There is something almost ritualistic about the moment when oil prices cross the psychologically powerful threshold of $100 per barrel. Markets shudder. Politicians panic. Economists dust off old vocabulary—shock, disruption, stagflation. The global economy, so modern in appearance yet so primitive in its dependence on fossil fuel, begins to wobble.

This week that threshold was crossed again. Crude oil surged past $100 per barrel for the first time in nearly four years following military strikes tied to the escalating confrontation between the United States, Israel and Iran. Brent crude—the international benchmark—briefly hovered near $101, while U.S. futures surged sharply in a single trading session. Such abrupt price movements are rare. Oil markets do not usually move like cryptocurrency.

Yet the numbers themselves are only the surface of the problem. Beneath them lies a deeper structural anxiety: the vulnerability of global energy supply to geopolitical conflict.

History offers uncomfortable parallels. In 1973, when Arab oil producers imposed an embargo following the Arab–Israeli war, oil prices quadrupled. The shock shattered Western economies that had grown accustomed to cheap energy. Inflation surged, economic growth collapsed, and a new word entered the economic vocabulary—stagflation.

A similar dynamic unfolded in 1979 after the Iranian Revolution disrupted oil production. Prices doubled again. Lines formed outside gas stations across the United States. Governments realised, perhaps too late, that geopolitics and energy markets were inseparable.

Today’s crisis echoes those moments, though the geopolitical landscape has evolved. The immediate trigger of the current price spike is the intensifying conflict surrounding Iran’s energy infrastructure and shipping routes. The Strait of Hormuz—a narrow maritime corridor between Iran and the Arabian Peninsula—has once again become the world’s most dangerous chokepoint. Nearly one-fifth of global oil supply flows through that passage. When instability touches Hormuz, the entire energy market reacts.

Shipping insurers have already begun reassessing risk. Maritime companies hesitate. Tanker routes slow. Even the rumour of disruption can send prices soaring. That is precisely what markets are responding to now.

Oil traders understand a simple rule: supply shocks rarely arrive gradually. They arrive abruptly, like earthquakes. When transportation routes become uncertain, supply calculations collapse overnight.

Analysts warn that up to 20 percent of global oil supply could be affected if disruptions in the Gulf intensify. Even if that estimate proves exaggerated, the market psychology behind it matters. Oil prices are determined not merely by current supply but by expectations of future scarcity.

Expectations, in turn, drive speculation.

Oil remains the bloodstream of the modern economy. When crude prices rise, the shock travels through every layer of production and consumption. Airlines pay more for jet fuel. Trucking companies absorb higher diesel costs. Shipping lines face surging operating expenses. Businesses rarely absorb such costs quietly.

They pass them on. Food prices, in particular, react quickly to energy inflation. Fertiliser production depends heavily on natural gas. Farm machinery runs on diesel. Crops must travel long distances from field to processing plants to supermarkets. Each stage carries an energy cost.

When oil prices climb, grocery bills eventually follow. Economists worry that the global economy—already fragile after years of inflationary pressure—could be pushed towards another period of stagflation. The formula is simple but destructive: rising prices combined with slowing economic growth.

The 1970s demonstrated how difficult that condition can be to escape. Traditional policy tools struggle in such an environment. Tight monetary policy can reduce inflation but deepen recession. Stimulus can revive growth but accelerate price increases.

It is a dilemma policymakers dread.

Governments are already exploring emergency responses. Discussions among major industrial economies include releasing strategic petroleum reserves to increase supply temporarily. Others propose guaranteeing insurance for oil tankers or deploying naval escorts through high-risk waters. These measures might stabilise markets in the short term.

But they do not address the underlying geopolitical risk. The Strait of Hormuz remains exposed. Any escalation—intentional or accidental—could close the passage or restrict shipping further. Even minor incidents in such a confined maritime corridor carry enormous consequences.

History again offers caution. During the 1956 Suez Crisis, the closure of the canal disrupted global oil trade and forced Europe to ration fuel. Though the disruption was smaller than today’s potential Hormuz crisis, the economic shock was severe enough to reshape Western energy policy for decades.

Compared with Suez, Hormuz is far more critical. The broader lesson is uncomfortable: globalisation has created a highly efficient but fragile energy system. Oil flows smoothly across continents during periods of stability. Yet that efficiency comes at the cost of resilience. When disruption occurs, the shock travels rapidly across the entire global economy.

Energy independence—so frequently promised in political speeches—remains largely illusory. Even countries that produce large volumes of oil are affected by global price swings. Energy markets are integrated. A barrel of oil does not recognise national borders.

And then there is the financial dimension.

Higher energy prices act like a tax on consumers. Households spend more on fuel and transportation, leaving less income for other goods. Credit card balances rise. Delinquencies follow. Businesses delay investment. Economic momentum slows quietly, then suddenly.

Financial markets are beginning to notice. If oil prices remain above $100 for an extended period, central banks may face a difficult choice between controlling inflation and protecting economic growth. Either path carries risks.

None of this means catastrophe is inevitable. Energy markets have demonstrated resilience

Oil at $100 is not merely a number on a trading screen. It is a reminder. The modern world, for all its technological sophistication, still rests on an energy foundation shaped by geography, politics and conflict. And when those forces collide, markets do not merely fluctuate—they tremble.

M A HossainThe writer is a political and defense analyst based in Bangladesh. He can be reached at writetomahossain@gmail.com

© The Nation