Executive Summary - A Challenging Inheritance

National Institute of Economic and Social Research ()

National Institute Economic Outlook, 2026, issue Summer, 1-4

Abstract: The Middle East conflict has produced a peace process, but not yet a peace. The Memorandum of Understanding agreed between the United States and Iran in mid‐June created a process for reopening the Strait of Hormuz, and oil prices fell from $102 per barrel at the time of our Spring Outlook to around $70 in early July. Yet the peace remains fragile: renewed strikes have since pushed oil prices back above $90, and European gas prices have risen back towards their March peaks. Our baseline forecast assumes the agreement broadly holds‐not least because the US midterm elections this autumn place a premium on achieving this outcome‐with oil prices falling back to around $70 by the end of this year and $62 by the end of 2027, and gas prices easing from their current highs once the Strait reopens.

JEL-codes: E17 E66 (search for similar items in EconPapers)
Date: 2026
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