Iran conflict could result in a 1970s style oil embargo amid Strait of Hormuz closure, worry experts

Oil markets are gearing up for a likely supply shock after the US and Israel strikes on Iran already shot up oil prices sharply amid fears that the Strait of Hormuz might be closed for weeks, disrupting global flows. Brent crude prices jumped 9% to $79.42 a barrel, while US crude climbed 8.6% to $72.61 per barrel.

Analysts had already predicted a “knee-jerk” reaction to oil prices when trading resumed in New York, but the bigger concern is whether a sustained conflict in the Middle East could lead to prolonged supply disruptions.

All eyes on Strait of Hormuz

The Strait of Hormuz, a narrow channel that carries one-fifth of the world’s oil, has come under sharp focus as the conflict in the Middle East shows no signs of easing following the US and Israel’s strikes on Iran.

US President Donald Trump told the Daily Mail that the conflict could last for four more weeks. In a Truth Social post on Sunday, he said strikes would continue until Washington’s objectives are met.

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However, any disruption in the Strait of Hormuz could directly lead to an outsized and immediate consequence on global oil and LNG flows.

While the vital waterway has not been formally declared closed, Reuters reported that an official with the European Union’s naval mission, Aspides, had received VHF radio messages from Iran’s Revolutionary Guards warning that “no ship is allowed to pass the Strait of Hormuz.”

However, Tehran has not officially confirmed any closure of the Strait of Hormuz.

Lying between Oman and Iran, the Strait of Hormuz serves as a critical artery for global energy flows. Marine tracking sites showed tankers piling up on either side of the strait, wary of attack or maybe unable to get insurance for the voyage.

According to Kpler data, about 13 million barrels of oil flowed through the route in 2025, which is approximately 31% of all seaborne oil flows around the globe.

A prolonged spike in oil prices could risk reigniting global inflationary pressures, acting as a tax on businesses and consumers that may dampen demand, as per a Reuters report.

What experts say

Experts and analysts have warned that oil prices may remain high until the conflict de-escalates.

“The most immediate and tangible development affecting oil markets is the effective halt of traffic through the Strait of Hormuz, preventing 15 million barrels per day (bpd) of crude oil from reaching markets,” Jorge Leon, head of geopolitical analysis at Rystad Energy, told Reuters.

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“Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil.”

OPEC did agree a modest oil output boost of 206,000 barrels per day for April on Sunday, but a lot of that product still has to get out of the Middle East by tanker.

Saul Kavonic, head of energy research at MST Marquee, told CNBC that a threatened Iranian regime may go ahead to block the Strait of Hormuz, even as the US and its allies will likely protect the flows by deploying military escorts to the ships.

“This could present a scenario three times the severity of the Arab oil embargo and Iranian revolution in the 1970s, and drive oil prices into the triple digits, while LNG prices retest the record highs of 2022,” Kavonic said.