The world’s busiest oil supply passage is in a chokehold, and the ripple effects are being felt across nearly every corner of the globe. The pressure is already showing up everywhere: at petrol stations, in grocery bills, and along global trade routes. The conflict, which has continued to intensify since February 28, has already pushed crude prices beyond the $100 mark, but experts warn a far steeper surge may lie ahead, with prices potentially soaring past a whoppping $167 per barrel and even to $200.With war tensions escalating in the Middle East, economists and energy experts are warning that if the Strait of Hormuz remains closed through September, the fallout could trigger one of the worst energy and trade shocks in modern history.According to projections from the Federal Reserve Bank of Dallas, cited by The Washington Post, a prolonged closure of the Strait could send oil prices soaring above $167 a barrel. However, some analysts are warning of an even darker scenario with some believing crude prices could surge to $200 a barrel if disruptions intensify. A recent note from Australian investment bank Macquarie Group suggested that if the conflict continues through June, oil prices could briefly surge above $200 per barrel.However, Vikas Dwivedi, global oil and gas strategist at Macquarie, told CNN earlier that the probability of such a scenario is around 29%. At the same time, the expert also noted that even if the war ends, oil could still climb to $200 a barrel if the Strait of Hormuz remains largely closed, a possibility that US President Donald Trump also raised.
Biggest crisis in history
Fatih Birol, head of the International Energy Agency, had already described the current oil supply turmoil as “indeed the biggest crisis in history” in an interview with France Inter radio. But the fallout from the Middle East conflict spills far beyond soaring fuel prices, with its impact threatening to disrupt global trade, strain supply chains, and deepen economic uncertainty worldwide.An analysis by independent trade monitoring body Global Trade Alert, reported by the Financial Times, suggests that prolonged conflict-driven oil market instability could significantly weaken global commerce. Using models based on earlier shocks such as the Covid-19 pandemic and 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 steep drop from prewar expectations.Simon Evenett, founder of Global Trade Alert and trade expert at IMD Business School in Lausanne, warned that world merchandise trade may prove far less resilient than early signals suggest. He said sustained fuel price volatility slows global trade growth, with the full economic impact often taking up to 19 months to materialise. His warning was stark: “The worst may be ahead of us.”Such a downturn could seriously dent the World Trade Organization’s March forecast, which had projected global goods trade growth of 1.9% in 2026 before improving to 2.6% in 2027. The WTO had already estimated that sustained high oil prices could shave 0.5 percentage points off 2026 growth, but the latest worst-case scenarios suggest the hit could be far deeper.From surging fuel costs and strained supply chains to slowing trade and recession fears, the Middle East conflict is no longer just a regional war story. If the Strait of Hormuz remains trapped in crisis, the shockwaves may reshape the global economy long after the headlines fade.
Middle East continues to boil
Meanwhile, the Middle East crisis has shown occasional signs of cooling, every peace push so far has ended in a stalemate. The latest standoff came on Thursday when US President Donald Trump claimed that three American naval destroyers were fired upon while passing through the Strait of Hormuz, though none of the vessels sustained damage. Trump also issued a fresh warning to Iran, threatening stronger military action if Tehran does not move quickly to sign a deal.In a post on Truth Social, Trump said the three “world class” US destroyers had transited the Strait successfully despite coming under attack, adding that while the American ships were unharmed, Iranian attackers and several small boats were “completely destroyed.”The conflict began on February 28, when US and Israel launched joint attacks on Iran, after which Tehran tightened its noose on the crucial Strait of Hormuz. Since then, oil supplies across the globe have been disrupted and crude prices have continued to swing beyond $100 per barrel, even touching $126 per barrel mark.
