Attacks on oil tankers in the Strait of Hormuz could lead to a ‘guaranteed global recession’

Experts say that these attacks open a front for war that could have massive repercussions. A large portion of the world’s energy supply transits these waters, and with every day that attacks occur and fewer ships risk sailing there, the world moves a little closer to economic crisis.

Oman lies at the bottom of the Strait of Hormuz, a major maritime traffic route linking Arab Gulf states, such as Iran, to the rest of the world. On a normal day, about 20 million barrels of oil, or about 20% Of the world’s liquid oil, it passes through the strait, which is less than 30 miles wide at its narrowest point. In a moment of regional instability, the sea corridor could quickly turn into a strategic checkpoint, and its effects have already spread on a global scale.

Renewed conflict in Iran, and retaliatory attacks by the regime across the Middle East, have put the Strait back at the center of recession fears, with analysts warning that even a partial or prolonged disruption to oil supplies could lead to a contraction in the global economy. Now, with the weekend attacks, experts are warning that a triple-digit rise in crude oil prices may be the least of the world’s worries. If the strait remains closed long enough, it could be a certain blow to the global economy.

“A prolonged closure of the Strait of Hormuz is a guaranteed global recession,” says Bob McNally, founder of the consulting group Rapidan Energy and a former energy adviser to the White House under George W. Bush. He said CNBC Saturday.

It’s not just oil. around five Of the LNG traded globally, it was transported through the Strait of Hormuz in 2024, according to the Energy Information Administration, making it one of the most important nodes in the global energy system. Tanker tracking data shows that Saudi Arabia alone carried the shipment About 5.5 million barrels per day Through the strait in 2024. With about 38% of all crude oil flowing through the strait, passage is essential for Gulf exporters. While solutions exist, including Existing pipelines crisscrossing its way through the Arabian Peninsula, its limited capacity would struggle to replace flows that would be lost in the event of a complete closure of the strait, leaving the global market particularly vulnerable to any sustained disruption.

While the Islamic Republic has not yet closed the strait by force, these sentiments have already done a great deal of work. The Iranian army warned on Saturday that passage through the strait was “unacceptable.”insecureAccording to local news reports affiliated with the Iranian Revolutionary Guard. By the end of the day, ship traffic through the strait had stopped. down 70% compared to the previous day, New York Times I mentioned.

Global repercussions

A prolonged halt in shipments would shock the global economy. Last summer, after a brief conflict also involving the United States, Israel and Iran threatened to close the strait, the Oxford Institute for Energy Studies Similar to The impact of the potential shutdown lasting more than a year, as it was found that 15% of global LNG supplies will be eliminated, with Europe, China, India and Japan being the most affected in terms of loss of imports.

Oil prices rose significantly as a result of the instability. Brent crude, the global pricing benchmark for most internationally traded crude oil, jumped as much as 13% on Monday to $86 a barrel, and analysts warn that attacks on Gulf energy infrastructure or an extended shutdown could bring it to a halt. $100 or higher. The last time oil prices reached this high was in 2022, after the Russian invasion of Ukraine led to sweeping international sanctions targeting Russian oil exports. Prices have remained below $80 over the past year.

Most banks and analysts consider the possibility of higher oil prices or a forced closure of the strait a small risk at the moment. CitigroupFor example, put Chance A $120 per barrel of oil at only 20% In a note Monday. Analysts also noted the logistical difficulties Iran may face in ordering and maintaining the closure of the Strait, including: American naval superiority In the region and the risks that the regime may face by losing its allies by cutting off energy supplies. The threat of closure is also not new for the Islamic Republic, which has threatened to close the strait several times in the past, but has never done so. Completely through.

in analysis The closest historical counterpart would be the 1970s, when an oil supply crisis led to deflation in many countries around the world, researchers by energy consultancy Wood Mackenzie noted. Analysts pointed out that unlike that period, the world is now much less dependent on oil. In order to create a similar magnitude of global economic crisis, oil prices would need to reach about $200 per barrel, they wrote.

Wood Mackenzie analysts added that such a reduction in global supplies, and the attendant risks to the global economy, would likely be unpalatable even in the United States.

“An ongoing conflict that significantly limits transit through the Strait of Hormuz, raises oil and liquefied natural gas prices and weakens an already fragile global economy, represents a significant political risk to the United States,” they wrote. “The sharp negative reaction in global financial markets could prompt the Trump administration to look for a way out and calm down.”