Global economy absorbs Iran war shock as markets rebound and travel costs climb
This digest was compiled by AI from multiple sources — links to the originals are below.
Six months into the U.S.-Israel war with Iran, global markets have rebounded sharply from initial losses, with the Dow up nearly 19% and the S&P 500 up almost 22% since late March. Oil prices remain about 20% above prewar levels, driving jet fuel costs up 70% and forcing airlines to cut flights and raise fares. The IMF says AI enthusiasm is offsetting war-related economic drag.
Key Facts
- The Dow has gained nearly 19% and the S&P 500 almost 22% since the market bottomed in late March.
- Brent crude climbed from a prewar close of about $72 a barrel to as high as nearly $120, and remains about 20% above prewar levels.
- Jet fuel is expected to cost on average 70% more than in 2025, according to the International Air Transport Association.
- Lufthansa Group cut 20,000 short-haul flights, and Spirit Airlines ceased operations.
- The IMF said in a July report that the economy is being shaped by war strain and AI enthusiasm pulling in opposite directions.
Market Rebound
Stock markets initially plunged after the Feb. 28 attack on Iran, with the Dow and Nasdaq entering corrections and the S&P 500 posting its worst month since 2022. Since the late March bottom, the Dow has gained nearly 19%, the S&P 500 almost 22%, and the Nasdaq 27%. If those gains hold through the end of 2026, all three indexes would record their fourth consecutive year of gains. Michael Ashley Schulman of Cerity Partners compared the global economy's resilience to a 'Mission Impossible' scene.
Oil and Travel Costs
Tanker movement through the Strait of Hormuz slowed to a crawl, pushing Brent crude from about $72 a barrel before the war to nearly $120 at its peak. Oil prices have eased but remain about 20% above prewar levels. The International Air Transport Association expects jet fuel to cost on average 70% more than in 2025. Airlines have raised ticket costs, hiked baggage fees, and added fuel surcharges while cutting flights. Lufthansa Group cut 20,000 short-haul flights, and Spirit Airlines ceased operations.
Economic Forces
The IMF said in a July report that the economy is being shaped by two major forces pulling in opposite directions. War has strained growth, but enthusiasm over artificial intelligence has offset the drag. Brett House, a Columbia University economist, said the likelihood of fuel surcharges being rolled back and airfares coming down is very low over the next few months.
1 source
Global economy absorbs Iran war shock as markets rebound and travel costs climb
