The ceasefire died at midnight Tehran time, and Iran made sure you heard it: the Strait of Hormuz is now closed to any type of vessel. Iran's foreign ministry declared the April 8 ceasefire "effectively meaningless" after fresh US strikes hit Qeshm, Bandar Abbas, and Sirik early this morning. The response was immediate—Iranian attacks on US bases in Kuwait, Bahrain, and Jordan, then the announcement that shut twenty percent of the world's oil trade.
The World Bank released its Global Economic Prospects report hours later, and the numbers say what the market hasn't priced: global growth is forecast to slow to 2.5% in 2026, down from 2.9% in 2025, the lowest rate since the onset of the COVID-19 pandemic. Forecasts for two-thirds of economies have been downgraded relative to January. The collision between the reopening fantasy and the blockade reality just landed in a 200-page document with the World Bank's seal on it.
Brent crude is projected to average $94 a barrel in 2026, thirty-six percent above 2025 levels, assuming the worst disruptions abate in July. July is three weeks away. The ceasefire that was supposed to hold until then collapsed this morning, and global inflation is now expected to rise to 4.0% this year, up substantially from 3.3% in 2025. The assumption baked into that $94 figure—that Hormuz reopens and stays open—died the moment Iran's foreign ministry made the call.
Here's what the market is missing: fertilizer prices are forecast to increase significantly this year, with knock-on effects for food prices. The energy shock doesn't stop at the pump—it runs straight through to the cost of growing anything. Economies in the Gulf directly affected by the conflict are expected to see growth tumble from 3.9% in 2025 to close to zero in 2026. Zero. The producers who were supposed to cushion the blow are now the epicenter.
The downside scenario—if energy supply disruptions prove more severe than currently assumed and are accompanied by substantial financial stress—puts global growth at just 1.3% in 2026, and inflation would rise to 4.4%. That scenario was theoretical when the World Bank wrote it. It became the base case at midnight.
Growth in developing economies is expected to drop to a post-pandemic low of 3.6%, down from 4.4% in 2025. The customers who bought everything during the last cycle—the demand that kept the global machine turning—are now the economies getting hit hardest. Weak growth in developing economies has stalled progress toward advanced-economy income levels, and by 2028, developing economies other than China and India will have collectively experienced nearly a decade of no progress on narrowing their per capita income gap with advanced economies.
The ceasefire was the only thing holding the consensus forecast together. It assumed de-escalation, a July reopening, and energy prices that peaked in the spring and faded by autumn. All three assumptions broke before the New York open. President Trump said yesterday that Iran would "pay the price" for stalled peace negotiations, promising "we hit them hard yesterday, and we're going to hit them again hard today." He delivered. Iran responded. The strait closed.
The World Bank's report is already outdated, and it was released this morning. The $94 Brent assumption is too low if Hormuz stays shut. The 2.5% growth figure is too high if the conflict extends past July. And the 4.0% inflation forecast is too calm if fertilizer and food prices spiral the way the energy-to-agriculture pass-through says they will.
The World Bank is immediately making up to $50–60 billion available through existing instruments, including $25 billion of pre-arranged financing, to support countries hit by the crisis. That's the tell. You don't unlock $60 billion in emergency liquidity for a transitory shock. You unlock it when the base case is breaking and you need to backstop the countries about to run out of dollars.
The market priced a ceasefire that would hold and a Hormuz that would reopen. It got neither. The World Bank just told you the cost: the slowest global growth since COVID, inflation back at four percent, and a developing world that stops converging and starts diverging. The only question left is whether the $94 oil assumption survives contact with a closure that has no end date.