In this edition: signal; system insights; what I am reading; and one last thing.
Signal
More Talks Expected After US Enforces Blockade on Iranian Ports Amid Hormuz Crisis
This week, the United States military said it had activated a targeted blockade of Iranian ports and coastal waters, a dramatic escalation in the almost 2-month old US-Israel conflict with Iran, which began on February 28.
The move came after inconclusive peace talks in Islamabad last week.
Vice President JD Vance, who led the US delegation, said the negotiations failed because Iran would not provide an “affirmative commitment” that it would not seek a nuclear weapon or the tools to achieve one quickly.
Oil prices rose sharply after the US military said it would implement a shipping blockade.
On Friday, Iran’s Foreign Minister, Seyed Abbas Araghchi, said “the passage for all commercial vessels through Strait of Hormuz is declared completely open for the remaining period of ceasefire, on the coordinated route”, after an Israel-Lebanon cease-fire agreement.
Oil prices dropped significantly, and stock markets in the US and Europe rose.
However, President Trump said the US blockade would continue.
In response, Iran’s top negotiator and parliament speaker, Mohammad Bagher Ghalibaf, said that “with the continuation of the blockade, the Strait of Hormuz will not remain open”.
Meanwhile, it was reported by Axios that the U.S. and Iran were negotiating over a three-page plan to end the war. According to their sources, the U.S. was considering a $20 billion cash-for-uranium deal with Iran.
New peace talks are reported to be possible for this weekend.
Why this matters: The Strait of Hormuz is the world’s single most important energy chokepoint. The IEA had recently described the impact of the disruption to oil and gas flows through the Strait as "the greatest threat to global energy security in history".
About 20% of global oil supplies and significant LNG volumes passed through the waterway before the conflict began.
With the current ceasefire nearing its end, the clock ticked in a very literal sense for global energy markets.
However, the prospect of new peace talks opens up the possibility of an extension to the ceasefire or a final agreement to end the conflict.
Key details:
The blockade took effect on Monday, 13 April at 10 a.m. ET.
It will not impede freedom of navigation for vessels transiting the Strait of Hormuz to and from non-Iranian ports, according to the US Central Command.
Iran’s military warned that no port in the Persian Gulf or the Sea of Oman would remain secure if Iranian ports are targeted, according to Iranian Press TV.
This US move countered Iran’s initial closure of the Strait since late February, and its tollbooth scheme, which reportedly charged some shipping companies a $2 million fee to guarantee safe passage.
Brent crude, the international oil price benchmark, broke through $100 a barrel, falling back below that mark as the week progressed.
Last week, just 24 ships passed through the Strait out to the ocean, according to reports. This is just a fraction of the ships that normally passed through before the conflict began.
China, India, Japan and South Korea reportedly account for 75% of oil and 59% of LNG exports from the region according to recently published research, making Asian supply chains deeply exposed.
The IEA Executive Director Fatih Birol said this week in an interview with AP that Europe has “maybe six weeks or so (of) jet fuel left”, if the Strait of Hormuz is not opened.
Sources: AP US Central Command France 24 OilMarkets.com NBC News Zero Carbon Analytics NYT The Guardian Reuters Iran’s FM Seyed Abbas Araghchi on X Iran’s Speaker of Parliament, MB Ghalibaf on X Market Watch Axios Horizon 11 April IEA
A Darker Outlook for the Global Economy
As flagged in last week’s edition of this Horizon briefing, the IMF this week released its flagship April 2026 World Economic Outlook report at its Spring Meetings in Washington, D.C.
It is arguably the most sobering report since the COVID-19 lockdown of 2020. The title says it all: “Global Economy in the Shadow of War.”
Why this matters: This is a warning signal from a leading international financial institution about the systemic risks that are now compounding simultaneously.
IMF chief economist Pierre-Olivier Gourinchas wrote that the war in the Middle East “interrupted what had been a steady growth trajectory”.
He said, before the war, the fund was poised to upgrade its global growth forecast, reflecting continued momentum in the global economy. But the forces of this momentum (tech investment boom, easing trade tensions, targeted fiscal support, and favourable financial conditions) will be overwhelmed by the war.
Central banks already navigating a post-tariff inflation overhang now face the worst of all policies with an energy shock pushing inflation up at the same time as growth is being knocked down.
Key details:
Assuming a short-lived conflict, the fund projects global growth of 3.1% this year, a downward revision of 0.2% from their January projections. Headline inflation is expected to rise to 4.4% in 2026 from 4.1% in 2025.
Under an adverse scenario, global output is expected to decline to 2.5% in 2026, with inflation rising to 5.4%.
Under a severe scenario, growth would be around 2% this year and next, and global headline inflation would come close to 6%. In such a scenario, the fund believes that the global economy would come close to experiencing a recession.
Beyond geopolitics, other risks on the fund’s horizon include renewed trade friction, an AI market correction, fiscal pressures risk driving up long-term interest rates, and institutional erosion, where weakening central bank independence or policy credibility could spike inflation expectations.
On the upside: Increased AI investment and adoption could boost productivity and business dynamism. Structural reforms and a continued easing of trade tensions could further lift economic activity.
The 21 eurozone countries are forecast to grow just 1.1% in 2026, down from 1.4% in 2025, hit hard by energy disruptions. Britain is expected to grow by 0.8%, Canada by 1.5%, Japan by 0.7%, and the United States by 2.3%.
Higher commodity prices have led to an upward revision of Russia’s growth forecast to 1.1% in 2026.
Growth in the Middle East and Central Asia is set to decline to 1.9% this year as the region is most directly impacted by the ongoing conflict.
Sources: IMF WEO April 2026
System Insights
The Iran War and the current situation in the Strait of Hormuz are perhaps the most acute expression of systemic pressure, where the United States, so far, appears to be using its military dominance not for the traditional purposes that would have been expected in the liberal international order’s heyday: to stabilise a public good of open shipping lanes. Instead, the current effect seems more intent on using maritime control as coercive leverage. From a realist perspective, this is power politics at its rawest.
The short-term consequence is an energy price shock. However, the medium-term consequence, if the blockade is sustained, could represent something far more structural that significantly disrupts energy supply chains, particularly for the Asia-Pacific economies. China, India, Japan and South Korea together account for 75% of oil and 59% of LNG exports from the Gulf. Those nations should be expected to increase investment in alternative supply routes and energy sources. The “globalisation of insecurity” is now a real and tangible market variable.
The IMF WEO, published this week, is reflective of a “negative supply shock”, the textbook stagflationary scenario, and comes on top of an already fragile global system. The fund notes that war in the Middle East has halted what was a genuinely improving trajectory. Higher energy prices are a textbook negative supply shock because they raise production costs and consumer prices, disrupting supply chains and eroding purchasing power.
This, no doubt, will cause much discomfort for central banks. The ECB, the Bank of England, and, perhaps to a lesser degree the Fed, all facing their own version of the same impossible dilemma: do they cut rates to protect growth, or do they hold/raise to contain inflation reignited by an energy shock?
The IMF’s own analysis shows that defence spending booms, which are accelerating this year, can boost economic activity in the short term but also temporarily increase inflation and create significant medium-term challenges. To avoid risks of overheating the economy, close coordination with monetary policy is also required.
What I am Reading
A New Form of World War. Paul Poast, an associate professor of political science at the University of Chicago, argued in a guest essay in The New York Times that the ongoing wars in Ukraine and Iran constitute a new form of world war, which are simultaneous, interconnected conflicts in which major powers indirectly confront each other by arming opposing sides. Drawing on historical precedents, he contends that today’s multipolar competition and the growing willingness of leaders to use military force create conditions in which limited wars can escalate across regions. To avoid unintended global conflict, leaders must adopt a genuinely global strategic lens. Opinion | A New Era of World War Has Arrived - The New York Times
European Asset Manager Risks. Dirk Schoenmaker, in a policy brief for the think tank Bruegel, argues that Europe faces mounting strategic, regulatory, and sustainability risks because US asset managers with different priorities on stewardship issues are rapidly becoming dominant in the European market. The EU must respond with stronger stewardship rules, centralised supervision, and proactive action to preserve European strategic autonomy. Risks for Europe of US dominance of global asset management
Tech Skills Adjustment. Shira Ovide and Andrew Van Dam argued in The Washington Post this week that the apparent decline in computer science majors is less about AI killing coding jobs than we may initially suspect and more about students redistributing into newer, adjacent tech disciplines amid a tougher job market and shifting perceptions of opportunity, suggesting that a structural adjustment is underway in the U.S. human-capital pipeline. https://www.washingtonpost.com/technology/2026/04/13/computer-science-major-ai/
Demographic Surge and Jobs. Staying with the subject of the jobs market, but this time on a more global scale. Ajay Banga, President of the World Bank Group, and Elisabeth Svantesson, chair of its Development Committee, argue that the world is now entering a decade where a massive demographic surge in developing countries collides with tighter public finances, and the only viable way to turn this population growth into jobs is by improving the policy and regulatory environment so private investment can scale. To turn demographic growth into jobs, get the rules right | World Bank Group blogs
One Last Thing
In the same week as the results of the elections in Hungary came through and delivered a political rupture, it was reported in Politico this week that the European Commission President, Ursula von der Leyen, called for qualified majority voting in foreign affairs, citing the need for a faster response to geopolitical events.
If member states agree to it, it would effectively end the unanimity requirement in foreign policy decisions. Such a move would speed up decision-making but would also be a move away from the EU’s intergovernmental origins, which traditionally left foreign affairs decision-making in the hands of member states. It would erode national veto power and potentially lock in the preferences of larger members.
Henry Kissinger, the former US Secretary of State, is often cited for asking ‘Who do I call if I want to call Europe?” If member states choose to grant these powers for the improvement of decision-making efficiency, it would go some way towards the EU member states speaking with one voice. It would also promise more predictable signals amid rising geoeconomic tensions, such as sanctions and other foreign‑policy‑linked measures.
However, even with QMV in the European Council (which represents the member states), the EU still combines multiple institutions (Commission, Council, High Representative), and member‑state diplomacy often continues in parallel.
Thoughts shared here are intended for discussion and knowledge only, not financial, investment, or legal advice. Always chat with your advisors first.