The full-scale war with Iran has reshuffled the cards in global energy markets, pushing oil prices back to the forefront of the geopolitical landscape after a period of relative calm in late 2025. With escalating tensions, the Strait of Hormuz has once again become the most crucial element in supply and demand calculations, as it is the waterway through which approximately 20 percent of the world's oil and gas trade passes, valued at nearly $1.3 billion daily. Any disruption to this vital artery is immediately reflected in global prices, which explains the expectations of a rapid surge in the price of crude oil.
Initial estimations suggest that prices could rise to around $85 per barrel if tensions remain contained, while they could exceed $90 or even $100 if the confrontation escalates or supplies are disrupted for a longer period. Some pessimistic scenarios go even further, predicting a potential price of $140 in the event of a prolonged closure of the Strait of Hormuz or direct attacks on regional energy facilities.
Iran produces slightly more than 3 million barrels per day and exports about two-thirds of its production, with the largest share going to Asia, particularly China, which relies on Iranian oil for nearly 14 percent of its imports. Therefore, any disruption to Iranian exports would not only affect the region but also global supply chains, putting pressure on major industrial economies that have not yet fully recovered from previous waves of inflation.
However, the picture is not one-sided; there are balancing factors limiting excessive price increases. First, Iran's ability to close the Strait of Hormuz for an extended period remains questionable, given the international naval preparations in place to escort ships and secure shipping lanes. Second, markets have become accustomed in recent years to absorbing geopolitical shocks more quickly, benefiting from the strategic reserves maintained by major powers to prevent severe supply shortages.
The third factor is the spare production capacity of some OPEC countries, estimated at 3.5 to 3.7 million barrels per day, roughly equivalent to Iran's production. Several producing countries have announced their readiness to utilize this spare capacity if needed, a move aimed at calming markets and preventing price spikes. Furthermore, past experiences, including the tensions of 2024 and 2025, have shown that sharp price increases are often followed by rapid corrections once the limits of the escalation become clear.
In terms of transportation, even in the event of a closure of the Strait of Hormuz, shipping companies will seek alternative routes, whether through existing pipelines transporting oil to ports outside the Gulf, or by increasing reliance on Red Sea and Mediterranean ports. While these alternatives will not fully compensate for the volumes transiting the strait, they will mitigate the shock and provide markets with some breathing room until the situation stabilizes.
In the short term, we are likely to see higher shipping and insurance costs, and perhaps longer queues at some gas stations in the directly affected countries, as happened in Tehran after the strike. But if the confrontation remains limited and does not escalate to target major regional facilities, the price surge may remain manageable. Markets, by their very nature, tend to overreact initially before reverting to actual supply and demand dynamics.
Economically, any sustained increase above $90 or $100 per barrel will impact global inflation rates and put pressure on household purchasing power, particularly in Europe and emerging economies. Since the global financial crisis, the world has suffered a gradual erosion of real incomes, and any new wave of inflation could reignite debates about interest rates and government support policies. Therefore, central banks are monitoring developments very closely, fearing that the shock from the energy markets could spread to other sectors.
In China, the largest importer of Iranian oil, the impact is right away, even though Beijing has long-term contracts at preferential prices and substantial strategic reserves. Nevertheless, any general price increase will raise the cost of imports, even if some of the shortfall can be compensated from other sources.
Politically, the escalation comes at a sensitive time in the United States, with the midterm elections approaching in November. Fuel prices are a significant factor influencing American public opinion, and any sharp increase could negatively impact the administration's popularity. Therefore, the calculations appear precise: managing the conflict in a way that achieves strategic objectives without allowing prices to spiral out of control domestically. American history demonstrates that foreign wars are always intertwined with economic and electoral considerations, and that stability in the energy market is a fundamental element of any successful political equation.
In conclusion, the world faces a new test of the resilience of the global energy system. The worst-case scenario remains theoretically possible, but not inevitable. Between strategic reserves, spare production capacity, alternative supply routes, and diplomatic tools, there is ample room to contain the shock. The direction of prices in the coming weeks will depend on the course and extent of the escalation: if it remains limited, prices may stabilize near $85; if it widens, they may approach or even surpass the $100. In any case, oil markets will remain a precise reflection of the delicate balance between geopolitics and the global economy.