The timing of the impending crude crisis | Brookings
Home
Search
Home
Search
Home
The timing of the impending crude crisis
Contact
Contact
Economic Studies Media Office
[email protected]
Share
Share
Bluesky Streamline Icon: https://streamlinehq.comBluesky
Search
Sections
Sections
Contact
Contact
Economic Studies Media Office
[email protected]
Share
Share
Bluesky Streamline Icon: https://streamlinehq.comBluesky
Subscribe to the Economic Studies Bulletin
Sign Up
Commentary
The timing of the impending crude crisis
Robin Brooks and
Robin Brooks
Senior Fellow<br>- Global Economy and Development
Ben Harris
Ben Harris
Vice President and Director<br>- Economic Studies,
The Bruce and Virginia MacLaury Chair
May 22, 2026
Shutterstock / Evgenii Bakhchev
11 min read
Bluesky Streamline Icon: https://streamlinehq.comBluesky
Sections
Toggle section navigation
Sections
Contact
Economic Studies Media Office
[email protected]
Follow the authors
Robin Brooks
Ben Harris
See More
More On
Climate & Energy
Sub-Topics
Energy Industry Energy Markets & Governance Energy Security
Program
Economic Studies
*]:!text-medium"><br>Editor's note:<br>This article was amended on May 25, 2026, to clarify daily production volumes of crude and refined product.
The shortfall in global oil supply due to the closure of the Strait of Hormuz has roiled markets and prompted discussions of a global recession. Yet, despite this massive shock—on the order of 20% of global oil supply—the conflict in Iran has to date failed to boost oil prices to catastrophic levels, with oil benchmarks remaining below their 2022 highs in the wake of Russia’s invasion of Ukraine. (Price movements for natural gas and some refined products have been more severe.) In this post, we focus on crude oil and present a rough framework to explain why global prices have yet to skyrocket, while also advancing a timeline to assess when prices could reach more alarming levels. The bottom line is that the supply shortfall will build in coming months as temporary buffers are depleted. And if markets grow increasingly pessimistic over an eventual resolution to the impasse in the strait, oil prices may rise materially higher.
Structural versus temporary forces in global oil markets
Sharp crude price gains have been constrained by three primary factors. One, structural adjustments in the crude oil trade—including pipeline bypass and the onset of new crude sources—that mitigate the supply shock. Two, the existence of global inventories that are designed to address supply volatility and provide temporary relief in instances such as this. And three, an overarching belief in markets that the impasse in the Strait of Hormuz will be resolved in short order.
From this perspective, the current market for crude is characterized as a race between the levels of temporary buffers and expectations for the duration of the impasse. This framework is supported by observed price action since the start of the conflict. The sharp swings in global oil prices reflect changing views on the likely duration; indications that the strait will remain closed for longer sees oil prices rise, while headlines suggesting a quick resolution prompt oil prices to tumble.
Our contribution is to quantify temporary and structural adjustments in the current shortfall. This distinction is important because—as the closure drags on—the ability of temporary forces to offset supply disruptions dwindles. Differentiating between temporary and structural forces allows us to identify what conceivably is a lasting supply deficit that may last for many months, regardless of near-term developments.
Prior to this conflict, around 20 million barrels of oil and refined product transited the Strait of Hormuz daily, with volume markedly lower in recent months. Measured against global production of crude and other liquid fuels of around 100 million barrels of oil per day (mb/d), plus similar volumes of refined product, this ranks as the biggest supply disruption ever.
Our focus here is on crude oil, for which pre-conflict trade through the strait totaled around 15 million barrels per day (mb/d) according to the International Energy Agency (IEA). We focus on crude because supply disruption here feeds into all subsequent markets by forcing refineries to cut production, which in turn, pushes up prices for jet fuel and other derivatives. Moreover, focusing on crude incorporates the impact of pipeline workarounds, which serve as a permanent and important offset to the supply disruption.
Prior to the war, global crude oil trade stood at about 45 mb/d, suggesting that approximately one-third of global trade is potentially disrupted before structural and temporary adjustments.1 If not offset, such a shock is sufficient to spike energy prices to levels consistent with a global recession.
Below, we first distinguish between structural adjustments (i.e., those that can continue indefinitely)...