The initial deal between the United States and Iran is still on course to be signed on Friday. If the next stages of negotiations are successful, they could end not just the war but also the terrible disruption to energy and trade flows that came with it.
So far, so good. The trouble is, the war has set in motion changes that will be hard to reverse, particularly when the prospects for a lasting peace still look shaky. So don’t expect economic growth to simply pick up where it left off before the U.S. and Israel first bombed Iran on Feb. 28. Today I write about what can’t be fixed quickly — and possibly can’t be fixed at all.
The world economy will never be the same
Few corners of the world economy have been left untouched by the past four months of war.
When Iran closed the Strait of Hormuz, Middle East energy exports dried up practically overnight. Oil and gas prices exploded. Inflation surged.
The economic fallout has taken the form of energy rations in Asia, fertilizer shortages in Africa and grounded planes in Europe. It has affected politics, too. President Trump is not the only leader whose ratings have fallen as voters despair about the cost of living.
The huge toll of this war is one of the main reasons Trump has been so eager to end it. It’s also one reason to think the current deal could lead to long-term peace: Many are desperate for this to be over.
But bringing a global economy back online after it has been operating at reduced speed for months is not going to be easy — or fast. As my colleague Patricia Cohen writes, expect the economy to be “kicked onto a path of lower growth and higher prices” for some time to come.
Trust and logistics
When the preliminary agreement to open the Strait of Hormuz and lift the U.S. blockade was announced, the relief in markets was immediate. Oil prices fell to their lowest levels since early March.
But as my colleague Rebecca Elliott writes, getting substantial amounts of oil and gas actually flowing again will take a lot longer.
In the best of times, it can take weeks or months to get oil and gas from wells in the Middle East to buyers in China or Japan, and these are far from the best of times.
The strait is not yet open. There are concerns that it could be mined. When it does open, the first step will be getting out the hundreds of stranded vessels. That process alone could take weeks, U.S. officials say.
The next step — firing up oil wells, refineries and other infrastructure that have been idle for months — is another difficult task. Fixing any infrastructure that was damaged in the war will take even more time, and money.
For any of this to happen, energy producers in the Gulf need to trust that the U.S.-Iranian deal will last. The best-case scenario for finding a new equilibrium, Wael Sawan, the chief executive of Shell, told Rebecca, is six to 12 months.
But restarting energy shipping isn’t just about getting trapped ships out through the Strait of Hormuz. It’s also about persuading shipping companies to come back in — and shipping executives are perhaps even more uneasy than energy executives. One told my colleague Jenny Gross it would take weeks or even months for him to feel comfortable sending ships into the Persian Gulf again.
A new global economy
If the U.S. and Iran eventually reach an agreement that enough parties have faith in, there’s a good chance that energy infrastructure in the Middle East will eventually be rebuilt and that shipping will eventually rebound.
But the war has altered the global economic order in ways that already look permanent, or at least enduring.
The cost of shipping may have permanently gone up. Iran wants to impose fees on ships that pass through the Strait of Hormuz, Patricia wrote. And the fact that it has demonstrated its power to disrupt shipping raises insurance costs.
The energy shock of the past four months is also “supercharging the hunt for alternatives” to Middle East oil and gas, as Patricia put it. A push toward renewables looks likely to benefit China, the world leader in producing wind turbines, batteries and solar panels. Russia, the second-largest producer of crude oil and gas after the U.S., has gotten a boost. And countries like Brazil, Venezuela, Colombia, Argentina and Guyana are all ramping up their oil production capacities.
The Gulf, a wealthy region that includes major global trade and financial hubs, may never be the same. Attacks on five-star hotels and airports have shaken its image as a beacon of stability in a volatile region.
Perhaps most importantly for many households, the world economy is no longer on the path it was on at the start of 2026. Back then, Patricia writes, economists were thinking about upgrading their forecasts for the year. “Inflation was coming down, growth was picking up,” the World Bank’s chief economist, Indermit Gill, said.
Now, central banks around the globe are raising interest rates to combat inflation. The World Bank just downgraded its global growth outlook. A year that started out promising looks likely to be painful. And that’s if the deal holds.
Other developments:
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Iran’s foreign minister said that talks with the U.S. on Iran’s nuclear program and sanctions relief would start immediately after the preliminary deal is signed on Friday.
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Iran will be entering the next phase of talks emboldened, my colleague Yeganeh Torbati writes.
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A coalition led by Britain and France is preparing to send minesweepers and other ships to secure the Strait of Hormuz once the cease-fire takes hold.
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TIMES EXCLUSIVE
Did Jeffrey Epstein kill himself?
Epstein’s death in a New York prison in 2019 was ruled a suicide by a medical examiner, but it has continued to be the subject of suspicion and intrigue. My colleagues reviewed thousands of pages of newly released documents, obtained his handwritten jail notes and interviewed fellow inmates as part of their investigation of his death.
They found no indication of a plot to kill him. They did, however, discover evidence that Epstein had written about and discussed suicide for weeks before his death, and that he had attempted it at least once — and possibly three times.
Read the full investigation and Epstein’s handwritten notes. Here are six takeaways.
OTHER NEWS
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British officials said a Russian frigate fired warning shots at a yacht in the English Channel. No damage or injuries were reported.
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At the Group of 7 summit in France, European leaders showed they remained ready to behave politely toward Trump. Prime Minister Narendra Modi of India is expected to meet Trump today.
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The U.S. charged at least five people in an alleged plot to attack the White House during Trump’s U.F.C. birthday event on Sunday.
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African health officials warned that the Ebola outbreak in Congo and Uganda could significantly worsen.
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SpaceX plans to acquire the A.I. startup Cursor for $60 billion.
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The A.I. boom is lifting Asia’s chip companies. None of them are Chinese.
WHAT ELSE IS HAPPENING
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Vice President JD Vance, who is expected to run for the presidency in 2028, released a book that criticizes Vatican officials. He also expressed some regrets.
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“Hockey Night in Canada,” a Saturday night ritual on the CBC, is no more.
TOP OF THE WORLD
The most clicked link in your newsletter yesterday was about a Greek priest going metal.
WORLD CUP
France and Argentina in action
Lionel Messi of Argentina and Kylian Mbappé of France are starting their 2026 World Cup campaigns. France, one of the top picks to win the tournament, took on Senegal in a highly anticipated opening round match. Argentina will face Algeria, and Norway will play Iraq, which hasn’t been at a World Cup in 40 years. We have live updates.
Leopard swag: Congo’s first match since 1974 isn’t until later this week, but the team is already making a splash. The players arrived in the U.S. sporting leopard-embellished suits and bags inspired by “La Sape,” the country’s tradition of dressing with pattern and personality.
We want to hear from you: Are you traveling for the World Cup? Tell us about your experience buying tickets, finding a place to stay and, if you’re coming to the U.S., dealing with entry requirements.
CAT CAMEO OF THE DAY
This ballet interruption
An orange cat wandered onstage in Turkey during a performance of Prokofiev’s ballet “Romeo and Juliet” during the tragic finale. It plopped down next to the fallen Romeo and then began to play with his hair, requiring Juliet to drag her lover away by the legs. Watch the video and read the comments for some glorious cat puns.
MORNING READ
In Ukraine, drones have come to dominate the battlefield and have even been absorbed into popular culture. Last month, a competition brought in soldiers from the front lines for a day of drone racing.
Pilots came with their families and friends, giving the event a festive atmosphere, with weapons buzzing around the grounds while children played on swings and slides. Check out the scene at the drone races.
AROUND THE WORLD
Unusual properties are hot in Australia
Australia’s housing market is among the most expensive in the world. In Sydney, real estate is so scarce that old electrical substations are in demand.
One property, on a main road leading to Bondi Beach, would need extensive work to make it livable. Bits of metal poked through the floor, and signs warned visitors to watch their step. “I would be inclined to restore it somehow,” one prospective buyer said. The asking price: 1 million Australian dollars, or about $700,000, less than a third of the area’s median property price. Read more about the electrifying real estate.
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RECIPE
These cold peanut ginger noodles are tossed with chopped crystallized ginger, which adds sweet-spicy chewiness. A combination of crunchy peanut butter and sesame oil gives the dressing an earthy nuttiness.
WHERE IS THIS?
Where is this statue?
TIME TO PLAY
Here are today’s Spelling Bee, Mini Crossword, Wordle and Sudoku. Find all our games here.
That’s it for today. See you tomorrow! — Katrin
A correction: Thursday’s newsletter stated incorrectly the name of the Croatian city featured in the photo quiz. It was Zadar, not Split. Thanks to our readers who spotted the error and wrote in.
We welcome your feedback. Send us your suggestions at [email protected].
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