The Strait of Hormuz is a narrow passage, but in energy markets it behaves like a global heartbeat. Before the current war, roughly 20 million barrels a day of crude and oil products moved through it. Since the fighting that began on February 28, 2026, the International Energy Agency says those flows have fallen to a trickle, while AP reports that most traffic has been halted since early March and that only 89 ships crossed the strait between March 1 and 15, far below the roughly 100 to 135 daily passages seen before the war. Brent crude has reacted violently: the IEA said it traded within touching distance of $120 a barrel before easing to around $92, and the U.S. EIA said Brent settled at $94 on March 9, about 50% above the start of the year. (iea.org)

Why does this matter for inflation? Because oil is not just a fuel; it is embedded in shipping, aviation, farming, plastics, and heating. The European Central Bank said on March 19 that the Iran war creates upside risks for inflation and downside risks for growth, while the Bank of England and the Federal Reserve have also become more cautious. Reuters reported that Goldman Sachs estimates a move in Brent from $70 to $85 would add about 0.7 percentage points to inflation in emerging Asia and trim growth by about 0.5 points. In other words, a prolonged Hormuz shock would feel less like a single price jump and more like a tax on the whole world economy, especially for oil-importing Asian countries. (apnews.com)

The crucial question is duration. Before this crisis, the World Bank expected global growth of 2.6% and global inflation of 2.6% in 2026, helped by softer energy prices, and the IMF had already warned that geopolitical escalation was a major downside risk. Now those forecasts look fragile. Still, there is one reason not to panic completely: the IEA has coordinated a 400 million-barrel emergency release, and the EIA still expects prices to fall later in 2026 if shipping resumes and the market’s underlying supply surplus reappears. So the most likely outcome is not a permanent 1970s-style oil shock, but a dangerous period of stagflation risk: hotter inflation in the short run, weaker growth if the blockade drags on, and extreme market volatility until the Strait is reliably open again. (worldbank.org)