The $120 Oil Scenario: What Happens If Hormuz Disrupts
A disruption to the Strait of Hormuz would be unlike any oil shock in modern history. We model the immediate market, consumer, and geopolitical fallout.
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The scenario
If the Strait of Hormuz were partially or fully disrupted, the world would face an oil supply shock with no modern precedent.
Hour 0–24: Price shock
Brent would gap higher immediately. Our base estimate: $120–$140 per barrel within the first trading session, as the market prices a 15–20 million barrel-per-day supply disruption.
Days 1–7: Consumer impact
Gasoline prices would surge $0.50–$1.00 per gallon within a week, even before crude fully reflects the shock.
Days 7–30: Economic spillover
- Inflation: Energy-driven CPI re-accelerates
- Central banks: Rate-cut bets unwound
- Equities: Risk-off; energy and defense outperform
- Currency: Dollar bid as safe haven
The buffer
The IEA estimates global strategic petroleum reserves hold roughly 1.2 billion barrels of usable stock. A prolonged closure would exhaust buffers within weeks.
How to prepare
This is exactly why we built the Preparedness Hub. Start with energy independence and a 30-day supply buffer.
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