One of the most powerful El Niños on record cost the world economy $5.7 trillion. The 2026 cycle might be even stronger

Just as the global economy cautiously emerges from one crisis, another is beckoning at the doorstep, one that is completely out of politicians’ control.

Markets and businesses breathed a sigh of relief last weekend when President Donald Trump announced a pending deal with Iran to cease hostilities in the Middle East and reopen the Strait of Hormuz to ship traffic. That blockaded chokepoint has sent energy prices and overall inflation soaring worldwide in recent months. Physical oil prices alone surged to $140 a barrel at one point, their highest level since 2008.

That brief relief seemingly ignored an announcement from the National Oceanic and Atmospheric Administration (NOAA) just a few days earlier, that could create more intractable trouble for businesses in the months ahead. An El Niño event—a natural pattern generally associated with balmier temperatures—has now officially formed over the Pacific Ocean, and early forecasts suggest it will be a whopper, both for the weather and for the global econo...