Good morning. The US defense secretary, Pete Hegseth, just put a number on the price tag: he told the Senate the US-Israel war on Iran has cost $37.5bn so far. And in the same wider escalation, the strait of Hormuz is effectively seizing up, dragging economic consequences far beyond the region.

According to the briefing, the US has attacked Iran for the eleventh consecutive night, hitting aircraft hangars and drone storage sites across the country. This came after Iran launched retaliatory strikes on US air bases and neighbouring Gulf states, where authorities have accused Iran of deliberately targeting desalination plants essential to life in the region. Meanwhile, each side claims it is preventing the other from gaining control over the strait of Hormuz, through which 20% of the world’s oil was shipped before the war began. The practical result: vessels carrying crucial shipments of oil, gas and fertiliser remain at a standstill.

That standstill matters for executives because it turns geopolitics into a supply-chain variable with real pricing and timing effects. Oil is the obvious headline, but the briefing also flags gas and fertiliser. Fertiliser is a less glamorous link in the chain that nonetheless hits food costs and industrial inputs, and it tends to travel on schedules. When ships stall, lead times stretch and contracts get stress-tested. Even if your company is not in the Gulf, you can still feel the knock-on effects through energy costs, shipping rates, insurance pricing, and the scramble to reroute cargo.

Now layer in the governance problem. The newsletter describes a White House “operating without expertise, strategy or restraint” that is stuck in a conflict with “no easy way out.” That framing is critical for boardrooms because it points to decision quality, not just battlefield outcomes. When policymakers have to manage escalation while also dealing with domestic pressure, they can end up with limited options that keep the risk elevated. In such moments, the market does not just price “what happened.” It prices “how long this lasts” and “how many surprise moves are still possible.”

This is also why the Senate cost debate is not a side quest. Hegseth faced lawmakers furious over the conflict’s soaring price tag and the deaths last week of three American service members. For decision-makers, that is the political version of liquidity risk: if costs keep climbing and casualties keep coming, the constraint environment tightens. That can lead to changes in funding, oversight intensity, and the political feasibility of certain military options. In other words, the “$37.5bn so far” is not only a fiscal fact. It is a constraint that can shape operational choices going forward.

Across the economic system, the strategic obsession with control of choke points like Hormuz is the kind of thing that spreads uncertainty faster than it spreads fuel. The briefing is explicit: both sides claim they are preventing the other from gaining control over the strait. When both narratives are pushing in opposite directions, shipping companies and counterparties tend to respond defensively. Standstills can become self-reinforcing because nobody wants to be the operator who arrives at the wrong time, in the wrong place, under the wrong assumptions.

Zooming out to the broader executive briefing, there is a second story about cost of living pressure in the UK that echoes the same theme: escalation, shock, and budget strain. The briefing notes that Andy Burnham, after his first call with Donald Trump within two hours of entering No 10 on Monday afternoon, is under mounting pressure to explain how he will pay for policy pledges tied to the cost of living crisis. The link is not that one causes the other. It is that in both arenas, leaders face the same hard equation: pressures are rising faster than the room to maneuver.

And even beyond economics, you can see the breadth of disruption in the weekly scan: England and Wales moving closer to drought status with about 23 million people banned from using hosepipes by this weekend, and Ukraine upheaval with Volodymyr Zelenskyy firing Ukraine’s commander-in-chief Oleksandr Syrskyi and offering a “prominent position” to the defence minister he sacked last week in a move that sparked nationwide protests. The through-line for executives: multiple shocks are landing at once, and markets tend to reprice risk when that happens.

The strategic stakes for peers with international exposure are straightforward. If 20% of the world’s oil trade routes are compromised and gas and fertiliser shipments stall, you need to think in second order effects: contract terms, inventory buffers, insurance and freight costs, and the operational resilience required when “normal” lead times stop being normal. The $37.5bn number gives the cost-of-war debate a hard edge. The Hormuz standstill gives it a supply-chain body. Right now, those two things reinforce each other, and that is how crises start reshaping the global order.