If fighting in the Middle East stretches beyond a week, energy traders warn the world could be staring at the early stages of a full-blown supply crisis — one that would ripple through oil, natural gas and broader financial markets, Bloomberg reports.

So far, with the crisis now entering its fourth day, price moves suggest investors are betting the disruption will be brief.

But the stakes are enormous.

Roughly 18 million barrels of oil a day — nearly a fifth of global consumption — typically pass through the Strait of Hormuz. The waterway is also a critical conduit for refined fuels and commodities including liquefied natural gas (LNG), liquefied petroleum gas and aluminum.

Tanker traffic through the strait was down 94% on Sunday, according to the Joint Maritime Information Center.

President Donald Trump has effectively wagered that a transformed global energy landscape — shaped by the U.S. shale revolution and expanded non-Hormuz export routes — gives Washington more military latitude in the region than previous administrations enjoyed.

The calculation: the U.S. is less exposed to supply shocks than many of its allies.

“The Iranian regime is under existential threat and therefore they’re prepared to do anything to get the world’s attention,” said Gary Ross, veteran oil consultant and hedge fund manager at Black Gold Investors. “We’ve had a somewhat muted response but the longer it carries on, the more risk there is of higher prices.”

Why Oil Hasn’t Exploded

Despite the extraordinary halt in shipping, oil prices have risen to 2024 highs but have not spiked to historic extremes. Traders point to an unspoken rule that has governed decades of regional conflict: do not close the Strait of Hormuz.

The waterway has long been viewed as untouchable because its disruption would endanger not only Gulf producers but also global consumers — and likely trigger direct intervention by outside powers.

Even during the Iran-Iraq “Tanker War” of the 1980s, the U.S. Navy escorted vessels to keep oil flowing.

“Every time these geopolitical shocks have happened broadly it’s been counted down within minutes,” said Trevor Woods, chief investment officer at Northern Trace Capital.

Markets have been conditioned to fade Middle East risk premiums after years of flare-ups that ultimately left energy flows intact. That helps explain why crude, though sharply higher, remains well below the peaks seen during past crises.

The shutdown of Qatar’s Ras Laffan complex — which accounts for roughly one-fifth of global liquified natural gas supply — has sent tremors through gas markets.

“This is unprecedented in the history of LNG,” said Richard Pratt of Precision LNG Consulting. With limited global storage and almost no spare liquefaction capacity, he warned, the system has little slack.

US Shale Revolution

The reason Washington may feel more insulated lies in the U.S. shale revolution, which transformed the country from a major importer into one of the world’s largest oil and gas producers. U.S. output is near record levels, giving global markets additional supply flexibility.

At the same time, Gulf producers have built partial workarounds to Hormuz. Saudi Arabia can divert up to 5 million barrels a day through its East-West pipeline to the Red Sea. The United Arab Emirates can bypass the strait via its Habshan-Fujairah pipeline.

Still, those routes cannot fully offset a prolonged closure. If disruptions last beyond several weeks, producers may be forced to shut in output.

Insurance is already becoming a choke point. War-risk premiums for vessels entering the Gulf have surged to around 1% of a ship’s value, a multiple of normal levels.

The strait’s strategic weight makes its sustained closure almost unthinkable — which is precisely why markets are still pricing in a short conflict.

In the U.S., gasoline prices have already risen to a three-month high. Because America is more energy independent than in past decades, consumers would feel sustained oil spikes at the pump.

Other major economies, however, are far more vulnerable.

China imports roughly 30% of its LNG from Qatar, though it has pipeline supplies from Russia, domestic production and coal as fallback. India gets about half its LNG from Qatar and has discussed rationing in a prolonged outage. Pakistan is even more exposed, sourcing nearly all its LNG from Qatar — leaving it at risk of acute shortages.

“The irony is that the U.S. is largely insulated from a global gas price shock because of its own domestic production,” said one LNG market participant. “The pressure point hits allies first and hardest.”

Ultimately, the biggest question is duration.

“Key questions are how much supply will be lost, for how long, and how do major powers react?” said Daniel Yergin, vice chairman of S&P Global. “That a scenario capable of causing the greatest oil supply upheaval in history is even under consideration is, by itself, alarming.”