Since the Strait of Hormuz was mined and the conflict between the U.S. and Iran escalated through May into sustained military strikes and a collapsed ceasefire, the economic bill has been piling up — and now the OECD has put hard numbers on exactly how bad it could get.

The OECD's Two Scenarios — One Optimistic, One Ugly

The Organisation for Economic Co-operation and Development dropped its June 2026 Economic Outlook on Wednesday. According to CNBC, OECD Director of Employment, Labour and Social Affairs Stefano Scarpetta called the Iran conflict "the dominant force shaping the global economic outlook."

Here are the two scenarios, plainly stated.

Scenario One — Short disruption: A peace deal is reached soon. Hormuz reopens. Gulf oil and gas production gradually returns to pre-crisis levels from Q3 2026. Under this assumption, global growth slows from 3.4% in 2025 to 2.8% in 2026, then recovers to 3.1% in 2027. According to the Economic Times, this is broadly in line with what the OECD projected back in March. G20 inflation peaks at 4% this year, then falls to 3.1% next year. Interest rates hold steady, then get cut in 2027.

Scenario Two — Prolonged disruption: No deal until 2027. Hormuz stays choked. Under this scenario, per CNBC and the Guardian, global growth falls to 2.1% in 2026 and 1.8% in 2027. Those are crisis-level numbers — worse than anything outside COVID and the 2008 crash, according to the Economic Times.

Inflation adds 0.4 percentage points in 2026 and 1.3 percentage points in 2027. Central banks would need to hike rates by 50 to 75 basis points in the short term. Then cut them again as demand collapses. The worst of both worlds.

Who Gets Hurt Most

Scarpetta was direct about the distribution of pain, according to CNBC: "The consequences would be global but could prove especially severe for developing economies with limited energy reserves, higher shares of energy and food in household consumption, constrained fiscal capacity and weak social safety nets."

The Economic Times flagged Asian nations as the most exposed — countries like India, Japan, South Korea, and Bangladesh that are heavily dependent on Middle East energy imports. The image of cars and motorcycles queuing for petrol in Dhaka, Bangladesh, published by the Guardian, is not an isolated anecdote. It's a preview.

The Guardian also pulled out a detail most financial coverage is burying: the AI boom itself is at risk. The OECD report stated directly that "significant energy price shocks or energy shortages associated with the prolonged disruption scenario would increase datacentre operating costs and constrain the supply of critical hardware used in AI systems." This could "further reduce the capacity and incentive for AI investment, leading to notably weaker growth in those economies currently being boosted by AI-related investment."

Wall Street's AI-fueled calm, which prior coverage noted was keeping equity markets elevated, has a structural vulnerability. The OECD just named it.

The Policy Trap

Governments are caught in a vise, according to Free Malaysia Today's coverage of the report. Fiscal expansion is the natural response to a slowdown, but public debt is already elevated globally — there's limited runway. Meanwhile, the broad energy subsidies many governments have rolled out to cushion their populations are backfiring by encouraging energy consumption during a supply crunch.

Central banks face the classic stagflation dilemma. Raise rates to fight inflation, you risk tipping a slowing economy into outright recession. Don't raise rates, inflation runs hotter. The OECD's mild scenario projects some rate hikes followed by cuts in 2027. The prolonged scenario blows that playbook up entirely.

The Peace Deal Problem

The OECD's optimistic "baseline" rests on a peace deal materializing in the near term. According to the Guardian, Trump has repeatedly suggested in recent weeks that a deal is imminent. None has materialized. Talks are currently suspended — Iran is refusing to negotiate while Israel continues striking Hezbollah in Lebanon. The chokehold on Hormuz has been running for more than three months.

The optimistic scenario requires something that is not happening right now. Most coverage from CNBC and Bloomberg treats both outcomes as equally plausible, giving prominent space to growth forecasts without adequately emphasizing that the conditions required for the better outcome don't currently exist.

What It Means for Households

Higher energy prices mean higher food prices — because fertilizer, transport, and food processing all run on energy. Higher inflation means central banks raise rates. Higher rates mean more expensive mortgages, car loans, and business credit. Weaker investment means slower hiring. That chain of consequences hits ordinary households directly.

The OECD's worst-case scenario — 1.8% global growth in 2027 — would be the deepest peacetime economic damage in four decades.

A deal needs to happen. It hasn't. Every week it doesn't, the 2.1% scenario becomes more likely.