In March 1974, a barrel of oil was 3.5 times higher than at the start of 1973. The world survived, as you might have noticed.About 3 weeks ago oil was at $62, futures have hit $115$120
Here is a quick summary from Claude.ai of the impact of the spike in oil prices.
Key Economic Impacts
Inflation & Consumer Costs: The national average U.S. gas price reached $3.41 per gallon on Saturday, rising $0.43 in just one week. Al Jazeera That pace, if sustained, filters rapidly into transportation, food, and manufacturing costs across the entire economy.
Stagflation Risk: The combination of a weak economy and high inflation is a worst-case scenario for investors because the Federal Reserve has no good tool to fix both problems simultaneously. Lower interest rates can boost the economy but also make inflation worse — and the Fed's hands may be increasingly tied as spiking oil prices push inflation higher. NPR A negative jobs number combined with a big jump in oil prices has traders worrying about stagflation risks. NPR
Stock Markets: The S&P 500 dropped 1.3% Friday after a report showed U.S. employers cut more jobs than they created last month, capping Wall Street's worst week since October. NPR
Supply Chain Disruption: Oil and gas storage in Gulf facilities is rapidly filling, forcing oilfields in Iraq and Kuwait to cut production, with the UAE likely to follow. Oilfields forced to shut in could take days, weeks, or months to return to normal output even after the conflict ends. Al Jazeera
Potential Worst Case: Qatar's energy minister told the Financial Times that crude prices could reach $150 a barrel if tankers remain unable to pass through the Strait of Hormuz, which could "bring down the economies of the world." CNBC
The Bottom Line
The global economy is facing a classic oil shock scenario — supply disruption driven by geopolitical conflict rather than demand fundamentals. The longer the Strait of Hormuz remains closed, the deeper the impact on global trade, inflation, and growth. Analysts say if oil prices spike to $100+ and stay there, it could be too much for the global economy to withstand. NPR We're already there.