After four months of closure, the Strait of Hormuz finally appeared to be open last week. Until it wasn’t.

Read also: IMO Estimates 80 Naval Mines Still Threaten Shipping Through Strait of Hormuz

With a ceasefire in effect and a framework announced to end the conflict, daily sailings through the Strait of Hormuz reached 70 last week, marking a milestone. With the hope that the worst is behind us, markets breathed a sigh of relief and oil prices eased. Unfortunately, the sense of a return to normalcy was short-lived. On June 25, Iran attacked a vessel to assert its control of the Strait, followed by two retaliatory US strikes over the weekend. As I write, volume through the Strait has dropped 70% from last week’s high to just 20 vessels, a far cry from post-war levels. It’s a reminder that while progress has been made to end hostilities, we’re not out of the woods yet. This latest incident shows just how fragile the situation is.

If history is any gauge, geopolitical negotiations are far from certain. Wars are easy to start and hard to end – especially wars in the Middle East. Add nuclear arms to the mix, and negotiations get very complex. So, it’s no surprise the latest reports find there are still significant gaps to close before reaching a definitive agreement. Complicating matters, both sides insist on the optics of a victory, which invites a steady stream of saber-rattling and positioning.

Underlying the negotiations is a new geopolitical reality that emerged from the conflict. Iran’s ability to assert authority to control the Strait and disrupt the global economy gives it a financial weapon that’s more powerful than bombs. This shifts the balance of power and creates strategic leverage. It also paves the way for Iran to charge transit fees for passage through the Strait, delivering a potentially lucrative source of revenue and defense against future economic sanctions.

Regarding the prospect of new tolls, fees, or service charges as they’re currently framed, there is a lot not to like on principle and political grounds. It runs counter to international law and sets a dangerous precedent; creates another headwind against global commerce; and imposes a new tax on something that was previously free. However, the cost of the fee itself will have little inflationary impact on American businesses and consumers – this additional tax burden is the least of our worries.

The real concern is the one-two-three punch of inflationary pressure sparked by the conflict. With 20% of global oil production halted by the Strait closure, energy was the first casualty of the war, leading to a rapid spike in gas prices. Next came transportation costs as fuel surcharges were passed on to businesses and consumers. Less immediate but more structurally impactful are the higher costs for petroleum-based feedstocks to manufacturing.

This triple knock-on effect of higher energy, transportation, and manufacturing costs is the real concern because it hits every industry that uses power, moves stuff, or makes goods – and that’s about everyone. No one was spared. Oil is a unique commodity in that way.

Just how hard did it hit American businesses and consumers? The data is just in. The latest Personal Consumption Expenditure (PCE) price index figures show that PCE rose from 2.8% in February to 4.1% in May. That’s 1.3 percentage points higher, or a 46% relative increase, in the first 12 weeks of the war. Once the June figures are published, the PCE rise should easily exceed 50% since the start of the conflict.

While alarming, it could be much worse. If the Strait gets blocked for another few months, US commercial and strategic oil reserves are projected to run dry. This would lead to an exponential spike in inflation that would dwarf anything so far. Let’s hope we don’t reach that point.

For now, the task at hand is to keep the Strait open, restore oil flow, and finalize the peace deal. The first step is to get ships consistently moving again, but that alone is insufficient. Port infrastructure and petroleum storage facilities damaged in attacks require repair, and shuttered wells need to be brought back into production.

Once confidence is restored that oil flow is secure, energy markets will quickly stabilize and prices at the pump will drop. Overall freight rates will ease as fuel surcharges recede, but exports from the Gulf states will likely be subject to new fees for safe passage through the Strait of Hormuz. Materials costs are likely to be the most stubborn. They tend to be slower to rise, but once up, take significantly longer to come down.

Long story short, the costs will impact American businesses and consumers well after the Strait is truly open for business and an official peace deal is ratified. The first step is to get oil reliably flowing again.