Global oil markets may be dangerously underestimating what lies ahead. That is the stark warning from Vandana Hari, founder of Singapore-based energy intelligence firm Vanda Insights, as the conflict between the U.S., Israel, and Iran enters what she calls a “war of attrition” with no clear end in sight.
Iranian forces have declared the Strait of Hormuz “closed” since March 4, threatening and carrying out attacks on ships attempting to transit the waterway. U.S. President Donald Trump has raised the prospect of military actions to reestablish free passage through the strait. The Washington Post
The human and economic costs are mounting by the hour — and Hari believes the worst may not yet be priced in.The door to negotiations seems firmly shutHari pulled no punches when asked how long this conflict could last: “That is the billion-dollar question in the markets right now and nobody seems to have a clear answer.”
She described the situation as having crossed into a war of attrition — a grinding phase where each side absorbs punishment rather than seeking a quick resolution. “From everything on the ground and all the rhetoric coming out of Tehran, that door [to negotiations] seems firmly shut,” she told ET Now.
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Her conclusion for oil traders: the crisis has sent shockwaves through global energy markets, with Brent crude jumping 10–13% in early trading, and analysts warning prices could reach $100 per barrel or higher if disruptions persist. Al Jazeera
Brent crude ended Friday at $103.14 per barrel, after earlier surging to nearly $120 as fears of disrupted production and shipping intensified. PBSWhy Iran’s ‘selective passage’ offer won’t work
One widely circulated hope has been that Iran could allow non-NATO countries — specifically China, India, and select European nations — to sail their vessels through the Strait unharmed. Hari dismissed this as wishful thinking.
“I am very-very sceptical that such an arrangement could be made reliably,” she said, questioning whether Iran has the operational capability to guarantee that only certain ships are struck while allowing others safe passage.
She also pointed to the insurance industry as a decisive veto. Even if Tehran extended an exemption, ship owners, charterers, and insurers from supposedly “exempted” countries would remain “extremely reluctant and risk-averse” to sail into an active war zone.
Iran didn’t need a naval blockade to bring traffic to a halt — all it took was several drone strikes in the vicinity of the strait, after which insurers and shipping companies decided the narrow S-curve waterway was too dangerous to traverse.
Iranian drones also struck bypass ports in Oman, damaging at least one fuel storage tank in Duqm and placing Sohar within an insurer’s war risk area, raising charter and insurance costs for ships attempting to reroute.
‘A few days’ of resilience — then catastrophe
Hari acknowledged that Asian countries — the most exposed to a strait closure — have rushed emergency measures into place. But she was blunt about their shelf life.
“These measures may tide the countries through over perhaps the next few days, up to a week,” she said. “But beyond that, several more weeks of closure of the Strait of Hormuz is looking absolutely catastrophic.”
The data backs her up. The IEA announced a release of 400 million barrels from global emergency reserves — but the US Energy Information Administration estimates global consumption at over 105 million barrels per day in 2026, meaning the released oil covers just four days of global demand.
Around 9 million barrels per day — roughly 10% of global supply — can only exit the Gulf through the Strait of Hormuz and will remain bottlenecked until transit resumes, according to Rystad Energy.
Iran’s IRGC has vowed not to allow “a litre of oil” through the strait, with a spokesperson warning markets to “expect oil at $200 per barrel.”
A ripple effect that will last months
What makes Hari’s analysis especially sobering is her long-term view. The damage, she says, is not confined to oil prices or the opening weeks of the crisis.
“Even the closure that has happened so far is already having a ripple effect — a percolating way all the way down into the economy — which is a debilitating effect we are going to see for months to come.”
Supply chain experts warn that the initial ocean impact may take 10–14 days to appear, but the real pressure typically hits within 2–5 weeks, as diverted containers arrive in clusters, terminal congestion rises, and drayage demand outpaces truck and chassis availability.
About 85% of polyethylene exports from the Middle East travel through Hormuz, meaning shortages could raise the price of packaging, automotive components, and consumer goods globally.
Hari drew a pointed contrast with previous crises: “We have seen oil continue to flow through COVID, through Russia-Ukraine sanctions. But I would say the current situation is an exception. It is testing the resilience of the market in a way those did not.”
The only thing that cools this market
The path to lower prices is narrow but clear: diplomacy, or at least a credible de-escalation signal.
The IEA’s executive director was explicit: “The most important thing for a return to stable flows of oil and gas is the resumption of transit through the Strait of Hormuz.”
Until that happens, Hari’s message to markets is sobering: do not rely on past resilience as a guide to what comes next. This time, the rules have changed.