When oil prices spiked past $100 a barrel in early 2022, most analysts pointed to Russia’s invasion of Ukraine. But a quieter, slower-burning fuse has been smoldering in the Middle East for years: the standoff between Iran and the West. Now, with Tehran’s nuclear program inching closer to weaponization capacity and the Strait of Hormuz becoming a chessboard for proxy warfare, the next phase of this oil crisis could reshape global energy markets far more aggressively than anything we’ve seen since the 1970s.
Let’s be clear: we’re not talking about a hypothetical scenario. The machinery is already moving. The question is how fast and how far the situation escalates. Here’s what the next phase of the Iran war oil crisis could actually look like, based on current geopolitical signals, shipping data, and energy market patterns.
The blockade that isn’t called a blockade
The first visible symptom of the next phase won’t be a full military closure of the Strait of Hormuz. That’s too blunt, too easy to counter with a multinational naval task force. Instead, look for a “gray zone” blockade — a series of targeted interceptions, minesweeping “incidents,” and insurance rate spikes that effectively throttle shipping without triggering a formal war declaration. Iran has already demonstrated this capability: in April 2024, IRGC speedboats swarmed a commercial tanker near the strait, forcing a course change. Multiply that by ten, and you get a situation where oil traders start pricing in a 15–20% risk premium just for transiting the Persian Gulf.
This isn’t disruption for disruption’s sake. It’s a lever. Tehran knows that 20% of the world’s oil passes through Hormuz. If they can create enough uncertainty — even without sinking a single ship — they can force global crude prices to $120, $130, or higher without firing a missile at Saudi Aramco facilities. The US Navy can’t insure every tanker, and re-routing around the Cape of Good Hope adds weeks and millions in fuel costs.
The secondary sanction trap
The second phase will hit harder: a coordinated diplomatic and financial squeeze that turns Iran’s oil exports — currently estimated at 1.5 to 1.8 million barrels per day — into a radioactive asset for buyers. Right now, China is the primary lifeline, buying roughly 90% of Iran’s crude through “teapot” refineries and shadow tanker fleets. But the next phase could involve the US Treasury targeting these same Chinese intermediaries with secondary sanctions, much like it did with Venezuelan oil in 2019.
If Washington decides to cut off the financial veins of these shadow networks — banks in Oman, UAE, and Malaysia that facilitate the trade — Iranian oil could effectively be forced off the market. That’s a loss of roughly 1.5 million barrels per day, an amount the OPEC+ cartel cannot quickly replace without draining its own spare capacity. Saudi Arabia’s spare capacity is already down to maybe 1.2–1.5 million barrels per day, and a lot of that is heavy sour crude, not the light sweet grades that refineries in Asia and Europe need.
The refinery choke point
Here’s where the crisis gets personal for drivers in the United States and Europe. Iranian oil isn’t just about crude supply; it’s about specific refinery configurations. Many Asian refineries — especially in India and South Korea — are optimized to process Iranian heavy sour crude. If that supply vanishes, they can’t just flip a switch to use Saudi light crude without expensive retooling and production delays. That means refined products like gasoline, diesel, and jet fuel will tighten faster than crude prices suggest. You could see crude at $110 per barrel while diesel hits $5.50 a gallon in the US, because the refining bottleneck becomes the real pain point.
In Europe, the situation is even more precarious. While the continent has largely stopped importing Russian crude, it still gets about 6% of its oil from Iran via indirect routes. If that door slams shut, European refineries — already running at razor-thin margins after the Ukraine crisis — could face forced shutdowns. We’re talking about a winter where heating oil becomes a luxury good.
The military escalation timeline
Let’s not ignore the most dramatic possibility: actual kinetic conflict. The next phase doesn’t require a full-scale invasion, but it could involve airstrikes on Iranian oil terminals — Kharg Island, for example, which handles about 90% of Iran’s crude exports. If the US or Israel hits that target, you’re instantly removing 1.3 million barrels per day from global supply. That’s not a gradual price creep; that’s a $150 spike in a week, with Brent crude potentially touching $180 before panic buying settles.
Iran’s response would likely be asymmetrical: missile attacks on Saudi or UAE oil infrastructure, cyberattacks on global tanker navigation systems, or even sabotage of the Suez Canal. Each move would send shockwaves through insurance markets, forcing shipping rates to multiply by five or ten times. The cost of moving a barrel of oil from the Gulf to Rotterdam could go from $1.50 to $15 overnight.
The strategic stockpile game
Governments know this. That’s why the US Strategic Petroleum Reserve (SPR) is down to about 370 million barrels — its lowest since the 1980s. The next phase will force a debate: do we release SPR oil to calm markets, or do we hoard it for a real emergency? If the SPR is tapped too early, you lose your only credible backstop. If you don’t tap it, prices soar and economies tip into recession. Either way, the consumer loses.
Meanwhile, Iran is playing the long game. Their oil exports have been remarkably resilient despite sanctions, thanks to a fleet of aging tankers with disabled AIS transponders and ship-to-ship transfers in the South China Sea. But that resilience has a ceiling. If the US Navy starts stopping and searching these vessels — which it has done sporadically — the entire shadow trade collapses. That’s the moment the oil market loses its last buffer.
What this means for your wallet and the world
So here’s the bottom line: the next phase of the Iran war oil crisis won’t look like the 1990 Gulf War supply disruption. It will be slower, more layered, and far more financialized. It’s a crisis of choke points, sanctions, and refinery mismatches — not just tankers being sunk. For the average person, prepare for $5 gasoline in the US, $8 diesel in Europe, and a global recession that starts in the shipping lanes and spreads inland.
For investors, the play is straightforward: hedge with energy stocks, but also look at shipping companies, defense contractors, and even agriculture (because higher fuel means higher food costs). For policymakers, the only real solution is to diversify away from Persian Gulf crude — which means accelerating renewables and nuclear, but also building strategic pipeline networks that bypass Hormuz. That’s a decade-long project. We may not have a decade.
The next phase is already here. It’s just not evenly distributed yet.
Ahmed Abed – News journalist