Top Energy Experts Warn: The Global Market May Face the Largest-Scale Oil Supply Disruption in History

On November 24, 2025, the Dora Oil Refinery Complex in Baghdad, Iraq, is ablaze with natural gas flares under the setting sun. Photo credit: AHMAD AL-RUBAYE / AFP via Getty Images

With the de facto blockade of the Strait of Hormuz forcing major oil-producing countries to cut production, the US and Israel’s conflict with Iran is rapidly evolving into a global energy crisis.

Standard & Poor’s Global Vice Chairman and author of The Prize: The Epic Quest for Oil, Money, and Power, Daniel Yergin, wrote last weekend in a Financial Times opinion piece that the root of this crisis can be traced back to the late 1970s. At that time, Iranian oil workers went on a major strike, and the subsequent Iranian Revolution established the Islamic Republic.

He said, “One consequence of all this is the persistent fear of a nightmare scenario: a prolonged and destructive war that disrupts oil shipments through the Persian Gulf.” He added, “There are concerns that this could lead to soaring energy prices and a severe global recession. Since the outbreak of war a week ago, Tehran has been doing everything possible to turn this nightmare into reality.”

In fact, due to Iran attacking ships in the Strait of Hormuz, a narrow waterway responsible for about 20% of global oil and liquefied natural gas transportation, the passage has become effectively impassable, and crude oil prices have surged 36% over the past week.

As major Persian Gulf oil producers are unable to export crude, storage facilities are now saturated, prompting these countries to begin reducing output.

Iraq has cut oil production by about 60%, from pre-war levels of approximately 4.3 million barrels per day to between 1.7 and 1.8 million barrels. Kuwait and the UAE have also reduced production.

Meanwhile, Qatar has been forced to cut its LNG output, impacting the liquefied natural gas market. Yergin pointed out that since the war began, spot prices for LNG in Asia, which heavily depends on LNG, have nearly doubled, and European natural gas prices have increased by about 50%.

He stated, “The most severe scenario would involve significant damage to energy infrastructure and a long-term blockade of the strait. This would intensify market fears of a prolonged supply shortage.”

Iran has begun attacking the oil infrastructure of Gulf neighbors, though so far, air defenses have prevented serious damage. Meanwhile, US and Israeli airstrikes have targeted a large refinery near Tehran that supplies fuel to civilian and military sectors.

Yergin noted that, of course, today’s global economy is very different from the 1970s oil crisis. The shale oil revolution has transformed the US into an energy powerhouse, and the resilience of major energy-importing economies has significantly increased.

Despite some analysts warning that a blockade of the Strait of Hormuz could push oil prices to $100 per barrel, on March 6, Brent crude settled at $92.69 per barrel, and West Texas Intermediate at $90.90 per barrel.

Yergin wrote, “Current oil prices around $90 are far from the worst-case scenario. But right now, the world is facing the largest-ever disruption in oil production, along with severe shocks to the global natural gas market. The key question for the global energy market is: how long will this intense war last?”

So far, neither the US nor Iran shows signs of backing down. US President Donald Trump has demanded Iran’s “unconditional surrender” and seeks a say in choosing Iran’s next Supreme Leader. Iran has vowed to continue fighting and has expanded its strikes to civilian infrastructure, including seawater desalination facilities that supply most of the Gulf region’s water.

Wall Street also doubts Trump’s ability to restore shipping through the Strait of Hormuz. Trump announced a $20 billion oil tanker reinsurance plan and said that, if necessary, the US Navy would escort tankers through the strait.

However, Iran’s “Shahad” drones have overwhelmed US and Gulf allies, attacking several key military targets.

Brookings Institution senior fellow Robin Brooks wrote in a Substack article on March 6, “Providing protection for so many ships is an enormous logistical challenge. Iran only needs to breach defenses with a few drones and sink a tanker to escalate from a very serious situation to a large-scale oil shock. In short, I don’t believe the US’s promise to provide naval escort is credible, because there are simply too many tankers to protect.” (Fortune Chinese)

Translator: Liu Jinlong

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