Factory surveys across the globe just delivered bad news on both fronts. New orders are drying up while input costs keep climbing, a squeeze that started building months ago and shows no sign of letting up after the ceasefire collapsed in mid-July.
The numbers tell the story. Turkey's manufacturing PMI tumbled to 47.1 in June, dropping below 50 for the first time in months, the line that marks the shift from growth to contraction. That same month, US factories had posted a four-year high at 54%, but even then, 42% of American manufacturers flagged the Iran conflict as a direct problem. They worried about oil volatility and whether their supply chains would hold.
The war's economic grip
The fighting kicked off February 28, 2026, when US and Israeli forces struck Iranian nuclear and military targets. What followed was the largest global oil supply disruption ever recorded. Commodity prices jumped across the board as traders priced in the geopolitical risk, and that premium never left the market.
July data shows the pressure persisted through the summer months. Turkey felt it hardest, squeezed from both directions: supplies from the east got disrupted while demand from western buyers weakened. The ceasefire that looked possible mid-month fell apart, removing what looked like the clearest path out of this mess.
What's emerging now is stagflation in real time. Slower growth paired with higher costs at the same time, which makes traditional policy moves almost useless. Central banks can't cut rates to boost demand without fueling inflation, and they can't tighten without killing what little growth remains. The truce breakdown matters most in the near term. A real ceasefire would start unwinding the oil premium almost overnight. Without one, manufacturers keep paying the tax.
This article is for informational purposes only and should not be construed as financial or investment advice.
