Rising tensions between the United States, Israel, and Iran are putting pressure on global energy markets, even though there haven’t been major supply disruptions yet. The Strait of Hormuz, through which about 20% of the world’s oil passes, is a key choke point that could threaten the global economy if the conflict lasts.
Robin Nizar, head of research at Coface, said a short conflict of a few days or weeks would have limited impact. “But if it goes on longer, the effects on the global economy could be serious, beyond just energy prices,” he added.
Oil prices shot up at the start of trading on Monday. Brent crude rose more than 10% as traders reacted to the risk of conflict.
Part of this rise comes because the extra supply that kept markets stable in 2025 is now gone. Last year, high production outside OPEC+ and quick stock rebuilding kept prices around $68 a barrel. But the current tensions are making supply less certain, pushing investors to act fast.
The Strait of Hormuz is vital for global oil, carrying 20% of consumption and 30% of sea shipments. Current tensions are already affecting prices. Alternative pipelines through Saudi Arabia and the UAE cannot handle a full closure of the strait. Experts say a long-term shutdown could push Brent crude into triple digits, possibly higher than the 2008 peak of $147 a barrel.
Iran produces more than 3 million barrels a day and exports around 2 million. Any supply disruption could force buyers, especially in Asia, to pay more for oil. Iran could also target oil facilities in other countries in the region. OPEC+ has limited spare capacity—around 4–5 million barrels per day—to respond. Other key routes like the Bab el-Mandeb and the Suez Canal could also be affected if tensions expand.
The crisis is affecting more than just oil. LNG, fertilisers, industrial metals, and petrochemicals are also impacted. Some shipping companies have paused routes or rerouted ships around the Cape of Good Hope, adding 9–14 days to transit times and raising shipping costs. This could push up inflation, especially in countries that rely on energy imports.
If oil stays above $100 a barrel for a long time, it could trigger global inflation, forcing central banks to raise interest rates. Experts say a $15 rise in Brent crude could cut global growth by 0.2 percentage points and add 0.5 points to inflation, raising the risk of stagflation and hitting trade and company profits worldwide.
