A disruption in global oil flows is quickly moving from a geopolitical to an economic concern, with a growing sense among economists that time is running out to prevent broader fallout.
Mohamed El-Erian, former CEO of Pimco and a past chair of President Obama's Global Development Council, is among those putting a clear timeline on the risk. Speaking this week, he said the global economy can still sidestep a downturn, but only if conditions change soon. "The globe will 'avoid a recession, provided—and here's the important thing—provided the straits are reopened in the next four to eight weeks," he told Fortune. "If they're not reopened in the next four to eight weeks, it will look very different.'"
At the center of the issue is the Strait of Hormuz, a critical corridor for global oil shipments. Tensions involving Iran, the U.S., and Israel have now dragged into a third month, with no clear resolution in sight. Earlier expectations that the conflict would be short-lived have faded, particularly as Iran has threatened ships moving through the waterway, tightening supply from one of the world's most important energy regions.
Markets are beginning to reflect that uncertainty. "Investors are pricing in a more protracted conflict," Deutsche Bank strategist Jim Reid said, pointing to longer-dated futures reaching their highest levels since the standoff began.
For the U.S., the picture is less straightforward than in past oil shocks. Domestic production has reduced reliance on foreign energy, but not eliminated it. The country still imported 17% of its energy supply last year, according to the U.S. Energy Information Administration, leaving it exposed to sustained price increases.
At the same time, underlying economic conditions are showing strain. Growth has continued, but not at a pace strong enough to drive meaningful job creation. Moody's chief economist Mark Zandi described the current trajectory as increasingly difficult to sustain.
"Growth, yes, but less than the economy's potential growth rate, and not sufficient to support any meaningful job growth. Unemployment is still low, but it is steadily drifting higher, and the labor force participation rate is falling. Of course, this is not sustainable," Zandi wrote.
The pressure is not evenly distributed. Higher costs, particularly for energy, are hitting lower-income households harder, widening an already pronounced economic divide. That dynamic is becoming more important as consumer spending shows signs of softening.
Earlier in the year, there had been more optimism around fiscal and monetary support. Stimulus tied to the One Big Beautiful Bill Act and expectations for Federal Reserve rate cuts were both seen as potential tailwinds. Those assumptions are now under pressure.
Research from Goldman Sachs and Morgan Stanley suggests that rising oil prices tied to the Iran conflict have largely erased what would have been a meaningful tax benefit for consumers. For lower-income households, the net effect may already be negative.
Even a near-term resolution may not be enough to reverse course. "Even if the Iran war winds down and oil prices recede quickly, the fallout will ensure there is no GDP pickup or job growth this year. Unemployment will rise further, and already considerable recession risks will worsen," Zandi said.
For commercial real estate, the implications are indirect but difficult to ignore. Slower job growth and weaker consumer spending tend to feed through to leasing demand, particularly in retail and office. At the same time, elevated energy costs can push up operating expenses and construction costs, adding another layer of uncertainty for owners and developers already navigating a choppy market.
With the timeline El-Erian outlined now in focus, the next several weeks could prove decisive—not just for energy markets, but for the broader economic outlook.
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