A prolonged closure of the Hormuz Strait could push oil prices to $200 per barrel, destabilize global LNG markets and accelerate electrification efforts across Europe and Asia.
Hormuz Strait closure scenarios raise fears of a global energy crisis
The prolonged closure of the Hormuz Strait continues to represent a major risk factor for the global energy sector. Following statements by Donald Trump, who over the weekend announced an “extensively negotiated” imminent agreement with Iran, both Washington and Tehran have since downplayed the possibility of a near-term end to the conflict.
According to an analysis published by Wood Mackenzie, a prolonged disruption of traffic through the Strait could push oil prices to as much as $200 per barrel. The European Commission also warned in its Spring 2026 economic forecast that a longer conflict in the Middle East and a persistent energy crisis could slow European growth and reignite inflationary pressures.
Worst-case scenario: prolonged blockade and global energy shock
The most severe scenario assumes a prolonged closure of the Strait, accompanied by regional military escalation and a major disruption of Gulf energy exports. Under this assumption, considered the worst plausible outcome, the waterway would remain closed until the end of 2026, with the possibility of renewed flare-ups causing additional supply interruptions.
According to Wood Mackenzie estimates:
- Brent crude prices could reach $200 per barrel by the end of 2026, despite weakening demand;
- More than 11 million barrels per day of oil and condensate products could remain stranded, worsening pressure on strategic reserves;
- Diesel and jet fuel prices could rise toward $300 per barrel in major refining hubs by year-end;
- The global economy could contract by as much as 0.4% in 2026, marking the third global recession of this century, with deep and long-lasting economic consequences;
- Oil and gas importing countries could intensify efforts to reduce dependence on imports by aggressively accelerating electrification.
Regional economic impacts would be severe and uneven. The Middle East could experience a 10.7% GDP contraction in 2026, while EU GDP would decline by 1.5% in 2026 and by 0.5% in 2027. US GDP growth would fall below 1% in both years, while China’s economic growth would slow to 3% in 2026.
“The longer-term outlook points to structurally weaker oil prices compared with our pre-conflict base scenario if importing countries accelerate efforts to reduce oil dependence,” said Alan Gelder, senior vice president for refining, chemicals and oil markets at Wood Mackenzie.
“If electrification advances more rapidly and oil imports are replaced, this would put further downward pressure on prices, with Brent potentially $10 per barrel below the rapid peace scenario over the medium to long term. However, this outlook depends both on the pace of the energy transition and on the higher energy costs faced by oil-importing economies seeking to reduce hydrocarbon dependence.”
Rapid peace scenario could stabilize oil markets by late 2026
In the most optimistic “rapid peace” scenario, an acceptable peace agreement is reached in the short term and the Strait reopens by June. In this case, the global economy would not return to pre-war conditions before the fourth quarter of 2026.
Crude prices would decline sharply following a deal, with Brent trading around $80 per barrel by the end of 2026 and falling toward $65 per barrel in 2027, as the oil market returns to oversupply conditions. Global GDP growth would slow from 3% in 2025 to 2.3% in 2026, while the Middle East would still face recession risks.
Intermediate scenario: agreement reached during the summer
This scenario assumes that the ceasefire holds, but negotiations continue until the end of summer, leaving the Strait largely closed until September. Oil and LNG supply shortages would persist throughout the third quarter of 2026, triggering a mild global recession in the second half of the year.
Under this scenario, global GDP growth would fall below 2% in 2026, resulting in modest but lasting economic consequences.
Hormuz Strait closure could reshape the global LNG market
The Wood Mackenzie report highlights that the global LNG market would face different levels of disruption depending on the three scenarios. Under the prolonged supply disruption scenario, market consequences would be significantly more severe.
According to the analysis, part of the current 85 million tonnes of annual LNG supply coming from the Gulf could be permanently lost. Another 75 million tonnes per year of LNG capacity currently under construction could face delays lasting several years. As a result, global LNG supply could remain on average 70 million tonnes per year below pre-conflict expectations.
“Persistent supply uncertainty would accelerate efforts to diversify energy systems away from imported LNG, supporting coal resilience and faster renewable energy and electrification growth in Asia and Europe,” said Massimo Di Odoardo, vice president for gas and LNG research at Wood Mackenzie.
“LNG prices would remain elevated until 2030, supporting investments in new LNG projects outside the Gulf, but weaker long-term demand could ultimately undermine future sector prospects.”
Even in the best-case scenario of an immediate peace agreement, pressure on the LNG market would continue until summer 2027, as Gulf export facilities gradually restore operations. Project delays would slow the expansion of regional supply.
Wood Mackenzie expects that US LNG cargo cancellations may be required to rebalance the market, while European TTF gas prices in the early 2030s could fall to nearly half of 2026 levels, reaching around $14 per million BTU before rising again toward 2035.
A more fragmented global energy system
Beyond the immediate supply disruptions, Wood Mackenzie suggests that a prolonged conflict could accelerate structural changes across global energy markets.
Even after the Strait reopens, intermittent disruptions could continue, reinforcing geopolitical risks associated with oil and LNG trade flows. This would increase price volatility and intensify pressure on import-dependent economies to strengthen energy security.
Under the prolonged disruption scenario, European and Asian countries would intensify efforts to reduce hydrocarbon dependence by accelerating electrification strategies.
“The consequences of a prolonged disruption would extend far beyond energy markets,” concluded Peter Martin. “They would simultaneously test the resilience of global trade and industrial supply chains, reinforcing the urgency of finding a solution.”
European energy prices could remain under pressure through 2027
Energy prices have remained highly volatile since the beginning of the Middle East conflict. A broader and more persistent supply disruption than currently anticipated would not only impact oil and gas markets, but would also weaken global growth and trade while increasing risk premiums.
According to the European Commission, gas markets would remain under pressure longer than crude oil markets. Europe would be particularly affected by rising global LNG prices, driven by stronger competition with Asian buyers seeking to secure available cargoes.
Seasonal factors would further amplify tensions, including stronger winter demand for heating and power generation. Continued restrictions on maritime traffic through the Hormuz Strait would therefore delay the normalization of global LNG flows.
These conditions could push European gas prices toward €80 per megawatthour by the end of 2026 before gradually declining during 2027.
