After a chaotic start to 2026, the second half of the year is expected to bring more uncertainty regarding the ongoing conflict in the Middle East.

According to a report from Oxford Economics released on July 6, the tenuous peace agreement between the U.S. and Iran poses the biggest supply chain threat moving forward. 

“Its durability will determine whether the global economy gets an energy-driven disinflation tailwind or absorbs a second oil shock,” said Oxford Economics chief economist Ryan Sweet. “It’s the key domino that will determine whether other risks are amplified or dampened.”

Read More: Why 2026 is Testing Global Supply Chains Like Never Before

As Sweet noted, the current U.S.-Iran ceasefire remains fragile, as was seen firsthand when military strikes resumed at the end of June. That said, traffic through the Strait of Hormuz has still started to pick back up, albeit in spurts as Iran has frequently sought to assert its control over which routes vessels can transit.

Oxford Economics also expressed concerns over potential disruptions to artificial intelligence supply chains in the latter half of 2026, given that U.S. AI investments are heavily dependent on goods from Northeast Asia, which rely on oil and natural gas that moves through the Strait of Hormuz.

“Risks are interconnected and non-linear,” Sweet explained. “A peace deal breakdown won’t just raise oil prices; it would also increase pressure on AI supply chains in Asia, force central banks to be hawkish, tighten financial conditions, and could shift the outcome of the U.S. midterms and Israeli elections. The cascade runs fast.”