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PRISM'S CURRENT VIEW
Major headlines this month were dominated by the outbreak of a U.S.-Israeli war against Iran, sweeping changes to the global tariff regime following a Supreme Court ruling, and an escalating critical minerals contest between China and the West:
Iran/Middle East: The U.S. and Israel launched large-scale military strikes on Iran on February 28, igniting a regional war that has killed Supreme Leader Khamenei, triggered a near-total de facto closure of the Strait of Hormuz, and reopened Houthi attacks in the Red Sea. The Hormuz blockade, now in its fourth week, is the most severe energy supply disruption since 1973, with Brent crude above $107/barrel and no ceasefire in sight.
Tariffs: The Supreme Court struck down Trump's sweeping IEEPA-based tariffs on February 20, and Trump responded by invoking Section 122 to impose a 15% global tariff valid for 150 days. Pre-negotiated bilateral trade deals with the EU, Japan, and others are now in legal and political jeopardy, while the administration has opened new Section 301 and 232 investigations to rebuild tariff leverage, a process that takes months.
Critical minerals: China's rare earth export controls, covering dozens of elements, magnets, and battery materials, remain in force, with a tactical one-year suspension of the October 2025 rules expiring in November 2026. The U.S. responded with a 54-country ministerial, a $500M domestic processing funding round, and new bilateral deals with Japan and Indonesia to build alternative supply chains, though meaningful non-Chinese refining capacity remains years away.
Logistics: The Strait of Hormuz, carrying roughly 20% of global oil supply, is effectively closed, with Iran's IRGC interdicting commercial vessels and the U.S. military conducting active operations to reopen it. Simultaneously, Houthis have resumed Red Sea attacks, threatening both key maritime chokepoints at once and forcing carriers back to Cape of Good Hope routings.
Energy: European gas storage heading into the spring refill season is at critically low levels, Germany at ~23%, Netherlands at ~14%, following the EU's formal ban on Russian gas and LNG and a harsh winter. With the Iran war now threatening global LNG supply from Qatar's Ras Laffan complex, the European energy supply outlook has deteriorated sharply since the start of the month.
RISK DASHBOARD
Economics
Oil prices have surged above $107/barrel on Hormuz closure risk, with worst-case scenarios approaching $100–$120/barrel if the disruption is prolonged, while European energy security has deteriorated sharply as critically low gas storage levels, compounded by the EU's Russian gas ban, now coincide with threats to Qatar's LNG exports from the expanding Iran conflict.
Oil Prices
Low oil prices remain likely to persist in the near term. However, there are various risks to monitor that threaten to restrict supplies and drive prices higher.
Risk level:
Risk trend:
Moderate
Stable
Global Inflation Outlook
Inflation risk remains stable across most markets, but it has risen in the US and UK.
Risk level:
Risk trend:
Moderate
Declining
Global Growth Outlook
Global economic risks increased this month, as uncertainty around the trajectory of the US economy increases global impacts.
Risk level:
Risk trend:
Moderate
Declining
HIGHLIGHTED TOPICS
Logistics
The Strait of Hormuz is effectively closed following Iran's retaliation against U.S.-Israeli strikes, while Houthis have simultaneously resumed Red Sea attacks, threatening both of the world's most critical maritime chokepoints at once and forcing carriers back to lengthy Cape of Good Hope routings.
Critical Infrastructure
Attacks on critical infrastructure have escalated significantlya dn could cause significant risk across supply chains in the future.
Risk level:
Risk trend:
High
Increasing
Maritime Shipping
Risks to maritime shipping remain elevated amid disruptions in the Red Sea, strikes in Europe and continued tensions in the Middle East that could spark disruptions in the Strait of Hormuz.
Risk level:
Risk trend:
High
Increasing
HIGHLIGHTED TOPICS
Materials & inputs
China's rare earth export controls remain in force across dozens of elements and magnets, with a tactical suspension expiring in November 2026, while the U.S. responded with a 54-country critical minerals ministerial, a $500M domestic processing investment round, and new bilateral supply deals with Japan and Indonesia. Separately, a severe global HBM and DRAM shortage driven by AI infrastructure demand has pushed memory prices up 80–90% in a single quarter, with capacity essentially sold out through 2026.
Artificial Intelligence
AI will be a transformative enterprise technology. But, it comes with near-term cost challenges and ESG risks.
Risk level:
Risk trend:
Low
Stable
Critical Minerals
Risk to critical minerals rose as China's export controls disrupt access to supplies.
Risk level:
Risk trend:
High
Increasing
Semiconductors
Risks to the semiconductor sector increased this month but remained moderate. The top concern is US tariffs on chip imports.
Risk level:
Risk trend:
Moderate
Increasing
HIGHLIGHTED TOPICS
ESG
The EU's Omnibus I Directive entered into force, removing roughly 90% of companies from CSRD and CSDDD supply chain due diligence obligations, while the Trump EPA repealed its endangerment finding, triggering a 25-state legal challenge, even as California and New York advance binding Scope 1–3 disclosure mandates.
ESG Macro Overview
The pace of ESG progress faces setbacks, forcing a more strategic view on ESG initiatives and creating new compliance risks.
Risk level:
Risk trend:
Moderate
Declining
ESG Transparency & Disclosures
EU transparency rules drive a race to the top that drives costs and reputational risk.
Risk level:
Risk trend:
Moderate
Declining
Carbon Taxes & Import Rules
New EU rules set the stage for significant cost increases from 2026 onward.
Risk level:
Risk trend:
Moderate
Stable
Climate & Net-Zero Policy
Supply chain leaders must prepare for the expanding scope of environmental risks and the potential for sudden policy change.
Risk level:
Risk trend:
Moderate
Stable
HIGHLIGHTED TOPICS
Domestic politics & elections
The Supreme Court struck down Trump's IEEPA-based tariffs on February 20, and Trump responded with a new 15% global tariff under Section 122, valid for only 150 days, throwing pre-negotiated bilateral trade deals with the EU, Japan, and others into legal and political uncertainty.
China Decoupling
Risks associated with doing business in China are high, and an EU-China trade war appears increasingly likely.
Risk level:
Risk trend:
High
Stable
US Tariff Policy
The risks of significant disruptions to trade and higher costs increased over the last month. New tariffs are likely across various categories.
Risk level:
Risk trend:
Critical
Stable
HIGHLIGHTED TOPICS
Geopolitics & more
The U.S. and Israel launched large-scale strikes on Iran on February 28, igniting a full regional war that has closed the Strait of Hormuz and pushed oil above $107/barrel, while Ukraine peace talks remain deadlocked over territorial demands with no ceasefire in sight.
China Decoupling
Risks associated with doing business in China are high, and an EU-China trade war appears increasingly likely.
Risk level:
Risk trend:
High
Stable
Middle East Conflict
Risk rose sharply after the US launched strikes on Iran on June 22. There remains a significant risk of continued instability in the region.
Risk level:
Risk trend:
High
Increasing
Ukraine War
Militarily at a stalemate, but with a change in US policy toward Ukraine, the outlook is more uncertain than ever.
Risk level:
Risk trend:
Moderate
Stable