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Executive Summary - A Challenging Inheritance

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  • National Institute of Economic and Social Research

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.

Suggested Citation

  • National Institute of Economic and Social Research, 2026. "Executive Summary - A Challenging Inheritance," National Institute Economic Outlook, National Institute of Economic and Social Research, issue Summer, pages 1-4.
    • Handle: RePEc:nsr:niesre:i:summery2026p:1-4
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    File URL: https://niesr.ac.uk/wp-content/uploads/2026/07/Economic-Outlook-Summer-2026.pdf?ver=bRIlAI8jRfszmPEN5DHs
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    More about this item

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E66 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General Outlook and Conditions

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