Prolonged Iran War Raises Demand Risks for US Corporates in World Economy News 07/04/2026 North American corporates are relatively insulated from the direct impact of the U.S.-Iran war. However, Fitch Ratings’ assessment of an adverse war scenario points to the potential for broad demand weakness across sectors, largely due to second-order effects on the global economy. Consumer-oriented sectors and those more vulnerable to fuel prices and interest rates face the greatest exposure. Our adverse scenario assumes oil prices average USD100/barrel in 2026 and global equity prices fall about 10%. It also assumes U.S. 10-year Treasury yields increase by 50 bps, U.S. investment-grade spreads widen 100 bps and U.S. high-yield spreads widen 200 bps relative to our base case. The impact on inflation and GDP after four quarters, would be +1.4 pp and -1.2 pp, respectively. Fitch’s March Global Economic Outlook base case forecasts 3.0% inflation ad 2.2% GDP growth in 2026. Airlines would face the most acute pressure from global oil price spikes, as jet fuel accounts for roughly 20% of costs. Most North American carriers have not fully hedged their fuel exposure, leaving them vulnerable to sustained price increases. JetBlue and WestJet are most at risk due to limited rating headroom. By contrast, the price response for North American natural gas has been relatively muted, despite surging global LNG prices, as most U.S. liquefied natural gas export capacity is already contracted. U.S. chemical producers could gain a near-term competitive advantage, as they rely primarily on natural gas and natural gas liquids rather than the oil-derived naphtha feedstocks. However, automotive and construction end markets, which each account for around 20% of global petrochemicals consumption, remain soft. Sustained higher energy costs would further strain consumer affordability for big-ticket purchases, potentially extending the sector’s demand malaise weakness and offsetting any near-term margin benefits. Fitch’s global chemicals outlook is ‘deteriorating’. The automotive sector faces compounded pressure from high gasoline prices and elevated interest rates at a time when affordability is already strained. Fitch’s global automotive outlook is ‘deteriorating’ for 2026. A sustained oil price shock would further constrain demand as automakers maintain price discipline. Homebuilders and building materials companies would similarly face headwinds from higher interest rates and rising construction costs. The conflict could significantly delay the sectors’ recovery. Consumer sectors would see reduced demand as inflation impacts household budgets. Discretionary areas such as cruises and mid-market lodging would be most affected, though high-end segments should prove more resilient. Fitch recently revised its 2026 outlook for U.S. Packaged Foods to ‘deteriorating’ from ‘neutral’, reflecting negative volume trends across many categories, partly due to an already pressured consumer. The technology hardware sector faces supply chain disruption risks from helium shortages as Qatar’s natural gas disruption persists. Helium is critical for semiconductor manufacturing, and prolonged tightness could force manufacturers to source from higher-cost alternatives or face allocation constraints. Supply chain disruptions during the pandemic caused inventory and working capital volatility and pressured margins. This time, the impact would be compounded by weakness in key end markets. Certain