Amid a recent escalation in military activity involving the United States, Israel and Iran, marked by joint airstrikes and threats of retaliation, the global energy sector is confronting extreme volatility.
The Strait of Hormuz—through which roughly 20% of the world’s oil and 20% of liquefied natural gas (LNG) pass—has emerged as a critical vulnerability. Any disruption there could trigger supply chain shocks, push prices higher, and reshape international trade flows.
Energy and financial market analysts shared their perspectives on X over the past few hours, highlighting not only immediate risks but also medium-term scenarios, including persistent inflation, a stronger U.S. dollar, and asymmetrical benefits for producers such as the United States and OPEC+ countries.
Dr. Carole Nakhle, CEO of Crystol Energy and secretary-general of the Arab Energy Club, emphasized that markets had already priced in a high probability of conflict. The primary concern is not the direct loss of Iranian barrels—which account for about 4% of global output—but potential retaliation against energy infrastructure in neighboring producers such as Saudi Arabia or the United Arab Emirates.
According to Nakhle, any disruption in the Strait of Hormuz would amplify market volatility, given that the channel transports roughly 25% of global oil flows and 20% of LNG. She projects that in a limited escalation scenario, Brent crude prices could adjust quickly, but warns that Gulf states remain concerned about missile threats and vulnerabilities at key facilities, potentially prolonging instability beyond the coming months. She also highlighted the political timing: with U.S. midterm elections still months away, current actions minimize electoral costs, allowing markets to stabilize before voters head to the polls.
Impact on allied countries
Joseph Brusuelas, chief economist at RSM US and a member of The Wall Street Journal’s forecast panel, offered a quantitative view on trade implications. He noted that Iran exports about 3 million barrels per day (mb/d), with China absorbing 80% of that volume—making Beijing particularly vulnerable to prolonged supply interruptions.
While the U.S. has achieved energy independence, its allies in Europe and Japan rely heavily on these flows. This could drive capital into dollar-, yen-, and Swiss franc-denominated safe-haven assets. Citing precedent, Brusuelas noted that during the 12-day war in 2025, oil prices rose 15%.
However, he projects that a real test for OPEC+—with spare capacity of 2-3 mb/d in Saudi Arabia and 1.5 mb/d in the UAE—could trigger increased production to offset deficits, potentially stabilizing prices in the $80-$90 per barrel range if the conflict does not extend beyond the next few weeks.
Roshana Popal, former senior analyst at Afghanistan’s National Security Council and expert in financial regulation, provided a technical breakdown of macroeconomic impacts. Popal argued that rising oil prices would directly benefit U.S. industries such as energy and defense, strengthening the dollar through incoming capital flows and improving the U.S. trade balance, which already exceeds 13 mb/d in production.
In contrast, importing economies such as China—the largest buyer of Iranian crude—Europe and India would face inflationary pressures, currency depreciation, and higher manufacturing costs, potentially reducing GDP growth by 0.5%-1.5% annually if prices remain above $100 per barrel. Gulf states like Saudi Arabia and Qatar could see net gains in export revenues, though regional instability poses investment risks. Globally, Popal anticipates higher inflation, with safe-haven assets like gold appreciating, while equities and cryptocurrencies could fall 5%-10% in the short term.
Agar Capital, a portfolio manager at Seeking Alpha, focused on the logistical dimension and its inflationary consequences. He noted that the Strait of Hormuz handles roughly 16 million barrels daily, and military tensions—even without a full closure—could slow shipping, raise insurance costs 20%-50%, and reduce effective supply, feeding inflation expectations and limiting central banks’ ability to cut rates. In a base scenario, Brent crude could rise to $80-$90, with knock-on effects on the DXY (U.S. dollar index) and the S&P 500, testing key support levels in a general “risk-off” environment. Over the medium term (6-9 months), he sees opportunities for U.S. shale, which becomes highly profitable above $80 per barrel, but warns that prolonged conflict could trigger a global recession if commodities remain elevated.
Finally, analysts at Bankr, specialists in financial infrastructure and markets, updated their outlook amid a potential shift to high-intensity conflict. Bankr estimates that a closure of the Strait of Hormuz would create an immediate 20 mb/d deficit—roughly 20% of global consumption—pushing Brent and WTI to $120-$150 per barrel in the short term, and potentially $180-$200 if the disruption persists. This would invalidate prior bearish scenarios, prompting long positions in energy but with low leverage due to volatility. Bankr projects a 1.5% drop in global GDP, runaway inflation, and a rotation to safe havens such as gold and bitcoin, which historically act as hedges during geopolitical instability. Alternative pipelines in Saudi Arabia and the UAE would not offset the shock, forcing costly rerouting and supply chain imbalances.