US-Iran talks stalled, escalating oil prices and global disruptions

The ongoing conflict between the United States and Iran has entered its 60th day, with negotiations described as "stalled" and no resolution in sight. Experts warn of long-term disruptions as Tehran has closed the Strait of Hormuz, a crucial passage for approximately 20 percent of the world’s oil and gas exports. The US has implemented a blockade to restrict Iranian oil shipments, further exacerbating the situation.

As a result, oil prices have surged, with WTI crude reaching $100.09 and Brent crude at $111.85. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, stated, "Negotiations seem stalled ... and any near-term resolution seems difficult." The United Arab Emirates announced its departure from OPEC effective May 1, aiming to increase oil production, but this is hindered by the closure of the strait.

The conflict's economic impact is significant, with the US consumer price index rising to 3.3 percent, the highest since May 2024, driven by energy costs. Bernard Yaros, lead US economist at Oxford Economics, noted that higher energy prices will likely influence inflation expectations and wage-setting behavior. Ben May, director of Global Macro Research at Oxford Economics, has downgraded the global GDP growth forecast due to expected prolonged disruptions in shipping through the Strait of Hormuz.

The ongoing war is also affecting US domestic politics, with President Trump's approval ratings declining as inflation rises. David Coffey, a procurement consultant, warned of worsening supply chain issues, stating, "Even if fuel supplies restart, it’ll be a few weeks before it can reach anywhere. There will be long-term disruptions."

What to watch: The upcoming midterm elections in November could be influenced by the economic fallout from the conflict and rising inflation.