Management Summary

Situation Status: Day 29

Economic Impact: Three Scenarios

Three closure scenarios have been modelled. The variables are duration and permanence of the toll booth arrangement. All figures are approximate and subject to significant uncertainty.

Scenario B is the working assumption for this analysis. The ceasefire conditions Iran has set — including sovereignty recognition over the Strait — are incompatible with Western acceptance. A 6-to-9-month timeline of elevated disruption, followed by a nominal ceasefire that leaves the toll booth operational, is the most probable outcome at current trajectory.

Mortality Projections

Mortality estimates cover two pathways: direct conflict casualties and famine/malnutrition deaths attributable to fertiliser supply disruption and humanitarian system collapse. These are independent cascades with different time horizons.

The famine mortality range is the wider and less certain figure. It depends on: duration of fertiliser disruption; whether the 2026 northern hemisphere harvest is fully compromised; whether the WFP and successor organisations can mobilise additional funding; and whether the political conditions exist for humanitarian access in the highest-risk countries (Sudan, Somalia, Yemen, Afghanistan, DRC, Niger, Mali).

The mid-estimate of 1.55 million excess deaths assumes a 6-to-9-month closure, partial crop yield loss in the 5–10 percent range across vulnerable geographies, and continued underfunding of humanitarian response at current levels. It does not assume worst-case outcomes. It assumes approximately what has happened in previous food crises of comparable scale, minus the emergency response infrastructure that previously existed.

Key Cascades: Summary Matrix

Diplomatic Outlook

Iran's five-point counter-proposal, delivered via Pakistani intermediaries, makes formal negotiation on Western terms difficult. The five conditions are reported as: (1) full US and Israeli military withdrawal from the region; (2) lifting of all sanctions; (3) international recognition of Iranian sovereignty over the Strait of Hormuz; (4) security guarantees for Iran's nuclear programme; (5) reparations. Conditions 1, 3, and 4 are not negotiable within current Western political parameters.

China has not signed the international readiness statement. India has secured bilateral passage. Japan and South Korea are in negotiations. The coalition is fracturing along lines of energy dependency. Each bilateral carve-out reduces Iran's incentive to negotiate a general reopening.

The most likely near-term outcome is a de facto stabilisation: reduced kinetic conflict, partial reopening through the toll booth for an expanding list of approved nations, and prolonged negotiations that produce no final settlement. This is Scenario B trending toward a permanent Scenario C toll-booth architecture. It is not a recovery. It is a new structure.

What to Watch

• Northern hemisphere harvest data (May–June): the first hard evidence of fertiliser shortfall effect on yields
• WFP emergency funding announcements: whether the humanitarian gap closes or widens
• Iranian parliamentary vote on Strait toll legislation: if passed, the toll booth becomes a formal legal instrument, not a battlefield arrangement
• Chinese bilateral deal status: if China secures full passage, it withdraws its most powerful incentive to support international pressure on Iran
• Maritime insurance pricing at 90-day reviews: the market's real-time verdict on whether the situation is improving
• Airline hedge roll-off schedule: when fuel cost hits consumer ticket prices (estimated H2 2026)