The two-week ceasefire paused the US-Iran bombing, but fighting is still raging across the region — and Iran's emerging toll system on the Strait of Hormuz may have permanently rewritten the economics of global shipping
Key takeaways:
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The ceasefire is between the US and Iran and is not a regional peace — Israel launched its heaviest strikes yet on Lebanon within hours of the announced deal. Iran hit oil infrastructure in Kuwait, the UAE, Bahrain, and Saudi Arabia — including the East-West Pipeline, the primary route for bypassing the Strait of Hormuz. Companies planning around a return to normal should instead plan around the idea that the war has narrowed, not ended.
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If the disruption stays within one quarter, the economic damage is painful but reversible — The Dallas Fed projects WTI oil at roughly $98 per barrel with a modest GDP hit in a short-closure scenario. The catastrophic scenario — WTI above $132 with sustained negative growth — requires the closure of the war to drag past Q2. Every week the ceasefire holds improves the odds, but Iran’s strike on the Saudi bypass pipeline complicates even the optimistic timeline.
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Iran may have stumbled into the most lucrative chokepoint tax in modern history — At conservative estimates, transit fees charged for traversing the Strait of Hormuz could generate $40 billion to $50 billion for Iran annually, or roughly 10% to 15% of Iran’s pre-war GDP — all at near-zero operating cost. That revenue stream inverts Tehran’s incentives. Indeed, keeping the toll system in place may now be worth more than restoring free transit.
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On April 7, less than two hours before a self-imposed deadline that threatened the destruction of Iran’s civilian infrastructure, President Donald J. Trump announced a two-week ceasefire in the war in Iran that began on the last day of February and continued over 38 days of sustained air strikes by the Unites States and Israel. In turn, Iran carried out retaliatory attacks across over a dozen countries and forced the effective closure of the Strait of Hormuz.
With the ceasefire, all that has paused. Yet, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: How can I plan around this?
The honest answer is, not yet — and the first 24 hours have already shown why.
A fragile, but functional peace
The ceasefire is remarkably thin, and it’s based on three operative clauses: i) the US and Israel halt strikes on Iran; ii) Iran halts retaliatory attacks on the US and Israel; and iii) Iran allows “safe passage” through the Strait of Hormuz. Everything else — from nuclear terms, sanctions, reconstruction, and the legal status of Hormuz transit — has been punted to negotiations in Islamabad beginning April 10, with Pakistan mediating.
With the ceasefire, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: “How can I plan around this?”
However, what the ceasefire covers matters less than what it doesn’t. Within hours of the announcement, Israel launched its heaviest strikes yet on Lebanon, and Iran warned it would withdraw from the ceasefire if attacks on Lebanon continue. Meanwhile, Kuwait, the UAE, and Bahrain all reported fresh Iranian missile and drone strikes targeting oil, power, and desalination infrastructure after the ceasefire was in place. Most critically, Iran struck Saudi Arabia’s East-West Pipeline, the main route by which Gulf producers have been rerouting oil to bypass the blockaded strait.
That pipeline strike should command attention in every supply chain and energy risk briefing this week because it signals how shaky the agreement is, and that Iran remains a long-term threat to vital infrastructure across the region.
For companies operating in or sourcing from the Gulf, the practical implications are immediate. This is not a ceasefire that restores pre-war operating conditions; rather it is a bilateral pause between two belligerents while the regional war continues around them. Insurance premiums, shipping risk assessments, and supply chain contingency plans should reflect that distinction until there is a meaningful shift.
What does this mean for the next two weeks?
Both sides are claiming victory — and increasingly, claiming different deals. Trump called Iran’s 10-point proposal “a workable basis on which to negotiate”; and Iran’s Supreme National Security Council called the ceasefire a “crushing defeat” for Washington. The White House now says the 10-point plan Iran is publicly circulating differs from the terms that were actually negotiated for the ceasefire. Tehran, meanwhile, says there is no deal at all if Lebanon isn’t included — a condition the US has not acknowledged. And of course, the Strait of Hormuz remains closed.
These are not the hallmarks of a stable agreement; but they may be the hallmarks of a durable one. The deal is thin enough so that each side can brief its domestic audience on a different story, and as long as neither is forced to reconcile those stories publicly, the pause holds.
And the incentives to keep talking are asymmetric but real. The US has watched gas prices surge past $4 nationally as domestic support for the war — which started at levels best described as in a hole — continued to drop even further. Goldman Sachs raised its recession probability to 30% and JPMorgan to 35%, and every day the strait stays closed pushes those numbers higher. The administration needs the global economy to exhale and needs distance itself from a war so it can focus on other priorities, including an already difficult midterm election cycle.
With the ceasefire, all that has paused. Yet, the question every boardroom, general counsel’s office, and procurement team is asking right now is simple: How can I plan around this?
Iran, for its part, wants the bombing to stop. Its conventional navy has been functionally destroyed, its air defenses are highly degraded, its nuclear facilities have sustained severe damage, and its cities, bridges, and transportation networks have been hit repeatedly. The regime survived and arguably emerged with greater domestic legitimacy than it had before the war, but the physical toll is mounting. Tehran wants the strikes to stop so it can claim victory by survival without incurring any more costs.
This mutual exhaustion is the load-bearing structure of the ceasefire. If the ceasefire holds for 72 hours (as I think it might), and if the strait begins opening to escorted traffic by Friday as Iranian officials have signaled, and if neither side finds a reason to walk away before the Islamabad talks convene, then the ceasefire will likely be extended. Not because the underlying disputes get resolved, but because the cost of resuming hostilities exceeds the cost of continuing to talk. Expect a rolling series of extensions, probably 30 to 45 days at a time, that resolve nothing while letting global markets gradually stabilize.
As we wrote earlier this month, if the disruption remains limited to roughly one quarter, the oil price shock is painful but reversible, ugly, but manageable. And every week the ceasefire holds pushes the trajectory toward the manageable scenario.
What happens after the ceasefire?
Again, if the ceasefire holds, we then have to start thinking about how this conflict resolves. Not surprisingly, this is where it gets uncomfortable.
The conventional assumption in Washington and in global markets is that the Strait of Hormuz will return to normal once the fighting stops. That assumption underestimates what Iran has built.
Iran’s parliament is working to pass a Strait of Hormuz Management Plan, codifying its claimed sovereignty over strait transit and establishing a legal framework for collecting toll fees. Media reports indicate Iran has been charging vessels between $1 million and $2 million per transit and is planning to keep charging those tolls for all ships as the strait reopens. So, at $1 million per ship, and with up to 135 transits per day, 365 days a year, that’s about $40 billion to $50 billion in annual revenue for Iran, or up to 15% of Iran’s pre-war GDP. All at an operating cost that approaches zero.
Iran didn’t enter this war planning to build the most lucrative chokepoint tax in modern history, but it may have stumbled into exactly that.
Compare that to Iran’s oil sector, which generated approximately $53 billion annually in 2022 and 2023, required massive capital investment and maintenance, and was subject to constant disruption. The toll revenue is comparable in scale, dramatically cheaper to operate, and immune to sanctions. If the final number is even a fraction of this, it’s still a massive financial shot in the arm for Iran that could become a far greater advantage than the damage to capital that the war has inflicted upon the state.
Iran didn’t enter this war planning to build the most lucrative chokepoint tax in modern history, but it may have stumbled into exactly that.
Of course, this changes the structural incentives around the Strait of Hormuz in ways most analysts haven’t fully absorbed. A permanent toll system gives Iran a revenue base to rebuild the military assets it lost, reduce its dependence on oil exports, and fund domestic investment that could blunt future protest movements. The regime’s cost-benefit calculus has inverted: Keeping the toll operational in place may now be worth more than restoring the pre-war status quo.
For the US and Israel, the only way to dismantle this arrangement is by force and the last 38 days demonstrated the limits of that approach. The US achieved air and naval superiority, destroyed Iran’s conventional military, and killed the supreme leader. None of it was enough to compel capitulation, and in fact, may not have even come close. A second campaign faces the same likely result, against a population now unified by the experience of surviving the first one.
The war didn’t just disrupt global trade. It may have permanently repriced the most important shipping lane on Earth — and left every piece of energy infrastructure in the Gulf more vulnerable than it was before the first air strike landed.
You can find more about how the War in Iran has disrupted global trade and global economies here
