There are crises that you follow from a distance, like background noise. And then there are others that end up knocking on your door. The conflict in Iran belongs to the second category. Since the Israeli-American strikes on Iranian territory at the end of February 2026, world markets have been teetering, energy prices have soared, and economists are once again talking about a word that many had hoped to hear no longer: recession. This is not speculation. It's hard data, verifiable figures, and an economic mechanism that history has played out many times before.
The Strait of Hormuz: a lock that holds the world hostage
To understand why the markets are so worried about Iran, you first need to understand the geography. The Strait of Hormuz, an arm of the sea less than 40 kilometres wide at its narrowest point, is the passageway for a massive fraction of the world's oil. In 2025, of the 102 million barrels of oil consumed every day worldwide, a very significant proportion will pass through this seaway. Twenty million barrels a day usually pass through here, from the United Arab Emirates, Qatar, Kuwait, Saudi Arabia, Iraq and Iran itself.
Since the start of the conflict, the Iranian Revolutionary Guards have been threatening this passage. Since the Monday following the start of hostilities, only nine ships have managed to cross this strategic gateway to world trade, according to maritime data analysed by AFP. You can see the scale of the problem: it's not just the price of oil that's at stake. It's the entire global supply chain.
Oil shock: the figures that speak for themselves
The oil crisis is no longer a doomsday scenario. It has already happened. The price of Brent crude has soared by more than 16 % since the outbreak of hostilities, topping the 85 dollar mark, its highest level since July 2024. The price of European gas has risen by 40 % in the days since hostilities began. More recently, Brent crude oil was trading at around 111 dollars a barrel, an increase of around 55 % since the start of the war, while European natural gas prices jumped by 13 % to 61 euros per megawatt-hour.
This oil shock is not without precedent. The first oil shock of 1973-1974 remains the most emblematic precedent: in retaliation for Western support for Israel during the Yom Kippur War, the Arab member countries of OPEC imposed an embargo on their exports. The price of a barrel of oil tripled in a few months, plunging Western economies into a severe recession. History does not repeat itself identically, but it often stutters loud enough for us to hear it.
Oil shock
The transmission mechanism between oil price shocks and inflation is well documented. Recent studies show that, on average, when oil prices rise by 10 %, inflation rises by 0.4 percentage points over two years. This figure may seem modest. But when you apply it to an increase of 55 % per barrel, the mechanics become brutal.
Kristalina Georgieva, Managing Director of the IMF, has confirmed that every 10 % rise in oil prices, if it persists for most of the year, pushes up global inflation by 0.4 % and reduces global economic output by up to 0.2 %. This is not an opinion. It is an institutional projection based on proven macroeconomic models.
The European Central Bank is taking the same line. Christine Lagarde has stressed that the war is creating upside risks for inflation, mainly through the oil and gas markets, with immediate consequences for consumer prices. The ECB is now projecting average inflation of 2.6 % in 2026, before falling to 2.0 % in 2027.But this scenario is based on the assumption of a contained conflict. In a more unfavourable scenario, involving greater and more lasting disruption to supplies via the Strait of Hormuz, inflation could reach 3.5 % in 2026, or even 4.4 % in a severe scenario.
Inflation taking hold of your daily life
What you feel at the pump or on your gas bill is only the visible part of the oil shock. Stéphane Garelli, a professor at IMD and the University of Lausanne, makes it clear: transport, insurance, packaging - all these things can go up. A lot of people are worried, because at the end of the day, it's not just about inflation, it's about the cost of living.
Energy is a fundamental input in the production of almost all goods and services. When the price of oil or gas rises, the cost of production rises for industrial companies, hauliers, farmers and electricity producers. These additional costs are then passed on, with a time lag, to consumer prices.
So you're not just experiencing a price rise at the petrol station. You're absorbing a systemic shock that runs up the entire value chain, from the oilfield to your shopping trolley.
Central banks caught in a vice
The oil crisis has put central banks in a particularly uncomfortable position. The Iranian crisis has put the world's central banks in a bind: rising energy prices are fuelling inflation while at the same time penalising the economy. Should rates be raised to contain inflation, or lowered to support growth?
Helen Thompson, author of A Political History of the Fossil World, is categorical: any rise in oil prices for more than a few weeks will result in an inflationary shock. If the price of oil were to rise for several months, we would find ourselves in a situation similar to that of 2022, at the start of the war in Ukraine.
Simon Johnson, an economist at MIT and winner of the 2024 Nobel Prize in Economics, points out that central bankers are haunted by memories of the 1970s, when their predecessors believed in a temporary shock that they could absorb with low interest rates, before bitterly regretting this decision in the face of runaway inflation.
The risk of recession: not an extreme scenario
Recession is no longer a word reserved for pessimists. Lagarde reiterated that a prolonged conflict would simultaneously increase inflation and weaken economic activity, complicating the ECB's policy response.This double movement has a name: stagflation. And this is the scenario that economists fear the most, because the usual tools become inoperative.
The US Federal Reserve has very limited room for manoeuvre: raising interest rates destroys growth, while lowering them feeds inflation. It's a precarious and risky balance. The sectors most exposed to the slowdown are transport, manufacturing, agriculture and consumer discretionary.
The alternatives remain limited, since the maximum bypass of cargoes through the Strait would still leave an estimated loss of between 8 and 10 million barrels for the markets.Saudi Arabia and’OPEC have increased their quotas, but this increase remains small in relation to the events that have taken place.
What you can do
Faced with this chain of risks, you are not totally powerless. If you run a business, now is the time to review your energy supply contracts, explore the currency hedges, and anticipate cost increases in your business. budget forecasts for 2026. If you are a private individual, keep an eye on your exposure to inflation-sensitive assets, strengthen your precautionary savings, and monitor the development of ECB key rates are common sense reflexes.
Conclusion: a crisis that calls for lucidity
The Iran oil shock is not an abstraction reserved for the trading floor. It affects you through your bills, your petrol pump and the price of your food. The chain of risks is real, documented and already in motion. There is no need for doom and gloom or denial. What you need is reliable information, a clear understanding of the mechanisms at play, and the ability to adapt your decisions to a rapidly changing reality. This conflict reminds us of a truth that economists have been repeating for a century: in an interconnected world, no war is ever really far away.
