The war with Iran has reshuffled the cards in global energy markets, pushing oil prices back to the forefront of geopolitics after a period of relative calm at the end of 2025. As tensions escalate, the Strait of Hormuz has returned to the center of calculations, as around 20 percent of the world’s oil and gas trade, valued at around $1.3 billion per day, flows through its waters. Any disruption to this vital artery immediately reflects on prices, which explains the rapid spike in the price of Brent crude.
Initial estimates suggest that prices could rise to around $85 per barrel if tensions remain contained, while they could exceed $90 or even $100 if the conflict expands or if supplies are disrupted for a longer period. Some pessimistic scenarios go even further, speculating that it could rise to $140 if the Strait of Hormuz were closed for a prolonged period or if regional energy facilities were directly attacked.
Iran produces over 3 million barrels per day and exports roughly two-thirds of its output, with the largest share going to Asia, particularly China, which imports around 14 percent of its needs from Iran. Any disruption in Iranian exports would not be confined to the region but would extend to global supply chains, putting industrial economies that have not yet fully recovered from previous waves of inflation under pressure.
However, the picture is not one-sided. There are balancing factors that limit excessive price increases. The first is that Iran’s ability to close the Strait of Hormuz for an extended period remains in doubt. Indeed, a number of defense experts have pointed to naval preparations to escort vessels and secure shipping lanes. The second is that markets have become capable of absorbing geopolitical shocks quickly through the strategic reserves maintained by major powers.
The third factor is the spare production capacity of some OPEC countries, which is estimated at around 3.5 to 3.7 million barrels per day- roughly equivalent to Iran’s production. Several of these states have already announced that they are ready to use this reserve capacity if necessary, seeking to calm markets and prevent prices from spiraling out of control. Previous experiences, including the tensions of 2024 and 2025, have also shown that sharp price spikes are often followed by rapid corrections once the limits of escalation become clear.
As for transport, even if a Hormuz were to close temporarily, shipping companies would seek alternative routes, whether through existing pipelines carrying oil to ports outside the Gulf or increasing reliance on Red Sea and Mediterranean ports. It is true that these alternatives cannot fully replace the volumes passing through the strait, but they can soften the shock and give markets breathing room until the situation stabilizes. Production could also be increased in other regions of the world.
In the short term, we will likely see shipping and insurance costs rise, and perhaps longer queues at some fuel stations in the countries directly affected, as happened in Tehran after the strike. However, if the conflict remains limited and does see attacks on major regional facilities, the spike could remain manageable. Markets tend to overreact before returning to grounded calculations of supply and demand.
Economically, any sustained increase above $90 or $100 per barrel would feed into global inflation rates and weigh on purchasing power, especially in Europe and emerging economies. Since the global financial crisis, the world has experienced a gradual erosion of real incomes, and any new wave of inflation could bring back debates over interest-rate policies and government support measures. Central banks are therefore monitoring developments with extreme caution, fearing that the shock could spread from energy markets to other sectors.
China, the largest importer of Iranian oil, would feel the impact directly. Beijing holds long-term contracts at preferential prices and maintains substantial strategic reserves, but any rise in prices across the board would increase the cost of imports, even if part of the shortfall could be offset through other sources.
Politically, the escalation comes at a sensitive time in the United States, months from the Midterm elections in November. Fuel prices are a significant factor in the American electorate’s mood, and a sharp increase could have implications for the administration’s popularity. Hence the delicate calculations: managing the conflict in a way that achieves its strategic objectives without allowing domestic prices to spiral. American history shows that foreign wars are always intertwined with economic and electoral calculations, and that stability in energy markets is a central to political success.
In sum, the world stands before a new test of the global energy system’s resilience. The worst-case scenario remains theoretically possible, but it is not inevitable.
Between strategic reserves, spare production capacity, alternative routes, and diplomatic tools, there remains ample room to contain the shock. The direction of prices in the coming weeks will depend on the course and limits of escalation: if it remains limited, prices may stabilize around $85; if it widens, they could reach the $100 threshold or beyond. In any case, oil markets will continue to mirror the delicate balance between geopolitics and the global economy.
Early developments will also be decisive in shaping investors’ expectations. Any signals of opening negotiation channels or regulating the tempo of operations would quickly be reflected on trading screens, reducing speculative pressure and restoring a measure of confidence to global markets.
