Iran War Is Biggest Oil Shock in History, Analysts Say

As the Iran war enters its fourth week, the Strait of Hormuz remains effectively closed, choking off roughly 15 million to 16 million barrels of oil per day from the market, while attacks on key energy infrastructure have disrupted refineries throughout the Gulf, Jake Conley reported for Yahoo Finance.

The conflict—and the subsequent disruption of the oil market—has drawn some comparisons to the 1973 oil embargo crisis.

Oil analysts say the conflict is unlike any other in history. The war in Iran is “incomparable” with any past oil shock, both in its scale and wide-ranging impact on the energy market, British Petroleum (BP) Chief Economist Gareth Ramsay said in comments at a recent industry event.

“I don’t think you can really compare this with any disruption in the past,” Ramsay said at CERAWeek by S&P Global, a major energy conference.

The disruption of the Strait of Hormuz, he said, is “every analyst’s study piece, or worst nightmare that we thought could never happen.”

Since the war began, futures on the international oil benchmark Brent crude have gained roughly 40%, while those on the US benchmark West Texas Intermediate (WTI) crude have climbed more than 30% to trade near record highs.

The conflict—and the subsequent disruption of the oil market—has drawn some comparisons to the 1973 oil embargo crisis.

Following the Yom Kippur War, Arab OPEC states cut off sales to the US and other Western economies, sending crude prices skyrocketing within months.

The shock drove a spike in inflation, deepened an already weakening growth backdrop, and contributed to steep losses in the equity market as policymakers tightened monetary policy in an attempt to contain price pressures.

Over the long run, the embargo reshaped the global oil market, accelerating the shift in pricing power toward producer nations and prompting governments to build strategic petroleum reserves and design coordinated emergency response mechanisms.