What Would Happen If The Strait Of Hormuz Is Shutdown By IRAN

I will explain 4 consequences that could occur if it gets shut down, even for a short period of time:

Oil prices could rise to over $100-130 per barrel (or higher in the worst case scenario).

Skyrocketing energy costs would drive up the prices of transportation, manufacturing, food, and goods worldwide and increase the risk of widespread stagflation (high inflation + slow growth).

Higher energy and transportation costs would squeeze consumption, corporate profits, and growth. Estimates suggest that global GDP could fall by 0.3-0.8% or more, and that recessions would occur worldwide.

The LNG and gas supply crisis. 20-22% of global LNG exports pass through the strait.

This resulting inflationary pressure, combined with squeezed corporate profits and reduced consumer spending, would significantly elevate the risk of global stagflation. Ultimately, the analysis estimates that worldwide economic growth would stall, leading to a projected drop in global GDP of 0.3% to 0.8% or more, tipping multiple international markets into widespread recessions.