As shipping traffic in the Strait of Hormuz approaches paralysis, concerns are mounting about the potential economic repercussions globally, especially if the flows of oil and basic commodities through this vital waterway continue to be interrupted.
According to an article published by Axios by Neil Irwin, the continuation of the crisis in the Strait may lead to increased inflationary pressures on the American economy, while the effects may be more severe on the economies of Europe and East Asia, which depend more on energy imports. Analysts warn that the rise in oil prices to much higher levels may push some major oil-importing economies into recession, which will have noticeable negative repercussions on the American economy as well.
The Strait of Hormuz, which is approximately 21 miles wide at its narrowest points, is one of the most important energy sea lanes in the world, as it is surrounded by Iranian territory on three sides. Reports indicate that Iran may target commercial ships attempting to cross, threatening to disrupt shipments of oil and liquefied natural gas, as well as essential raw materials such as agricultural fertilizer components, aluminum and steel.
Despite attempts by the United States and its allies to break the blockade through measures such as providing government insurance for ships or potentially escorting commercial ships by the US Navy, these efforts have not yet achieved effectiveness.
Oil markets have witnessed significant fluctuations in recent days depending on field developments. According to the data, the price of Brent crude, the global oil index, rose to about $101 per barrel on Thursday morning, compared to $72.48 before the outbreak of war. Futures contract prices also indicate expectations of continued pressure on supplies, as the price of Brent for July 2025 delivery reached about $91.60, with prices remaining above the $80 level until the end of the year.
Goldman Sachs analysts point out that the US economy enjoys a degree of protection thanks to its high domestic oil production, but it will not be completely immune from the effects of the global market. In a scenario where the average price of Brent is assumed to reach $98 during March and April before it declines later, the bank expects US inflation to rise in 2026 by about 0.8 percentage points to reach 2.9%, with GDP growth expectations declining to 2.2%.
In a more severe scenario, where oil flows are disrupted for an entire month and the average price reaches $110, inflation could rise to 3.3% while growth slows to 2.1%. In light of these risks, economists at the bank raised the possibility of the US economy entering a recession this year to 25%.
Oxford Economics estimates go further, simulating a scenario in which the oil price reaches $140 per barrel for two months, which the institution describes as a “breaking point” for the global economy. In this case, the Eurozone, Britain, and Japan may enter into an economic contraction, while the American economy is approaching an actual recession.
Researchers Ryan Sweet and Ben May warn that oil prices at this level could lead to a decline in global GDP by 0.7% this year, with global inflation rising to 5.1%, 1.7 percentage points higher than previous expectations. They also point out that the recovery of financial markets after military crises in the Middle East was rapid in past decades, but the recovery this time may be slower and more complex.
