Macro Implications of the 2026 Iran War for EU and US Inflation and Growth

Emily Carter

Welcome to Global Equity Research. I’m Emily Carter, and you’re listening to our rapid-response series on how big macro shocks filter into markets and real economies. Today we’re unpacking Softgate Capital Research’s new report, “Macro Implications of the 2026 War in Iran for EU and US Inflation and Growth.” You can find the full written report via the link in the episode description or directly at softgatecapitalresearch.com.

Emily Carter

I’m joined by my co-host, and Softgate Capital’s new chief analyst, Gregory Palmer. Gregory, this is your first time on the mic with us in that new role—no pressure.

Gregory Palmer

Yeah, no pressure at all—just trying to explain a war-driven energy shock without stumbling over my inflation models. But it’s great to be here, Emily, and this is exactly the kind of messy macro story I like turning into something usable for investors.

Emily Carter

So let’s set the stage. The report starts with a very specific timeline from late February into March 2026. Walk us through what actually happened.

Gregory Palmer

Right. The clock really starts on February 28th, 2026. That’s when large-scale U.S.–Israeli strikes hit targets in Iran. From there, you get a pretty quick escalation cycle: Iranian retaliation, attacks affecting shipping and regional infrastructure, and explicit threats around the Strait of Hormuz. By early March, commercial maritime traffic through Hormuz is described as basically ground to a halt. Operationally, one of the most important signals comes on March 10th: reporting cites the U.S. Navy telling the shipping industry that naval escorts through Hormuz aren’t possible “for now.” So even with naval power present, the message is: we cannot safely shepherd tankers through this chokepoint at scale. That keeps perceived risk and insurance premia elevated.

Emily Carter

And that chokepoint aspect is really the heart of the story. For listeners who don’t live in tanker data all day, why does Hormuz matter so much?

Gregory Palmer

Hormuz is the highest-leverage energy chokepoint on the planet. In 2024, oil flows through the strait averaged about 20 million barrels per day—roughly 20 percent of global petroleum liquids consumption. On top of that, about 20 percent of global LNG trade moved through Hormuz, mainly Qatari volumes, with some from the UAE. Bypass capacity is limited to just a few million barrels per day via pipelines to places like Fujairah and the Red Sea, and those routes haven’t really been stress-tested at this scale. So if you choke Hormuz, you’re not just pinching regional flows, you’re constraining a fifth of global oil and LNG, and a lot of the world’s spare capacity is effectively trapped behind that gate.

Emily Carter

Which is why policymakers reacted so aggressively, right? The IEA stepped in with something unprecedented.

Gregory Palmer

Exactly. On March 11th, the International Energy Agency announces the largest coordinated emergency release it’s ever done: 400 million barrels from members’ emergency reserves. That’s a huge signal—essentially saying, “This isn’t just noise, this is systemically important.”

Emily Carter

Markets clearly took it seriously even before that release. The report leans on U.S. government price series to show how fast things repriced. What stands out for you?

Gregory Palmer

The speed. Between February 27th and March 9th, spot Brent moves from about 71 dollars 30 to 94 dollars 35—roughly a 32 percent jump. WTI goes from about 66 dollars 96 to 94 dollars 65, so more like 41 percent. That’s a massive crude move in less than two weeks. And it doesn’t stop at flat price. A key VLCC benchmark for Middle East to Asia is reported around 424 thousand dollars per day—described as an all-time high. War-risk insurance premia in and around Hormuz jump from roughly a quarter of a percent of hull value to something in the one to one-and-a-half percent range. You’re talking four to six times pre-war pricing just to insure the ship.

Emily Carter

So you’ve got higher oil prices, higher freight, and a multiple on war-risk premia—all at once.

Gregory Palmer

Right. That combination directly raises delivered energy costs and effectively tightens supply, even if barrels are technically still being pumped somewhere. And because LNG carriers and broader shipping are caught up in the same risk complex, you very quickly move from a “just oil” shock into a broader energy-and-logistics shock.

Emily Carter

Which is where the macro lens really kicks in. In the report, you call it a first-order energy and logistics shock with second-order transmission through risk premia, expectations, and confidence. After the break, we’ll dig into what that means for inflation and growth in Europe versus the U.S.—and why the euro area looks more fragile in most of your scenarios.

Emily Carter

Let’s get into the mechanics. When listeners hear “energy and logistics shock,” that can sound abstract. How, concretely, does this move into headline inflation in the EU and the U.S.?

Gregory Palmer

I’d break it into four main channels. First is oil and refined products: crude feeds straight into gasoline and transport fuels. A widely used U.S. rule-of-thumb—cited by Dallas Fed research—is that crude is about half the retail gasoline price, so a 20 percent crude shock gives you roughly a 10 percent gasoline move and about a 0.3 percent level increase in CPI, with most of that pass-through inside a month. Second is gas and LNG, which is where Europe is particularly exposed. Around 20 percent of global LNG trade went through Hormuz in 2024, mostly Qatari gas. Even though a lot of that targets Asia, Europe feels it through global scarcity and price bidding. And an ECB working paper from March 2026 estimates that a gas supply shock raising gas prices by 10 percent lifts euro area headline inflation by about 0.6 percentage points after one year. That’s a big multiplier.

Emily Carter

So even if the physical gas shortfall hits Asia more directly, Europe gets hit via price, and that propagates through power and industry.

Gregory Palmer

Exactly. Third channel is shipping and insurance: the VLCC freight spike, LNG carrier rates jumping more than 40 percent in the reporting, and war-risk premia going 0.25 to 1–1.5 percent all raise delivered prices. The fourth is sanctions and trade finance frictions—U.S. and EU measures against Iranian networks and shadow-fleet logistics. Even when cargo technically can move, payment and compliance get harder, which adds cost and uncertainty.

Emily Carter

Given those channels, your model in the report quantifies how much extra inflation this war could add relative to the pre-war baseline. Can you walk through the headline numbers?

Gregory Palmer

Sure. Think of three scenarios. In the baseline—where disruption eases within weeks and conditions broadly line up with the EIA’s March outlook—you get an additional 0.45 percentage points on average euro area HICP over the next 12 months, and about 0.23 percentage points on U.S. CPI. In the moderate shock—multi-quarter disruption, partial closure, elevated freight and insurance—that rises to about 1.74 percentage points for the euro area and 0.82 for the U.S. over 12 months. In the severe case—prolonged effective closure, big regional outages, logistics really impaired—you’re up around 3.46 percentage points for euro area HICP and 1.71 for U.S. CPI, again as 12‑month averages.

Emily Carter

So across the spectrum, Europe takes the bigger inflation hit.

Gregory Palmer

Yes, structurally. Gas and power pass through faster into European prices, and the ECB is constrained by its need to avoid a repeat of the 2022–23 energy shock. The U.S. still sees meaningful inflation because gasoline is such a visible household purchase and oil is globally priced, but the U.S. has more domestic production and generally less regulated retail energy pricing, which can make the system a bit more flexible.

Emily Carter

And what about growth? The report argues the hit is more growth-negative for Europe than the U.S., but with more uncertainty than the inflation estimates.

Gregory Palmer

Right. There are three big reasons. First, terms of trade: the euro area is a large net energy importer at the margin, while the U.S. produces a lot of its own oil and gas, so more of the income loss is external for Europe. Second, industrial structure: European manufacturing and power systems transmit gas shocks very directly into producer prices and activity. ECB research shows sizable headline inflation effects from gas supply shocks; if wages don’t keep pace, that’s real-income compression and weaker consumption. Third, policy constraints: if euro area inflation re-accelerates into those moderate or severe scenarios, the ECB has less room to ease even as growth softens. The Fed faces a tough trade-off too, but the starting point and the domestic energy base are different.

Emily Carter

You also flag second‑round risks—wages and expectations—plus FX and financial conditions as amplifiers. Can you sketch that out?

Gregory Palmer

Sure. Europe has fresh memories of double‑digit energy inflation, so there’s a higher risk that workers and firms respond more aggressively this time, pushing for compensation when they see energy back in the headlines. That’s the classic second‑round channel: energy shocks bleeding into wages and then core inflation. On FX, geopolitical stress has supported the U.S. dollar; Reuters reporting highlights the dollar rising against the euro on the back of war‑driven oil anxiety. A stronger dollar tightens global financial conditions and can import disinflation to the U.S. but raise imported-cost pressure for others. Add higher equity volatility, wider credit spreads, and you’ve got another layer of tightening on top of the direct energy shock.

Emily Carter

So the bottom line for listeners is: energy and logistics are the spark, but the medium‑term macro damage depends on how wages, expectations, FX, and policy all interact. Next, we’ll talk about that policy side, and how the report translates these scenarios into a high-level investor playbook—without getting into specific trades.

Emily Carter

Let’s zoom in on policy. We’ve already talked about the IEA’s 400‑million‑barrel emergency release. What else are policymakers actually doing, and what are they signaling?

Gregory Palmer

Energy security is clearly front and center. Besides the IEA release, U.S. reporting points to potential use of the Strategic Petroleum Reserve, which legally requires a presidential finding of a “severe energy supply interruption” or participation in an international program. In Europe, emergency oil‑stock rules mean member states hold at least 90 days of net imports or 61 days of consumption, giving a framework for coordinated releases if needed. On shipping risk, the U.S. International Development Finance Corporation has announced a 20‑billion‑dollar maritime reinsurance facility aimed at reducing war‑risk premia for hull and cargo. That targets one of the bottlenecks that can keep effective supply constrained even when production is available. Then there’s central bank communication: ECB officials stress vigilance and a determination to avoid a repeat of the 2022–23 episode, while Fed officials emphasize getting inflation back to 2 percent over time but acknowledge that an oil shock can raise inflation and slow growth simultaneously. Both institutions frame their 2 percent goals—medium‑term for the ECB, longer‑run for the Fed—as anchors against second‑round effects.

Emily Carter

Sanctions are another layer here. The report notes new EU measures and continued U.S. focus on Iranian networks and the shadow fleet, which adds friction even when physical flows are possible.

Gregory Palmer

Exactly. Those actions increase transaction and compliance costs and can outlast the kinetic phase of the conflict, which is one reason the report treats them as part of the “persistent risk” backdrop rather than a short‑term headline.

Emily Carter

Without giving any kind of recommendation, can you translate your scenarios into a very high‑level investor playbook—just in terms of what variables matter across assets?

Gregory Palmer

The way I’d think about it—purely as macro context—is by mapping each scenario to a few key dimensions. On rates and curves, a short, well‑managed disruption is more consistent with a temporary bump in headline inflation and limited change in the medium‑term policy path. A moderate or severe disruption, especially in Europe, points toward a tougher inflation‑growth trade‑off and more two‑way uncertainty on curves. For inflation compensation—breakevens and similar gauges—the question is how much of the energy shock markets see as transient versus persistent. Our numbers suggest a clear one‑year impact, but the fade in 2027 is important if policy credibility holds. On FX, the dollar’s role as a geopolitical hedge has already shown up in the data; an extended conflict with Europe more exposed on energy tilts the macro backdrop toward euro underperformance relative to the U.S. in many states of the world. And in equities, the report talks in terms of sectors rather than tickers: energy‑intensive industries, transport, and European cyclicals are more directly exposed to higher input and freight costs, while some parts of the energy complex, logistics, and insurance are closer to the center of the shock. The key is risk management and scenario awareness, not a single deterministic view.

Emily Carter

That’s helpful framing—more like a map of pressure points than a set of calls. Before we wrap up, I need to read an important disclaimer from Softgate Capital Research. This is the same text you’ll find at the end of the written report.

Emily Carter

Before we wrap up, a brief but important disclaimer from Softgate Capital Research: This publication has been prepared independently and impartially by Softgate Capital Research, a company based in the Czech Republic, for the sole purpose of providing general informational content. It is intended as an additional source of insight for interested readers and may include general market commentary, macroeconomic observations, or descriptions of financial products, without any emphasis on marketing or product promotion. This document does not constitute a marketing communication within the meaning of applicable EU and Czech regulatory frameworks, including delegated Regulation (EU) 2017/565. It contains no direct incentives to purchase financial instruments and is informational in nature. The publication does not provide investment recommendations, value judgments, or guidance regarding the relevance of the information to any investment decision. Accordingly, it does not qualify as investment research under Art. 36 (1) of delegated Regulation (EU) 2017/565. It has not been prepared in accordance with legal requirements designed to ensure the independence of investment research and is not subject to restrictions on trading prior to the dissemination of investment research. All information contained herein is non-binding and reflects the knowledge and understanding of the author(s) as of the date of preparation. Softgate Capital Research reserves the right to amend, update, or withdraw any part of this publication at any time without prior notice. Nothing in this publication should be interpreted as an offer, solicitation, recommendation, or invitation to engage in any transaction involving financial instruments or related products. No part of this document should be relied upon as the basis for entering into any contract or for including any financial instrument in an investment strategy. The information presented is derived from publicly available sources that Softgate Capital Research considers reliable; however, the firm has not independently verified such information. While reasonable care has been taken to ensure accuracy and fairness, Softgate Capital Research and its representatives make no express or implied warranty regarding the completeness, timeliness, or correctness of the content. No liability is accepted for any loss or damage—direct, indirect, consequential, or otherwise— arising from the use of or reliance on this publication. Hyperlinks to external websites may be included for reference. The presence of such links does not imply endorsement, approval, or responsibility for the content of any external site. Any opinions, estimates, forecasts, or projections expressed herein represent the judgment of the author(s) at the time of publication and may change without notice. Softgate Capital Research has no obligation to update or revise this document should circumstances, assumptions, or market conditions change. Past performance of financial instruments or issuers is not indicative of future results. No assurance can be given that any financial instrument or issuer discussed herein will achieve favorable outcomes or reach any particular price level. Forecasts are based on assumptions supported by available data but remain inherently uncertain. Softgate Capital Research, its principals, or its employees may hold positions in, or engage in transactions involving, financial instruments mentioned in this publication. The firm may also provide services to issuers or companies referenced herein. Softgate Capital Research may act upon information contained in this publication prior to its distribution. This publication is the intellectual property of Softgate Capital Research and may not be reproduced, distributed, or transmitted—whether in whole or in part—to unauthorized recipients without prior written consent. By accessing this publication, the recipient agrees to comply with these restrictions. Softgate Capital Research is not registered or certified as a credit rating agency under Regulation (EC) No 1060/2009 on credit rating agencies. Any assessment of issuer creditworthiness contained herein doesnot constitute a credit rating within the meaning of that regulation. Analyses or interpretations of credit ratings are based solely on publicly available rating documents and do not represent a rating action.

Emily Carter

That’s all for this episode of Global Equity Research. If you’d like to go deeper into the charts, tables, and scenarios we discussed, you can access the full report at softgatecapitalresearch.com or via the link in the description.

Gregory Palmer

Emily, thanks for steering us through a pretty dense topic. And thanks to everyone listening for sticking with a lot of moving parts—energy, logistics, inflation, policy. We’ll keep updating as the data and the situation evolve.

Emily Carter

If you found this helpful, please like, share, and subscribe to Global Equity Research so you don’t miss future macro and equity episodes. Gregory, thanks again—and we’ll see you all next time.

Gregory Palmer

Thanks Emily. Take care everyone.