The historical analog here is worth looking at carefully.
This +82% move from Jan baseline ($60→$109) is most similar to 1990 Gulf War in magnitude (+90%), not 1973 or 1979. The 1990 shock lasted ~6 months and produced an 8-month recession + 6.3% peak inflation.
But there are two structural differences that make 2026 potentially worse:
1. Starting position: in 1990 inflation was already 5%+ and the Fed had room to ease. Today the Fed has been trying to normalize for 3 years.
2. Fertilizer: the Gulf isn't just oil. It's where ~25% of seaborne ammonia/urea moves. Gas feedstock shock → fertilizer cost explosion → food inflation on 3-6 month lag. The 1990 shock didn't have this because Hormuz closed briefly and the fertilizer supply chain wasn't as Gulf-dependent.
At $109 sustained for a quarter, models using published RBC/Oxford/IMF parameters project: US CPI to 7.6%, global GDP to 1.8%, Fed forced to hike into a near-stall economy.
The word "stagflation" keeps appearing in headlines but the mechanism usually isn't spelled out. The mechanism here is: oil → input costs → CPI → Fed hikes → credit tightens → investment falls → GDP sinks. Meanwhile oil → food → real wage squeeze. Both channels active simultaneously.
1990 comparison is too mild, if anything. Back then, the Hormuz never actually closed. Today's complete halt of oil flows through that bottleneck is completely unprecedented. "We have not seen anything like this in pretty much the history of the Strait of Hormuz" - so sayeth Rystad Energy's chief economist).
In 1990, 20% of cars were not electric. No wind/solar power too. Those models are totally useless.
I'm more worried about AI electricity consumption than oil prices doubling.
There is too much upside for this war. Once the ayatollahs are gone, Iranian oil will flow to the free markets and unfortunately, oil prices will crash (making electric vehicles not an attractive option).
The historical analog here is worth looking at carefully.
This +82% move from Jan baseline ($60→$109) is most similar to 1990 Gulf War in magnitude (+90%), not 1973 or 1979. The 1990 shock lasted ~6 months and produced an 8-month recession + 6.3% peak inflation.
But there are two structural differences that make 2026 potentially worse: 1. Starting position: in 1990 inflation was already 5%+ and the Fed had room to ease. Today the Fed has been trying to normalize for 3 years. 2. Fertilizer: the Gulf isn't just oil. It's where ~25% of seaborne ammonia/urea moves. Gas feedstock shock → fertilizer cost explosion → food inflation on 3-6 month lag. The 1990 shock didn't have this because Hormuz closed briefly and the fertilizer supply chain wasn't as Gulf-dependent.
At $109 sustained for a quarter, models using published RBC/Oxford/IMF parameters project: US CPI to 7.6%, global GDP to 1.8%, Fed forced to hike into a near-stall economy.
The word "stagflation" keeps appearing in headlines but the mechanism usually isn't spelled out. The mechanism here is: oil → input costs → CPI → Fed hikes → credit tightens → investment falls → GDP sinks. Meanwhile oil → food → real wage squeeze. Both channels active simultaneously.
1990 comparison is too mild, if anything. Back then, the Hormuz never actually closed. Today's complete halt of oil flows through that bottleneck is completely unprecedented. "We have not seen anything like this in pretty much the history of the Strait of Hormuz" - so sayeth Rystad Energy's chief economist).
The UK and Europe are arguably even more exposed.
In 1990, 20% of cars were not electric. No wind/solar power too. Those models are totally useless.
I'm more worried about AI electricity consumption than oil prices doubling. There is too much upside for this war. Once the ayatollahs are gone, Iranian oil will flow to the free markets and unfortunately, oil prices will crash (making electric vehicles not an attractive option).
And from the same site: https://www.reuters.com/business/energy/us-energy-chief-defe...
What a coincidence that American policy again favors Russia. Just so coincidental. Every time.
When I opened the link the title was adjusted and showed 25%..
oh the global stock market is a mess now.
Earlier: https://news.ycombinator.com/item?id=47302323