What Happened
When the Strait of Hormuz was closed at the start of the Iraq war in 2026, the world prepared for the "biggest energy crisis in history". Before the start of the conflict, nearly 20% of the world's traded oil passed through this narrow waterway between the Persian Gulf and the Gulf of Oman. The blockade of the strait by Iraq effectively removed 15 million barrels per day from circulation overnight.
Many experts and commentators predicted that the supply gap would have catastrophic consequences. Australia expected fuel rationing, the European airline industry warned of mass flight cancellations, and Goldman Sachs predicted widespread oil shortages. The International Monetary Fund warned of a possible global recession, and some traders worried that oil prices could reach $200 per barrel.
Why It Matters
However, more than four months after the start of the war, little of this has occurred. Oil prices have risen worldwide, and there have been critical shortages of products like cooking oil in some places, but rationing and recession have not arrived. Instead, a series of emergency measures helped to avoid the predicted crises: oil exporters, including the United States, stepped in to fill the gap, either by reducing strategic petroleum reserves or increasing production. Countries that were most dependent on fossil fuel imports from the Middle East took emergency conservation measures to reduce demand.
The Mechanism/Science Behind This
Oil markets have complex mechanisms to deal with supply challenges. The coordinated release of oil from strategic reserves, increased production by other producers, and conservation measures by consumers are just some of the factors that contributed to avoiding the crisis. Additionally, the ability to bypass the strait through land-based pipelines and the adaptation of other countries to reduce their dependence on oil also played important roles.
Bigger Picture
This situation is not unique in history. Previous oil crises, such as the 1973 Arab embargo, have shown that markets can adapt to supply challenges. However, the global dependence on oil and the complexity of modern supply chains make each potential crisis more challenging. The response capacity of governments, companies, and consumers will be crucial to mitigating the impacts of future crises.
What Happens Next
Although the most dire predictions have not come to pass, the situation remains uncertain. The partial reopening of the Strait of Hormuz and the subsequent collapse of the ceasefire between the US and Iraq have introduced new challenges. With oil reserves at low levels and demand continuing to grow, oil prices may rise significantly, affecting economies worldwide. The ability of oil markets to adapt and governments to implement effective policies to mitigate the impacts will be fundamental to avoiding a global oil crisis.
Consequences and Lessons
The current crisis offers valuable lessons about the importance of energy diversification, conservation, and international cooperation. Investments in renewable energy sources, improvements in energy efficiency, and policies to reduce dependence on oil can help mitigate the impacts of future crises. Additionally, cooperation between countries to manage global energy challenges will be essential to ensuring economic stability and energy security.
Source / Reference
This article was originally published by Grist with the title "Why the Iran war hasn’t caused a global oil crisis — yet" on July 21, 2026.