After strikes by the United States and Israel against Iranian targets, global oil markets have moved from caution to contingency planning for a substantial supply shock. Traders expect a sharp, instinctive jump when markets reopen, but analysts warn the far greater danger is a prolonged disruption to Gulf exports rather than a single-day price spike.
Energy strategists are openly discussing scenarios that would dwarf routine volatility. Vandana Hari, chief executive of Vanda Insights, warned that a direct confrontation between the US and Iran could become an unprecedented, hard-to-predict conflict, with the oil market facing the ‘‘worst-case’’ outcome of major, sustained interruptions to flows unless Washington is able to neutralize Iran’s maritime and military capabilities and keep the Strait of Hormuz open.
The Strait of Hormuz has returned to the centre of market attention. Kpler data shows about 13 million barrels a day of crude transited the strait in 2025 — roughly 31 percent of seaborne oil flows — making any disruption disproportionately damaging to global supply. Iran’s Islamic Revolutionary Guard Corps announced a ban on vessel transits, and a tanker attempting to pass was struck and began to sink, underscoring how quickly commercial shipping can be threatened.
Industry voices say the duration and geographic breadth of any disruption will determine the scale of the price response. Rapidan’s Bob McNally described the situation as ‘‘extremely grave’’ given the market’s dependence on Hormuz shipments. MST Marquee’s Saul Kavonic sketched a range of risks — from Iranian export losses of up to 2 million barrels a day to attacks on regional infrastructure — and said the fallout could be several times more severe than the 1970s Arab oil embargo, with international crude climbing into triple digits and liquefied natural gas prices potentially retesting their 2022 peaks.
Even without direct hits on Iranian production facilities, the threat to supply chains has intensified. Andy Lipow of Lipow Oil Associates said the worst-case path would see Saudi oil infrastructure attacked, followed by a complete closure of Hormuz; he assigned that scenario an approximate probability of one-third given the risk of Iran being driven into desperate measures.
The implications for the global economy are immediate and broad. A sustained oil-price shock would stoke inflation, raise shipping and insurance costs, slow trade-dependent growth, and force central banks to weigh tighter monetary settings against slowing activity. Physical-market effects — such as longer tanker journeys around Africa, higher freight rates and tighter refined fuel availability — would compound the macroeconomic hit.
Policymakers and markets will watch three levers closely: naval and diplomatic moves to secure shipping lanes, OPEC+ decisions on output, and the deployment of strategic petroleum reserves. Short-term relief could come from coordinated releases or temporary rerouting of flows, but neither fully offsets the structural risk that prolonged confrontation would pose to energy security and to fragile global growth.
In the weeks ahead volatility is likely to remain elevated. Even if the most catastrophic outcomes are avoided, the episode highlights persistent vulnerabilities in a world still heavily reliant on a handful of strategic chokepoints and hydrocarbon suppliers. Energy markets, shipping insurers and governments will need to prepare for a range of scenarios from episodic price spikes to longer-term shifts in supply patterns and strategic alignments.