.

Trump can’t live with that. We need the strait to be opened. Which is why he had to give up so much just to get Iran to go back to the status quo of late February before the war. We can’t bomb the strait open, he didn’t have the ability to marshall the massive ground invasion necessary to force the strait open - so he basically had to give the Iranians a massive benefit in order to induce them into this deal.

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That is not true. If Iran is paid fees they keep the strait open most of the time. When they shut it down here and there the regime risks war with China, India, the US, and EU.

We do not need a deal. That is magical thinking that we ever did.

Yes things coming through the strait will cost more. That gives us an advantage in trade. It won’t cost us much more.

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It is true. Iran wasn’t going to reopen the strait unless we stopped bombing them and removed the blockade. And that wasn’t going to happen unless there was an agreement between the parties that they would open the strait in exchange for the bombing stopping and the blockade being lifted. And once both parties had accepted that there would have to be a deal, then Iran had all the leverage to force favorable terms into the deal.

Iran was already at war with the U.S. They did not run any risk of war with the EU, India, or China - because all of those countries had already made it clear that the U.S. created this problem and that they weren’t getting into a ground war with Iran to help clean up the U.S.’ mess.

I think you misunderstand. The “deal” in question is the deal to open the strait. It would have been catastrophic for the strait to stay closed, which is why we had to agree to this deal.

This future, amorphous thing that the parties are negotiating in the future? That “final” deal to address nuclear issues? There’s every reason to suspect that will never happen. Trump and the U.S. don’t need that deal to happen. I think that’s the most likely outcome - it will take years of hard work to hammer out that kind of deal, and that’s not the President’s style.

But this deal - the MOU? We had no choice but to agree to it. And that’s what Trump can’t walk away from. For all his posturing, he can’t have “no deal” on the strait. Which is why Iran has him by the you-knows.

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“wasn’t”?

Al,

Move with the times.