Will the Iranian crisis lead to an oil shock in the world? Analysis

Iran's parliament has voted to close the Strait of Hormuz, which is important for the transportation of Middle Eastern oil. Russia predicts that blocking the route will lead to a global oil shock. At the same time, the United States, which provoked Iran with its attacks, will suffer too. The head of the White House, Donald Trump, has already published a post in which he called on the world community to keep oil prices low. The exact consequences of the closure of the strait are described in the Izvestia article.

Market impact

• The closure of the Strait of Hormuz, which Iran is ready to undertake as a response to the US attack on its facilities, can have a significant impact on the price of oil. This narrow sea passage plays a key role in global energy logistics. A significant portion of global oil exports pass through the Strait of Hormuz every day, including raw materials from countries such as Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates and Qatar. About 20% of the world's seaborne oil exports are transported through the strait — about 20 million barrels per day (about $600 billion per year). Any disruptions in shipping through this artery inevitably raise concerns among market participants and put pressure on oil pricing, even if physical supplies have not yet been interrupted.

• Bidders in the oil futures market will seek to insure themselves against a possible shortage of supply by purchasing oil under current contracts, which instantly raises prices. This is called the risk premium, and it can reach tens of dollars per barrel in the event of a major escalation. Such an increase does not necessarily reflect a real shortage of oil, but is a reaction to the potential threat of disruption of stable supplies. At the same time, with the strait blocked, many countries, including the EU, China and Japan, which depend on Middle Eastern oil, will face difficulties in ensuring energy security.

• The United States has already warned that the decision to close the strait will lead to an even greater escalation of the conflict in the Middle East. At the same time, Tehran decided not only to block the route, but also to attack the American military base in Syria. The continued escalation of the situation will only further boost the price of oil.

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• The expert community assumes that the price of Brent crude oil may reach the level of $130 per barrel or higher (at the time of publication of the material, August futures for Brent crude oil cost $76 per barrel). A lot will depend on the performance of the strait lock. This is how futures markets can react in conditions of limited supply and increased demand amid instability.

• Historically, there have been price spikes during major military conflicts. This happened during the Iran-Iraq War, the Gulf War, and the U.S. invasion of Iraq in 2003. In each of these cases, the markets reacted instantly, pricing in future risks, even if supplies had not yet been physically interrupted.

Influence on Russia, China, the European Union

• The closure of the Strait of Hormuz could have widespread consequences for the global economy. This event is turning from a regional crisis into a factor affecting exchange rates, inflation, investment flows and the redistribution of oil supplies.

• For Russia, the closure of the Strait of Hormuz could create a significant price advantage against the backdrop of rising global oil prices. The Russian Federation, as one of the largest oil exporters, receives a significant inflow of foreign exchange earnings with any increase in oil prices. At the same time, its export routes do not depend on the Persian Gulf. The closure of the strait may temporarily improve Russia's foreign trade balance.

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• The United States, being the largest oil producer, is theoretically less vulnerable from the point of view of physical shortage of energy resources. Their domestic production, primarily shale oil, provides a significant portion of domestic demand. However, prices in the oil market are formed globally, so even if the U.S. economy is self-sufficient in energy resources, it will experience price pressure.

• For China, the consequences may be most sensitive, as China is heavily dependent on oil imports from the Middle East. In the first three months of 2025, China imported 5.4 million barrels of crude oil daily through the strait. The closure of the strait will destroy the usual logistics chains. China will have to quickly activate reserves from strategic reserves and increase purchases from alternative suppliers, including Russia.

• The European Union is also at risk. Until recently, Russia accounted for a significant part of the EU's oil imports. However, after the start of the sanctions wars and the reduction of imports from the Russian Federation, many European countries began to focus on oil from Saudi Arabia, Kuwait, the United Arab Emirates and Iraq, which is supplied through the Strait of Hormuz. Given the high degree of dependence of the European industry on petroleum products, this will increase the cost of production of European companies. The EU has already reported that it is closely monitoring the situation with the strait, but is not yet preparing special measures to stabilize oil prices.

Global implications

• The most tangible consequence of blocking the route will be an increase in global inflation. An increase in oil prices inevitably leads to an increase in the cost of production processes around the world. Energy resources are included in the cost of almost all goods and services. So the increase in their prices will affect every segment of the economy, from agriculture to high—tech manufacturing. Depending on the duration and depth of the crisis, these processes may shift from a temporary economic imbalance to a full-scale global economic downturn.

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• Financial markets will become extremely volatile, reacting to rising risks and deteriorating macroeconomic expectations. Shares of fuel-dependent companies will lose value. At the same time, the oil and gas sector and raw materials assets will show growth.

• In general, the closure of the Strait of Hormuz could trigger a new international economic crisis. Disruption of this route entails a domino effect, starting with a sharp jump in energy prices and ending with a deterioration in economic conditions in countries sensitive to changes in import and logistics costs. Russia predicts that oil prices will rise, which could trigger a global oil shock. At the same time, Washington will also feel the negative consequences, which has brought the regional conflict between Iran and Israel to the international level.

When writing the material, Izvestia interviewed:

• Maxim Chirkov, Associate Professor of the Department of Economic Policy and Economic Measurements at GUU;
• Doctor of Economics, Professor of the Financial University Alexander Safonov.