Asger Risom
Oil prices are approaching $120 a barrel as disruptions in the Strait of Hormuz rattle global markets. Analysts warn that prolonged shipping constraints could trigger an energy shock reminiscent of the 1970s oil crisis.
Oil prices have surged past $100 per barrel and are now approaching the $120 mark, as markets react to the growing risk of a prolonged disruption to shipments through the Strait of Hormuz.
The spike comes roughly a week after U.S. and Israeli strikes on Iran triggered retaliatory tensions across the region. The Strait of Hormuz — one of the world’s most critical oil chokepoints — has seen heavily constrained traffic since the escalation, while several Gulf producers have begun slowing output.
Oil prices have nearly doubled in just over three months in 2026, raising fresh concerns about inflation and the stability of the global economy.
Fears of a modern oil shock
Some analysts are warning that the situation could resemble the oil shocks of the 1970s, when supply shortages sent prices soaring and triggered widespread economic disruption.
Market strategist Ed Yardeni said financial markets are increasingly worried about a similar scenario if shipments through the Strait remain restricted.
“This oil shock won’t end until ships can sail freely through the Strait,” Yardeni wrote, pointing to prediction markets showing the probability of a recession rising to a three-month high.
He added that prolonged disruption could even trigger a bear market in stocks.
Supply losses could be historic
Other analysts argue the scale of the disruption could surpass past energy crises.
Bob McNally, president of energy analysis firm Rapidan Energy, said the current shipping constraints are already having a deeper impact than the Suez crisis of 1956–1957.
According to McNally, several major Gulf oil producers have begun reducing production because they are running out of storage capacity for crude that cannot be shipped.
“This represents the largest oil supply loss in history, by a factor of two,” he wrote, adding that the situation is particularly severe because global spare production capacity is extremely limited.
Markets reacting rapidly
Not all analysts believe oil prices will continue climbing at the same pace.
Robin Brooks, a senior fellow at the Brookings Institution and former chief foreign exchange strategist at Goldman Sachs, said markets may have already priced in much of the disruption.
“The markets are in full panic mode,” Brooks wrote, but suggested the upside may be limited if conditions in the Strait stabilize.
“If anything, it’ll get more open, so I wouldn’t chase this spike,” he added.
Even reopening the Strait may not calm markets quickly
Other energy analysts caution that restoring normal supply could take far longer than the initial disruption.
Warren Patterson, head of commodities strategy at ING, said the longer oil flows remain restricted through the Strait of Hormuz, the more prices are likely to rise.
Even if shipments resume soon, it will take time for upstream production and logistics to return to normal levels.
Felipe Elink Schuurman, CEO of Sparta Commodities, said the disruption affects the entire energy supply chain. Ports must reorganize shipping schedules, production needs to ramp back up, and refineries require consistent crude deliveries before returning to full operations.
“Even if Hormuz reopens tomorrow, normalization takes months — not days,” Schuurman wrote.
Sources: Business Insider
