NEW YORK — A sudden spike in crude prices following last week’s surprise escalation between Iran and a U.S.–led naval coalition is reviving memories of the energy crises that convulsed the world economy a half-century ago, market participants said Friday.
Benchmark Brent futures settled above $125 a barrel for the first time since 2022 after Tehran briefly halted traffic through the Strait of Hormuz, a chokepoint that handles roughly one-fifth of seaborne oil. Average U.S. gasoline prices touched $4.18 a gallon, up 37 cents in six trading days, according to energy tracker OPIS.
“There is a whiff of 1973 in the air,” said a senior commodities strategist at a European investment bank. “The price move is smaller in real terms, but the psychological shock feels similar because consumers thought the energy crisis was behind them.”
During the twin oil shocks of 1973-74 and 1979-80, a quadrupling of prices triggered stagflation in the United States and forced oil-exporting states to recycle petrodollars through Western banks, laying the foundation for today’s global capital markets. Economists say a protracted disruption in the Persian Gulf could once again redraw financial flows.
An internal briefing note circulated among G-20 finance ministries this week—reviewed by SourceRated—warns that a sustained $30 risk premium on crude could shave 0.8 percentage points off global growth and add nearly one percentage point to headline inflation over the next year. The memo also flags a “re-orientation of sovereign wealth allocations” if Gulf states enjoy another revenue windfall.
U.S. officials insist the situation is contained. “Traffic has resumed through Hormuz and strategic reserves are available,” an Energy Department spokesperson said. Still, the White House is weighing an additional coordinated release of up to 60 million barrels from OECD emergency stockpiles, two officials familiar with the discussions told SourceRated.
Some analysts caution against linear comparisons with the 1970s. Unlike then, the United States is now the world’s largest oil producer, and renewable capacity has expanded seven-fold in a decade. “The macro impact will be painful but not system-changing unless the strait stays shut for months,” said Amy Chu, chief economist at Horizon Advisors.
Looking ahead, traders will watch Sunday’s virtual OPEC+ meeting for signals on spare capacity. Central banks, meanwhile, face a delicate balancing act: tightening policy to quell energy-driven inflation without derailing growth already strained by high borrowing costs. Whether the Iran flare-up proves a brief scare or the catalyst for a new financial architecture may hinge on decisions made in the next few weeks.