Only three weeks after Iran decreed the effective closure of the Strait of Hormuz in retaliation for the joint attacks by the United States and Israel on its military and energy facilities, the global economy is on the brink of a historic oil shock that threatens to combine runaway inflation and simultaneous recession, a scenario that starkly evokes the 1973 crisis but, due to its scale and speed, could surpass it in severity.
The main chokepoint of global oil –through which about 20 million barrels a day used to transit before the conflict, equivalent to 20% of the global supply and 20% of liquefied natural gas transported by sea– has seen its traffic plummet from over a hundred oil tankers a day to practically zero. Saudi Arabia, Iraq, the United Arab Emirates, Kuwait, and Qatar have declared force majeure and cut their production by between 10% and 70%, depending on the case. The International Energy Agency (IEA) has not hesitated to describe this disruption as "the greatest energy crisis in history" and has proceeded with a record release of 400 million barrels from strategic reserves, an amount equivalent to four days of global consumption.
Prices have responded with unprecedented speed in recent conflicts. The price of Brent crude jumped from between $70 and $80 to over $100 within days, with peaks recorded at $126, while Dubai crude reached $166. Natural gas in Europe temporarily doubled, and liquefied natural gas (LNG) became 100% more expensive. If the closure lasts more than a month –and all indications are that the situation evolves day by day with no signs of immediate resolution– analysts project levels of $150 to $200 per barrel, figures that would multiply the inflationary impact. This shock is not selective like the Arab embargo of 1973, which reduced global supply by only 5% to 7% (about five million barrels a day less) for five months. At that time, prices quadrupled from about $3 to $11.65 in January 1974. Now, the physical and military disruption simultaneously affects most Gulf exports and creates an immediate domino effect on fuels, fertilizers, plastics, and transportation.
The most exposed sectors are precisely those that critically depend on oil and its derivatives. Transportation –by road, air, and sea– faces brutal hikes in fuel prices: in California, gasoline already exceeds $5 per gallon, which increases global logistics and freight costs. The petrochemical industry, the base of plastics, packaging, and thousands of everyday products, sees its production costs soar. Agriculture suffers doubly: fertilizers, made from natural gas, are dramatically more expensive, threatening harvests and food prices worldwide. Aviation and the manufacturing sector complete the landscape of vulnerabilities, with compressed profit margins and potential factory closures if the shortage worsens. According to energy expert Daniel Yergin, this is "the largest supply disruption in the history of the global oil market", and its consequences will not be limited to prices: they will disrupt entire value chains and force structural adjustments that could last well into the decade.
The executive director of the IEA, Fatih Birol, has been blunt: "No country will remain immune" to the effects of this crisis. "The global economy is under a greater threat", he warned after the release of reserves, emphasizing that the closure of Hormuz represents an unprecedented energy security challenge since the 1970s. Economists like David Bassanese, head of BetaShares, already openly discuss a “stagflationary moment” in which growth would weaken while central banks would be constrained from lowering rates due to inflationary pressure. "If oil remains above $100 and the disruption continues, we will face weak growth but high inflation that will hinder an agile monetary response,” he explained. Meanwhile, Sal Guatieri of BMO Capital Markets describes the U.S. situation as the "second stagflationary shock in a year", following earlier trade tensions.
The United States, despite its greater self-sufficiency thanks to shale oil, is not escaping the storm. Gasoline prices in key states like California already exceed five dollars per gallon, fueling an inflation that the labor market –at risk of slowdown– will not be able to absorb easily. GDP could be cut by as much as 1.5% if the barrel stabilizes at $120, according to estimates from Capital Group.
Europe, much more dependent on imports, faces an even more delicate scenario: gas prices have temporarily doubled, and the continent, still recovering from the Ukrainian crisis, sees its heavy industry and ability to maintain competitiveness threatened.
China, the world's largest crude importer, with half of its purchases historically passing through Hormuz, suffers direct pressure on its manufacturing and chemical sectors. Analysts from The Asia Group warn that sustained energy costs at $90-100 per barrel would erode margins in energy-intensive industries and hinder the goal of stimulating domestic consumption, subtracting tenths from the growth of the Asian giant.
Russia, on the other hand, emerges as one of the few short-term beneficiaries. The increase in prices has allowed it to boost its energy revenues by about $150 million a day, according to market estimates, and has facilitated a temporary easing of Western sanctions to stabilize global prices. Moscow, which was already exporting to India and China at preferential prices, sees its fiscal position strengthened amid negotiations over Ukraine. However, the Kremlin is not without risks: a prolonged global recession would ultimately reduce demand for its hydrocarbons.
Third World countries, especially those in South America, face the "double blow" they already suffered in the 1980s: imported inflation and falling demand for their primary exports. The external debt of emerging economies, which was already at high levels, could spike again if energy and transportation costs remain high for months. In Latin America, the outlook is mixed, according to Goldman Sachs: producing nations like Brazil and Mexico could capture extra dollars from the rise in crude, but net importers and the most vulnerable economies will see their inflation worsen and regional growth slow, revised down to 2.1% for 2026.
Argentina, in particular, finds itself in a particularly delicate position. Although Vaca Muerta allows it to aspire to higher crude and gas exports –which would generate foreign exchange in a context of global shortage– the immediate impact is negative and is multiplied by its high structural inflation. Local fuels become immediately more expensive, transportation tariffs rise, and fertilizers –crucial for the expected record harvest of soybeans and corn– skyrocket costs in the agro-export sector, the country’s main dollar engine. Maritime freight and insurance have also increased due to global logistical disruption.
Local analysts like Marcelo Elizondo warn that the net effect will be inflationary and contractive: "This raises costs and ultimately ends up making agricultural commodity prices rise as well,” he pointed out, recalling that Argentina does not depend directly on the strait to export grains but does suffer the indirect rise in costs across the entire chain. If the closure persists, the country could see its already fragile macroeconomic balance destabilized further, with increased exchange rate pressure and less room for expansive policies.
The parallels with 1973 are inevitable but also revealing of crucial differences. That crisis marked the end of the post-war prosperity era, generated stagflation, contracted U.S. GDP by 6%, and doubled unemployment in many Western countries. Oil consumption fell by 6% to 7% in the West, and developing countries saw their debt explode from $75 billion in 1970 to over $600 billion in 1980.
Today, three weeks after the closure of Hormuz, the full macroeconomic effects –confirmed recession– have not yet materialized, but experts agree that we are facing the largest energy crisis since the 1970s. If the strait does not reopen soon, the effects of 2026 could not only match but surpass in magnitude and speed those of 1973, accelerating a structural transformation of the global economy: greater awareness of energy vulnerability, reordering of trade routes, and a new power balance between producers and consumers.
As financial markets fluctuate and governments release emergency reserves, the question running through foreign ministries and boardrooms is the same as in October 1973: how far will this shock go and how long will it take the world to adapt to oil that is no longer cheap or guaranteed? The answer, for now, is being written day by day in the waters of the Persian Gulf.
Adalberto Agozino holds a PhD in Political Science, is an International Analyst and a Professor at the University of Buenos Aires
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