No longer a nation of movers

Middle East tensions threaten global supply chains as Yemen's Houthis join attacks on Israel, raising risks to oil and cargo flows through the Red Sea—a key backup export route for Saudi Arabia alongside the Strait of Hormuz. The Trump administration is lifting its block on Russian oil shipments to Cuba amid the island's energy crisis. Separately, proposals for higher taxes on the wealthy in states like California, New York, and Washington revive debates over migration patterns, as U.S. internal mobility hits historic lows.

Escalating Conflict Risks Broader Disruptions

The Iran conflict's expansion, with Houthis launching weekend strikes on Israel, endangers Red Sea shipping. This channel serves as Saudi Arabia's secondary path for limited oil and cargo exports. Macro economist Julia Coronado, founder of Macro Policy Perspectives and a University of Texas at Austin professor, warns of prolonged risks if both the Strait of Hormuz and Red Sea face closures.

Disruptions could extend beyond oil to industrial inputs like aluminum and helium—critical for semiconductor production—and consumer goods. These shocks carry dual threats: inflationary pressures from higher costs and recession risks from crushed demand, especially outside the U.S. Central banks face heightened challenges balancing their inflation-fighting and growth mandates.