A few months ago, I published Empty Homes and Silent Saws, in which I made the case that the North American forest industry has been stuck in an irreversible structural decline. The argument centered on the collision of demographic decline, a housing affordability crisis that has pushed homeownership out of reach for a generation of buyers, and an industry that had been slow to reckon with the consequences of both. Since then, a new (potentially catastrophic) factor to the deterioration has entered the arena: a war with Iran.

While the situation is still developing and there is more that is unknown than known, there is a potential for this conflict to be as economically disruptive as COVID–an event that punctuates the economy with a definitive “before” and “after,” particularly for the already-struggling forest industry. Nonetheless, there is still a great deal of complacency in the market, and much of that results from a fundamental misunderstanding of the conflict, its asymmetry, and its critical position in global energy markets.

The forest industry’s exposure to this conflict runs (in terms of first-order effects) almost entirely through one product: diesel fuel. Log trucks. Skidders. Feller bunchers. Processors. Chippers. Every stage of a timber harvest, from the time a tree is felled to the time logs are delivered to a mill gate, runs on diesel. When diesel prices move, harvesting costs move with them, and the adjustment is immediate in a way that stumpage prices and mill gate prices are not. The contractor bears the gap.

Put simply, this conflict risks exacerbating and greatly multiplying economic stress to arguably the most stressed component of a stressed industry. As a many of the world’s largest refineries burn, a certain amount of pain to that sector is now baked-in, but how bad could it get?

Bad. Real bad.

TLDR: There’s a chart down below with oil/gas/diesel prices and various scenarios

The Strait of Hormuz Is the Prize

From what I can gather scraping through social media, there is a strong sense from Americans that this war has already been won (even a latent sense of that from those who oppose the war). Iran’s leader was taken out, their navy destroyed, and the sneaky Dorito (The B2 bomber) has unchallenged supremacy in the skies. Soon this will all be behind us, and it will be written in history books as an analog to the First Gulf War. It will be just like Venezuela.

The United States certainly overwhelming conventional superiority here. That much cannot be denied, but that was never in question. Conventional warfare was never what the IRCG planned to counter. They’ve instead spent decades optimizing an asymmetric play around the Strait of Hormuz

The strait is a narrow waterway between Iran and Oman at the mouth of the Persian Gulf, roughly 21 miles across at its narrowest navigable point. Approximately 20 percent of the world’s crude oil supply transits through it under normal conditions (about 20 million barrels a day). Shipping traffic is currently down 95 percent after Iran closed it to traffic, attacking tankers that attempt to brave the journey for the high premiums.

Most people watching this conflict, misunderstanding the importance of Hormuz, operate under the assumption that Hormuz will reopen soon, and that oil prices and consequently diesel and gas prices will normalize when it does. But Iran has spent decades preparing to close Hormuz under exactly these conditions, and the toolkit it has assembled is well-suited to the task. Fast attack boats, operating in swarms large enough to overwhelm point defense systems, can be deployed from the Iranian coastline in minutes (Estimated inventory of 1,600). Anti-ship missiles, some supersonic, some designed to fly at sea level to defeat radar coverage, give Iran the ability to threaten not just commercial shipping but the naval escorts that would accompany any convoy (estimated inventory of 3,000). Aerial and surface drones (like the ones used to attack radar and oil infrastructure so far) add another layer of saturation capability. Mines (estimated inventory of 5,000), which are inexpensive to deploy and require significant time and resources to clear, can render a shipping lane unusable for weeks without any further Iranian action at all (there are already credible reports that these have been deployed). All of these mechanisms can be easily concealed from aerial bombardment until needed.

Many people ask why, if Iran has a formidable counter-naval arsenal, these weapons have not been deployed. It comes down to targeting. In open ocean, targeting a specific vessel requires sophisticated intelligence, surveillance, and reconnaissance capabilities. The Strait of Hormuz requires none of that. Any vessel attempting to transit enters a defined, narrow channel from which it cannot deviate. Iranian targeting systems do not need to find ships; they simply watch the geometry of the strait, and the ships come to them.

Trump has discussed running armed convoy escorts through the strait, and the Pentagon has stated publicly that it is considering a range of options. Such outcomes are unlikely, however, as those naval vessels cannot even guarantee their own safety. The USS Cole, an Arleigh Burke-class destroyer, was nearly sunk in 2000 while docked in Yemen by a small boat carrying C4 explosives. A supersonic anti-ship missile is a categorically different problem, and the US military understands this, having experienced the USS Stark incident.

To be perfectly blunt, Iran can hold the strait closed at a cost that Iran considers acceptable, and there is little we can do about it. This is the uncertainty on which the entire global energy market is currently suspended.

How This Could Play Out

There are four broad trajectories this conflict could take, each with meaningfully different consequences for diesel prices and, by extension, for anyone running a harvesting operation in the United States. None of them is certain, and the decisions being made right now in Washington, Tehran, Tel Aviv, Moscow, and Beijing will determine which path materializes. What follows is an honest assessment of each.

Quick Resolution: Ceasefire Requiring Both Parties

This remains the most commonly assumed outcome, though the likelihood is dubious. Trump’s public language has shifted perceptibly toward exit, and the phrase heard repeatedly from the Pentagon is that this is not 2003, a deliberate signal to the domestic audience that no occupation or nation-building follows from these strikes. Iran has said publicly that negotiations with the United States are not on the table, but that framing is perhaps carefully constructed to preserve diplomatic cover while back-channel conversations proceed. Russia, China, and France have all confirmed contact with Tehran in a mediating capacity.

The critical constraint in this scenario is that a unilateral American withdrawal does not reopen the Strait of Hormuz. As long as Israel continues striking Iranian territory, Iran has no incentive to stand down its anti-shipping posture. A genuine reopening of the strait requires both parties to cease operations, which means the meaningful unit of analysis is not American exit but joint resolution.

The complication in this scenario is of course Israel, and it is a significant one. Israel’s current government is more hardline than any that preceded it, and it entered this conflict with a specific and non-negotiable objective: the elimination, not the degradation, of Iran’s nuclear program. A ceasefire that leaves Iran’s nuclear capabilities intact is, from Israel’s perspective, a defeat at a moment Israel cannot afford one. American domestic support for open-ended military engagement on Israel’s behalf has been eroding in ways that look structural and permanent, and Israeli leadership understands that this may be the last window in which American air cover is available for an operation of this scale. They are not inclined to exit before the objective is achieved–permanently.

Russia presents a separate complication. Moscow has been presented in Western media as a potential good-faith mediator, and Putin has spoken with Trump at length about frameworks for resolution. But Russia’s revenues depend heavily on oil prices, and oil is currently above $90 per barrel. Every additional week of disruption represents substantial additional income for a country funding a war in Ukraine (and western resources pulled away from their adversaries). Russian incentives to facilitate a rapid resolution are considerably weaker than the diplomatic positioning suggests.

If resolution materializes, diesel stabilizes roughly where it is today, perhaps drifting modestly lower over several weeks as the structural damage floor absorbs the initial shock. The forest industry can operate in that environment. It is painful relative to pre-war conditions and adds more pressure to an already-beleaguered sector, but it is manageable.

SPR Release and the Bridge That Has Now Been Played

Today, the IEA made it official. Member nations unanimously agreed to release 400 million barrels from their collective strategic petroleum reserves, the largest coordinated release in the agency’s 52-year history, roughly twice the scale of what was deployed in response to Russia’s invasion of Ukraine. The market’s response was diminutive. Crude, which had spiked toward $120 earlier in the week, barely moved on the announcement, sitting just under $90 within hours of the press conference.

The numbers explain the market’s muted reaction. Four hundred million barrels covers approximately 20 days of disrupted Hormuz flow at face value, or 45 to 50 days according to analysts who account for regional storage drawdowns and production cuts already underway. That timeline points to mid-April. IEA-coordinated releases have historically not exceeded roughly 2 million barrels per day across member nations in practice, well below the theoretical maximum, and the physical oil takes two to four weeks after a release decision to reach markets. The reserves also hold crude, not refined products, which adds further processing lag before the barrels translate into diesel at the pump.

What the release accomplishes is buying time, suppressing the fear premium, and signaling coordinated political will. What it cannot do is reopen a strait Iran controls. If this conflict resolves by the end of March, the SPR bridge covers the gap and the release looks, in retrospect, well-timed. If it runs past mid-April, the bridge expires with no comparable policy tool remaining. The largest card consuming nations had to play has now been played. Oil is still at $90, and the Strait is still closed.

Conflict Through March

If the conflict resolves around the end of March rather than immediately, the SPR bridge remains intact and the worst outcomes are avoided. Prices would run elevated through the month, likely in the $110 to $128 range as the strait stays closed, before beginning a gradual recovery. The recovery would not be immediate even after a resolution announcement, because mine clearing takes weeks, war-risk insurance markets do not reopen overnight, and oil depots and refineries cannot be un-exploded. The physical recovery lags the diplomatic one by a meaningful margin. The price consequences for the forest industry are likely to result in further contraction, but they are survivable.

Conflict Through Spring or Summer

If Iran’s calculation is that a prolonged disruption creates sufficient economic pressure to bring the United States to the negotiating table on terms favorable to Tehran, then the incentive structure points toward holding the strait closed rather than reopening it. Mojtaba Khamenei, the new Supreme Leader, is a less well-understood figure than his father, and early signals from his positioning suggest he is not inclined toward concession. The core impasse remains: Israel requires nuclear program elimination, Iran will not accept it, and neither the US nor Iran’s intermediaries have identified a formula that resolves that gap.

A conflict that runs through April exhausts the SPR bridge and puts crude oil in the $160 to $170 range based on the scale of supply disruption relative to historical analogs. The 1973 oil embargo removed roughly 7 percent of global supply and produced a 300 percent price increase. The current disruption, combining Hormuz closure with confirmed Gulf production cuts of approximately 7 million barrels per day, represents somewhere between 22 and 27 percent of global supply genuinely stranded, with no rerouting available because Hormuz is a physical chokepoint rather than a flow that can be redirected. At $160 to $170 crude, diesel runs above $7 per gallon nationally. At prices sustained through summer, the trajectory extends toward $8 and above, with demand destruction (recession) acting as the natural ceiling rather than any diplomatic development. Recovery from those levels would be slow. Struck refinery infrastructure does not come back online with a ceasefire announcement, and markets would remain cautious about Iran’s willingness to close the strait again.

Escalation: Yanbu, the Houthis, and the Double Chokepoint

Saudi Arabia has a second export route that does not pass through Hormuz: the East-West Pipeline, which carries crude overland from the Eastern Province to the Red Sea port of Yanbu. This pipeline is the backstop that allows some Saudi oil to reach global markets even when the Persian Gulf is inaccessible. Yanbu is a known target, and Iran or its proxies have both the motivation and the demonstrated capability to strike infrastructure at that distance. If Yanbu is hit, both of Saudi Arabia’s export routes go offline simultaneously, and the rebuild timeline runs six to eighteen months. The pricing consequences are, frankly, catastrophic.

The Houthis in Yemen, who have already demonstrated their willingness and technical capability to disrupt Red Sea shipping, control territory overlooking the Bab el-Mandeb strait at the southern end of the Red Sea. If they formally enter this conflict, weakened though they are, the Cape of Good Hope becomes the only remaining routing option for vessels serving the Persian Gulf, adding two to three weeks per voyage and corresponding costs that flow through to everything the ships carry. These scenarios are not the base case, and each carries a low individual probability. Their consequences, however, are not marginal adjustments to the current disruption. They represent a different category of event entirely, one in which the policy tools already deployed offer no meaningful relief.

What This Means for a Forest Industry Already Under Pressure

Anyone familiar with the forest industry knows the magnitude of impact such prices could have on operations, but the exact outcomes are impossible to predict because the more we drift into more severe scenarios, the less forestry-specific dynamics matter. At $7 or $8 diesel, sustained over months, the disruption starts functioning as a macroeconomic event, one that reshapes entire sectors in ways that are genuinely difficult to predict in advance. The honest comparison is COVID-19, not because the mechanisms are similar but because the scale of uncertainty is.

In February 2020, if you had asked anyone in the forest industry what a global pandemic would do to lumber markets, the consensus answer would have been somewhere between bad and catastrophic. Nobody predicted $1,700 per thousand board feet. The mechanism was government stimulus: trillions of dollars in federal spending, interest rates held at zero, a home renovation boom driven by people confined to their homes, and a demand surge that the market had no framework for anticipating. The dominant variable turned out to be not the disruption itself but the policy response to it.

At the scale of a $200 crude oil event, that same dynamic applies. Federal emergency legislation, strategic energy policy changes, potential price controls or rationing, recession-driven demand collapse, or alternatively a stimulus response that accidentally generates construction demand the way 2020 did–any of these could theoretically become a reality. At COVID-level disruption, the range of outcomes is wide enough that confident predictions are not credible, and anyone offering them is working from a narrower model than the situation warrants.

What can be said with confidence is that the forest industry enters this period in a weaker position than it occupied in 2019. Contractor liquidity is thinner after three years of margin pressure. Mill capitalization is tighter. The tolerance for absorbing extended cost shocks without permanent capacity reduction is lower across the board. A large external disruption hitting an already-weakened system produces different outcomes than the same disruption hitting a healthy one. That asymmetry matters, and it is the reason this conflict deserves close attention and subsequent planning from the industry.

The argument I made in Empty Homes & Silent Saws was about slow-moving forces: demographic decline, housing policy failure, structural oversupply, and the industry’s difficulty adapting to all three. Those forces have not resolved, and the Iran conflict adds is a fast-moving, externally driven shock whose resolution timeline is genuinely uncertain and whose upper-bound consequences, if the conflict extends or escalates, could dwarf anything the forest industry has absorbed since 2008.

The structural damage to global oil markets is already baked in regardless of when this ends. The pre-war energy price environment is not coming back this summer even under the most optimistic resolution scenario. Whether what follows is manageable or something more severe depends on decisions being made right now by people whose motivations are completely extraneous to those of the average America. The range of outcomes here is wide, but this could be big.