Fitch Ratings, based in Toronto, New York, and Chicago, has indicated that North American corporations appear to be somewhat shielded from the immediate repercussions of the ongoing conflict between the U.S. and Iran. Nonetheless, an evaluation of a potential adverse war scenario by Fitch suggests that there could be widespread demand weakness across various sectors, primarily due to secondary effects on the global economy. Sectors that cater directly to consumers and those particularly sensitive to fluctuations in fuel prices and interest rates may experience the most significant impacts.
In the adverse scenario outlined by Fitch, it is projected that oil prices could average around $100 per barrel by 2026, while global equity markets might see a downturn of approximately 10%. Additionally, U.S. 10-year Treasury yields may rise by 50 basis points, with spreads on U.S. investment-grade bonds widening by 100 basis points and high-yield spreads increasing by 200 basis points compared to the baseline scenario. The anticipated effects on inflation and GDP after four quarters are an increase of 1.4 percentage points in inflation and a decline of 1.2 percentage points in GDP. Fitch’s March Global Economic Outlook predicts an inflation rate of 3.0% and GDP growth of 2.2% for 2026.
The airline industry stands to face the most intense challenges from rising global oil prices, as jet fuel constitutes nearly 20% of operational costs. Many North American airlines have not fully hedged against fuel price fluctuations, leaving them susceptible to prolonged increases in fuel costs. JetBlue and WestJet are particularly at risk due to limited financial flexibility. Conversely, the response of North American natural gas prices has been relatively subdued, despite escalating global liquefied natural gas (LNG) prices, as a significant portion of U.S. LNG export capacity is already under contract.
U.S. chemical manufacturers might gain a temporary competitive edge as they predominantly utilize natural gas and natural gas liquids instead of oil-based naphtha feedstocks. However, the automotive and construction sectors, which together account for about 20% of global petrochemical demand, are currently weak. Persistently high energy prices could further restrict consumer purchasing power for major expenditures, prolonging the demand slump in these sectors and negating any short-term margin improvements. Fitch’s outlook for the global chemicals sector is deemed to be ‘deteriorating’.
The automotive industry is facing intensified pressures due to high gasoline prices coupled with elevated interest rates, which are already affecting affordability. As a result, Fitch’s global automotive outlook for 2026 is categorized as ‘deteriorating’. A sustained spike in oil prices could further dampen demand, as automakers are likely to maintain pricing discipline.
Similarly, homebuilders and companies involved in building materials will encounter challenges from rising interest rates and increased construction costs. The ongoing conflict may significantly hinder the recovery of these sectors.
Consumer spending is expected to decline as inflation impacts household finances, with discretionary sectors such as cruise lines and mid-market hotels being particularly vulnerable, although luxury segments may demonstrate greater resilience. Recently, Fitch adjusted its outlook for U.S. packaged foods in 2026 from ‘neutral’ to ‘deteriorating’, reflecting negative volume trends across numerous categories, partly attributable to the already stressed consumer base.
In the technology hardware sector, risks of supply chain disruptions loom due to helium shortages linked to ongoing natural gas production issues in Qatar. Helium is essential for semiconductor production, and extended shortages could compel manufacturers to seek higher-cost alternatives or face supply constraints. Previous supply chain disturbances during the pandemic led to inventory volatility and margin pressures, and this situation could be exacerbated by weaknesses in critical end markets.
Nevertheless, some sectors may benefit from the conflict. Upstream oil and gas producers could see advantages from a prolonged period of elevated hydrocarbon prices. Fitch has a positive outlook for the aerospace and defense industry, driven by increased defense expenditures and an extensive modernization program in the U.S. The rise in military activities could also provide additional growth opportunities for this sector.
