What a week. Seven days of relentless Israeli and US bombing, the assassination of the head of state and other potential leaders of Iran, the closure of the Strait of Hormuz, the suspension of most oil and gas exports from the Gulf, closure of the world’s largest LNG refinery in Qatar, as well as Iran’s retaliatory strikes against oil infrastructure, hotels, airports and bases in all of the Gulf monarchies, but still no real sense of what the end game is for Washington.

The economic impact will depend on how long this continues. If the Iranians surrender quickly, things might settle down. If they hold out for weeks, as the Serbs did when Nato bombed them in 1999, then the disruption to the global economy will be profound; it will manifest itself as stagflation, oil prices will spike. And economic confidence, that most ephemeral but critical of commercial drivers, will evaporate, leading to higher inflation and lower growth, lower investment and lower spending.

Right now the world has experienced a brutal supply-chain shock: the price of freight, whether it’s on the high seas, the air or overland, has spiked. In this globalised age of Anthropic and Open AI, we tend to forget the logistics of getting bulky things from one country to another. In reality, the global economy is as much a feat of transport as technology. When we can’t move stuff about or when the risk of doing so soars suddenly then deliveries slow or grind to a halt.

When this transport shock has been absorbed, the next phase will be the stagflation phase, where the economy slows but inflation rises simultaneously, culminating in higher prices and higher unemployment.

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