Jason Bordoff and Meghan L. O’Sullivan
Within days of the initial U.S. and Israeli attack on Iran on February 28, 2026, the world was plunged into an energy crisis. Tehran’s near shuttering of the Strait of Hormuz, through which roughly 20 percent of the world’s oil and liquefied natural gas transit each day, amounted to the largest disruption of global energy flows in history, according to the International Energy Agency. Within the first three weeks of the conflict, oil prices rose by 55 percent. Gasoline jumped by roughly a dollar a gallon, and heating oil and jet fuel soared even higher. Many countries began to ration fuel, shorten workweeks, and close factories. It quickly became clear that until the strait reopened, prices would continue to climb, boosting inflation and dampening growth.
This crisis may appear to be unprecedented, but its contours are familiar. In 1973, Arab members of OPEC embargoed oil exports to countries supporting Israel in the Arab-Israeli war, causing a dramatic price spike that traumatized American consumers and contributed to high inflation and slow growth. The 1973 crisis also inspired efforts to avoid another shock. Governments took steps to reduce their reliance on imports, build strategic stocks, and pursue greater cooperation and market integration. Over time, policymakers grew more comfortable trusting their countries’ energy security to global markets.
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