Replay of 2008? Hormuz blockade could raise the risk of an economic downturn
The warning came as the US and Iran maintained opposing stances on Tehran’s uranium stockpile and controls on the Strait of Hormuz on Thursday, although US Secretary of State Marco Rubio said there had been “some good signs” in talks.
- May 22, 2026,
- Updated May 22, 2026 9:38 AM IST
The closure of the Strait of Hormuz through August raises the risk of an economic downturn close to the scale of the Great Recession in 2008, according to Rapidan Energy Group. The advisory firm said its base case assumes the waterway reopens in July, leading to an average oil demand reduction of 2.6 million barrels a day and the spot-market price for benchmark Brent crude peaking near $130 a barrel over the summer.
Rapidan said a disruption lasting beyond July would require even greater demand erosion to offset the supply shock through August and September, potentially enough to trigger an annual decline in global oil consumption in 2026.
The warning came as the US and Iran maintained opposing stances on Tehran’s uranium stockpile and controls on the Strait of Hormuz on Thursday, although US Secretary of State Marco Rubio said there had been “some good signs” in talks.
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The firm said a delay until August would deepen the third-quarter supply deficit to roughly 6 million barrels a day, just as inventories approach operationally challenging levels. Even with an early-August restart, markets would tighten before any relief is felt, as crude inventories continue declining into September while Arab Gulf production gradually rebounds and shipments begin reaching destinations, according to Rapidan.
It also said several leading forecasters already expect a rare contraction in worldwide demand this year. Oil prices have nearly doubled since late February as the war between the US, Israel and Iran upends global markets and raises concern about a simultaneous spike in inflation and slowdown in growth.
“The current macro setup is less extreme than the 1970s or 2007 to 08,” Rapidan analysts wrote in a note, citing economies that are less oil-intensive and more credible monetary policy frameworks. “But that relatively stronger starting point doesn’t neutralise the risk that continued oil price spikes would exacerbate financial and macroeconomic vulnerabilities.”
US President Donald Trump said the US will eventually recover Iran’s stockpile of highly enriched uranium, which Washington believes is destined for a nuclear weapon, though Tehran says it is intended purely for peaceful purposes. Oil prices whipsawed in a volatile trading session on Thursday, moving lower on uncertain prospects for a resolution of the war.
Trump has said he is ready to resume strikes on Iran, which the US and ally Israel first launched in late February, if he does not get the “right answers” from Iran’s leadership. Iran’s Revolutionary Guards have warned that renewed attacks would trigger retaliation beyond its region.
The closure of the Strait of Hormuz through August raises the risk of an economic downturn close to the scale of the Great Recession in 2008, according to Rapidan Energy Group. The advisory firm said its base case assumes the waterway reopens in July, leading to an average oil demand reduction of 2.6 million barrels a day and the spot-market price for benchmark Brent crude peaking near $130 a barrel over the summer.
Rapidan said a disruption lasting beyond July would require even greater demand erosion to offset the supply shock through August and September, potentially enough to trigger an annual decline in global oil consumption in 2026.
The warning came as the US and Iran maintained opposing stances on Tehran’s uranium stockpile and controls on the Strait of Hormuz on Thursday, although US Secretary of State Marco Rubio said there had been “some good signs” in talks.
MUST READ | Iran defines Strait Of Hormuz regulatory zone: What the new PGSA means for global trade
The firm said a delay until August would deepen the third-quarter supply deficit to roughly 6 million barrels a day, just as inventories approach operationally challenging levels. Even with an early-August restart, markets would tighten before any relief is felt, as crude inventories continue declining into September while Arab Gulf production gradually rebounds and shipments begin reaching destinations, according to Rapidan.
It also said several leading forecasters already expect a rare contraction in worldwide demand this year. Oil prices have nearly doubled since late February as the war between the US, Israel and Iran upends global markets and raises concern about a simultaneous spike in inflation and slowdown in growth.
“The current macro setup is less extreme than the 1970s or 2007 to 08,” Rapidan analysts wrote in a note, citing economies that are less oil-intensive and more credible monetary policy frameworks. “But that relatively stronger starting point doesn’t neutralise the risk that continued oil price spikes would exacerbate financial and macroeconomic vulnerabilities.”
US President Donald Trump said the US will eventually recover Iran’s stockpile of highly enriched uranium, which Washington believes is destined for a nuclear weapon, though Tehran says it is intended purely for peaceful purposes. Oil prices whipsawed in a volatile trading session on Thursday, moving lower on uncertain prospects for a resolution of the war.
Trump has said he is ready to resume strikes on Iran, which the US and ally Israel first launched in late February, if he does not get the “right answers” from Iran’s leadership. Iran’s Revolutionary Guards have warned that renewed attacks would trigger retaliation beyond its region.