Hormuz Closure Could Slash Global Growth 2.9% in Q2, Dallas Fed Warns

Key Details The Federal Reserve Bank of Dallas projects that a prolonged Strait of Hormuz shutdown through June would reduce global GDP growth by 2.9 percentage points in the second quarter. Roughly one-fifth of the world's oil passes through this critical maritime chokepoint, which has been effectively closed due to regional conflict. West Texas Intermediate crude has already climbed past $97 per barrel as a result. Price Projections by Duration If the strait reopens after one quarter, oil would drop to $68 per barrel in Q3 while GDP growth rebounds 2.2 percentage points. A two-quarter shutdown would push oil to $115 in Q3 before settling at $76 in Q4. Extended three-quarter closures could drive prices as high as $132 by year-end, the researchers warned. Why It Matters Diesel prices have exceeded $5 per gallon for only the second time in U.S. history, directly impacting freight operations and broader economic activity. Economists are tracking both inflationary pressures and demand destruction from elevated fuel costs. Higher pump prices are already forcing consumers to reduce spending elsewhere and change travel habits, creating ripple effects throughout the economy. Bottom Line Truck operators should prepare for potential fuel volatility and monitor geopolitical developments affecting the Hormuz Strait closely.