Market attention once again converged on the Strait of Hormuz and prospects for a negotiated end to the Iran war, as the International Monetary Fund warned that a prolonged conflict would test economic resilience. Peace talks between the U.S. and Iran over the weekend ended without a deal. Afterward, U.S. forces instituted a blockade of ships entering or leaving Iranian ports beginning on Monday morning. Iranian threats to vessels traversing the Strait of Hormuz have disrupted the flow of oil and gas during the six-week war. Energy prices exhibited ongoing volatility this week amid uncertainty over when the critical waterway will be safe to use—and whether negotiations during a two-week ceasefire will succeed.

The IMF issued a new forecast for 3.1% global growth in 2026, according to an economic outlook published on Tuesday. That was down from its previous estimate in January of 3.3%. The organization also cut its growth forecast for the Middle East and central Asia to 1.9% from 3.9%. “Downside risks dominate the outlook,” the IMF said, citing a longer or broader conflict as one potential scenario that could weaken growth further. First-quarter earnings reports from some of the largest U.S. banks offered a more upbeat assessment, as spending and loan activity signaled resilience among consumers and businesses. Investors also received an update on President Donald Trump’s pick to lead the Federal Reserve. The Senate Banking Committee has set Kevin Warsh’s confirmation hearing for next Tuesday.

This week’s edition of the Weekly View from the Desk takes a fresh look at the economic ripple effects from the developing situation in the Strait, from regional oil supplies to inflation.