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The Strait of Hormuz closure is entering its ninth week following a US-Israel military strike on Iran, with economists comparing the shock to the 1970s oil crises. Stagflation risks are mounting as demand destruction spreads from Asian markets into Western economies. European policymakers face constrained options as inflation pressure collides with already-fragile growth.
A Middle East conflict threatening the Strait of Hormuz has drawn warnings from top economists of an energy crisis rivalling the 1970s. IMF chief economist Pierre-Olivier Gourinchas says the shock could drive unemployment and food insecurity across multiple countries. Without a resolution, economist Justin Wolfers warns elevated energy costs could persist for years — a direct threat to Europe's energy-dependent economy.
The Middle East conflict has cut 20 million barrels per day from global oil markets through a Hormuz Strait blockade, according to MacroEdge Research. Resulting inflationary pressure is forcing the Bank of England to hold rates at 3.75% while UK mortgage lenders raise borrowing costs, with Federal Reserve officials warning price pressures won't ease before late 2026.
