The situation was further exacerbated by the subsequent war between Iraq and Iran, which broke out in 1980 and severely damaged mining facilities throughout the region. The price of oil has more than doubled in a short time and attacked the border of 40 dollars per barrel.
For advanced economies, this meant a return to stagflation, that is, to the painful combination of high inflation and economic depression. Endless lines once again formed at gas stations in the United States and Western Europe, and governments were forced to introduce rationing systems or speed limits on highways.
However, this shock also brought lasting changes that we still feel today. The automotive industry was forced to focus on the production of smaller and more fuel-efficient vehicles, ending the era of huge road vessels with excessive consumption.
At the same time, the development of nuclear energy and the search for new oil deposits outside the OPEC territory, for example in the North Sea or in Alaska, accelerated significantly. The 1979 crisis thus remains a reminder of how deeply political instability in one region can undermine the stability of the entire global economy.
Why is “Oil Shock 2026” different?
The oil crisis can already be seen everywhere, from the USA to Europe to Asia.
In Kansas, USA, home buyers saw 30-year mortgage rates rise above six percent this week. In western India, families grieving the death of a loved one have discovered that gas crematoria have been temporarily closed.
In Hanoi, Vietnam, gas station owners put up “sold out” signs. In Kenya, tea growers and traders were worried that their exports to Iran would rot in port. And in the United States, Canada, Europe, Britain and Mexico, farmers paled at the sight of soaring fertilizer prices.
The escalating war in Iran has dealt a devastating blow to the global economy, which has already been hit by the collapse of the international trade order, the war in Ukraine and the chaotic policies of President Trump.
“This is a really big deal,” David Goldwyn, a former U.S. diplomat and U.S. Department of Energy official, said of closing the Strait of Hormuz, the world’s most important oil supply bottleneck. It’s the emergency scenario everyone feared, he added.
US President Donald Trump gave Iran 48 hours over the weekend to reopen the strait to shipping, warning that Tehran faced the destruction of its energy infrastructure if it did not. That deadline was set to expire late Monday night.
Birol said the closure of the Strait of Hormuz had a serious impact on the Asia-Pacific region. “The single most important solution to this problem is to open the Strait of Hormuz,” Birol said.
In response to Trump’s threat, Iran’s military said it would attack energy and desalination infrastructure “belonging to the US and the regime in the region.”
What does this mean for us?
We are already feeling the first consequences in Slovakia and Europe. Gasoline and diesel prices at domestic pumps rose by tens of cents during March. If the conflict fails to de-escalate in the coming days, we are at risk not only of expensive refueling, but also of a second wave of inflation, which will affect everything from food to industrial production.
Governments around the world are already starting to prepare crisis scenarios. “Car-free Sundays” are mentioned – a concept experienced only by the memorialists in 1973.
After the oil crisis, there is also a threat of a “water” crisis
People living in the Persian Gulf region depend on only a few desalination plants for their water supply, making them a highly strategic target with high impact in the event of any conflict. These stations are located on the coast, directly across from Iran across the Persian Gulf, making them an easy target for an Iranian attack.
Decommissioning these facilities would have a significant impact on the civilian population and could be an effective way to cause suffering in a country without direct attacks on civilians.
It would also be devastating for industry that also depends on water from these facilities. Key energy industries in the Persian Gulf, including the oil and gas industry, are linked to water desalination.
