Iran War Drives US Import-Export Prices Up Most Since 2022; Oil Above $75, Threatens Margins

US import and export prices jumped in April by the largest margin since 2022, a direct result of the escalating Iran conflict and disruptions to Middle East oil flows. The Strait of Hormuz, through which roughly 20% of global oil transits, has been effectively closed for shipping for over two months, tightening crude supplies and pushing prices above $75 per barrel. This supply shock is feeding through to manufacturers' input costs, with India's producer prices hitting three-and-a-half-year highs as elevated energy costs pressured factory-gate inflationThe rate at which prices rise across an economy..

Turkey's central bank revised its year-end inflationThe rate at which prices rise across an economy. target upward to 24%, explicitly citing the Iran war as a driver of higher energy prices. The impact is geographically broad: African import-dependent economies face margin pressure, aviation industry earnings have deteriorated (Singapore Airlines reported profit drag from higher fuel costs), and global freight volumes face headwinds. Meanwhile, energy exporters are benefiting; Bloomberg reported that TCW Group is adding exposure to government bonds from energy-producing developing nations, betting that the oil shock will provide lasting benefits to commodity exporters.

Defense contractors and security-related names are also benefiting from the elevated geopolitical risk premium embedded in equity valuations. The delegation at the Trump-Xi summit notably included major aerospace and defense players, signaling that market participants view elevated international tensions as structural rather than cyclical.

The debate hinges on whether the Iran conflict escalates further or de-escalates. If shipping through the Strait of Hormuz reopens within weeks, energy prices will likely retreat, and the inflationThe rate at which prices rise across an economy. impulse will fade. If the conflict persists, energy importer margins will face sustained pressure, forcing central banks to hold rates higher for longer, a headwind for equities and fixed income alike.