The world’s busiest oil supply route is blocked and its impact is being felt in almost every corner of the world. The pressure is already visible everywhere: at petrol pumps, in grocery bills and on global trade routes. The conflict, which has been steadily intensifying since February 28, has already pushed crude oil prices past $100, but experts warn there could be an even sharper surge ahead, with prices potentially rising to $167 a barrel and even $200.With war tensions rising in the Middle East, economists and energy experts are warning that if the Strait of Hormuz remains closed until September, it could result in one of the worst energy and trade shocks in modern history.A prolonged closure of the strait could send oil prices above $167 a barrel, according to estimates from the Federal Reserve Bank of Dallas cited by the Washington Post. However, some analysts are warning of an even darker scenario and some believe crude oil prices could rise to $200 a barrel if the disruption prolongs. A recent note from Australian investment bank Macquarie Group suggested that if the conflict continues into June, oil prices could briefly rise above $200 a barrel.However, Vikas Dwivedi, global oil and gas strategist at Macquarie, previously told CNN that the probability of such a scenario is about 29%. Also, the expert also said that even if the war ends, if the Strait of Hormuz remains closed to a large extent, oil could still rise to $ 200 per barrel, a possibility that was also raised by US President Donald Trump.
The biggest crisis in history
International Energy Agency chief Fatih Birol had already described the current oil supply turmoil as “truly the biggest crisis in history” in an interview with France Inter radio. But the fallout from the Middle East conflict goes beyond rising fuel prices, which threatens to disrupt global trade, strain supply chains and deepen economic uncertainty around the world.Analysis by independent trade watchdog Global Trade Alert, reported by the Financial Times, suggests that prolonged conflict-induced oil market volatility could significantly weaken global commerce. Using models based on the COVID-19 pandemic and earlier shocks such as the 2008 commodity crash, the study found that continued fuel price volatility could reduce global trade growth by 1.75% by the end of next year, a sharp decline from pre-war expectations.Simon Evenet, founder of Global Trade Alert and a trade expert at the IMD Business School in Lausanne, warned that world trade may prove to be much less resilient than early indications suggest. Persistent fuel price volatility slows global trade growth, he said, with the full economic impact often taking up to 19 months to occur. His warning was clear: “The worst may be ahead of us.”Such a slowdown could seriously impact the World Trade Organization’s March forecast, which had projected global goods trade growth to be 1.9% in 2026 before improving to 2.6% in 2027. The WTO had previously estimated that sustained high oil prices could shave 0.5 percentage points off 2026 growth, but the latest worst-case scenario suggests the hit could be far deeper.From rising fuel costs and strained supply chains to slowing trade and recession fears, the Middle East conflict is no longer just a story of regional war. If the Strait of Hormuz remains mired in crisis, the shock waves could reshape the global economy long after the headlines fade.
The Middle East continues to boil
Meanwhile, the Middle East crisis has shown occasional signs of abating, with every peace effort to date ending in deadlock. The latest standoff came on Thursday when US President Donald Trump claimed that three US naval destroyers were fired upon while passing through the Strait of Hormuz, although none of the ships were damaged. Trump also issued a new warning to Iran, threatening strong military action if Tehran does not move quickly to sign the deal.In a post on Truth Social, Trump said that three “world-class” American destroyers had successfully transited the strait despite the attack, and while the American ships were unharmed, the Iranian bombers and several small boats were “totally destroyed.”The conflict began on February 28, when the US and Israel launched joint strikes on Iran, following which Tehran tightened its grip on the vital Strait of Hormuz. Since then, oil supplies around the world have been disrupted and crude oil prices have been rising above $100 per barrel, even touching the level of $126 per barrel.
