Prolonged Iran war hurts industry disproportionately
Global industry hit hardest as Gulf energy disruption cascades through manufacturing and supply chains worldwide.
Our new Prolonged Iran War scenario, which models a six-month closure of the Strait of Hormuz and intensified attacks on energy infrastructure, would lead to a global industrial recession. Growth would fall to 0.6% in 2026, the lowest outturn since the Covid-19 pandemic.
Our Global Industry Model suggests transport, chemicals, refining, basic metals, and power generation would face the largest hits to activity.
We use input-output modelling techniques to identify key region-sector vulnerabilities. This analysis shows key Asian refineries, chemicals manufacturers, and power generators are reliant on inputs from the Gulf and are acutely exposed to disruption to energy inputs.
Beyond oil and gas, our TradePrism data show the Gulf region is also a major supplier of sulphur, helium, polyethylene, raw aluminium, and fertiliser inputs such as urea and ammonia. These create cost and supply-chain risks for a range of downstream sectors, including food, metals, plastics, and semiconductors, that would intensify in a prolonged disruption to the Strait.
Second-round impacts are also critical in this scenario, as higher inflation, weaker confidence, and interest rate hikes hit a broader set of industries. Big-ticket discretionary items like automotives, and investment-led sectors like machinery, are especially vulnerable to the deteriorating macroeconomic backdrop.
Download the full report for detailed insights and scenario analysis.