The war is ending, but will its effects end too?

We started the week with the news of the agreement between the US and Iran. The tension that had persisted in global markets for a long time has, at least to some extent, given way to calm. Because there had been positive developments on the agreement before, but somehow things had reached an impasse again, and the parties had acted in ways that kept the Strait of Hormuz closed. This time, however, the situation looks different, because for the first time, official Iranian authorities have also made statements confirming the agreement. It was even announced that the memorandum had been digitally signed and that the wet signatures would be made in Geneva.

Of course, this does not look like a full-fledged peace agreement. Because Israel's statements following the announcement of the agreement indicate that the process could be sabotaged at any moment. In this regard, although many positive indicators are beginning to emerge, we can say that the markets are "cautiously optimistic."

As always, the first effects of the agreement news were seen in gold and oil prices. While gold prices have started to rise again, oil prices have dropped significantly. But when will we return to the pre-war situation?

It is obvious that the war has caused severe damage to many economies. In this regard, apart from gold pricing, we must accept the fact that many indicators will not easily return to their pre-war levels, and even if they do, it will take a very long time.

Take oil prices, for example. We predict that oil prices, which were expected to average around $60 per barrel this year before the war, will take much longer to fall back to those levels. Because the oil production infrastructure in the region has suffered very heavy damage. Industry professionals report that repairing damaged facilities and storage units and bringing them back to full capacity will take many years. It is said that repair times for some facilities could reach 3-4 years. According to Wood Mackenzie's study, affected fields could reach only 70% of their former capacity within three months and 90% within six months—assuming everything goes well. In the LNG market, the effects are expected to last for years. It is estimated that the war disabled 3.52 million barrels per day of refining capacity. It will take nearly two months for Gulf refineries to reach 90-95% capacity.

Furthermore, since many countries have used their strategic petroleum reserves, they will create additional oil demand to refill their stocks once the Strait of Hormuz opens. This means continued limited supply and high demand, so prices will take longer to fall to desired levels than estimated.

Another economic indicator affected by the war is inflation. The long-term effects of the rise in commodity prices caused by the war have created additional inflationary pressure in all countries. Some central banks that were preparing to cut interest rates had to raise them instead, while others took additional tightening steps. Moreover, due to "price stickiness," rapidly rising prices take a long time to come back down, and in countries like Türkiye, where pricing behavior is distorted, prices hardly ever come down at all.

The war also caused downward revisions to growth forecasts. Many financial institutions have lowered their global growth projections. Frankly, 2026 can already be declared a complete "lost year." And this is the case even when we are convinced the war is over. In other words, if the current positive atmosphere deteriorates, things could get even worse. So the end of the war does not mean everything will quickly get better. The negative effects of the war will continue to deeply affect everyone, especially the real sector, for some time to come.