Global oil prices held above the psychologically significant $100 threshold on Friday as the war involving the United States, Israel, and Iran edged toward its third week, reinforcing fears that a prolonged disruption to Middle East energy routes could soon ripple through the global economy.

The international benchmark Brent crude traded at $101.15 per barrel by 5:40 a.m. ET, up about 0.7%, while West Texas Intermediate rose 0.1% to $95.87 per barrel, after both contracts trimmed earlier gains.

Despite the modest moves on Friday, oil markets are closing out another powerful week. Brent is set to finish the week more than 9% higher, following a 27.9% surge last week, the biggest weekly gain since the market turmoil during the COVID-19 pandemic in 2020. U.S. benchmark WTI, which logged its strongest weekly performance since 1983 last week, is on course for a further 5.8% increase.

The rally reflects mounting anxiety among traders that the conflict could trigger a sustained disruption to global oil supply, particularly through the strategically vital Strait of Hormuz.

The narrow waterway linking the Persian Gulf to international markets is one of the most critical choke points in the global energy system. Roughly 20% of the world’s oil consumption passes through the corridor, making it central to energy supply chains across Asia, Europe, and North America.

With shipping in the area increasingly restricted amid the conflict, dozens of tankers have been forced to delay voyages or remain stranded while producers face mounting storage constraints.

Several foreign vessels operating in or near the Strait have reportedly been struck by ammunition this week, heightening fears that the conflict could evolve into a wider maritime security crisis.

Industry executives say the impact on global supply is already significant.

Speaking to CNBC, Amjad Bseisu, chief executive of EnQuest, warned that every day the disruption persists, it removes massive volumes of crude from global markets.

“Every day we see a delay, there’s another 20 million barrels wiped off the market, and that will have an impact, and continues to have an impact,” he said.

Bseisu added that the current supply shock is comparable to the disruption triggered by the Arab oil embargo of the 1970s, one of the most dramatic episodes in modern energy markets.

“The last time there was a similar reduction in supply was the Arab embargo. Then we saw a quadrupling of prices,” he said, noting that crude has already surged about 50% since the conflict began.

Political Signals Point To Prolonged Conflict

Markets are also reacting to political signals suggesting the war may not end soon. Donald Trump said overnight that the United States was prepared for a prolonged campaign.

“We have unparalleled firepower, unlimited ammunition, and plenty of time,” he said, urging supporters to “watch what happens” to Iran’s leadership.

According to a report by Axios, Trump also told leaders during a call with the Group of Seven that Iran was “about to surrender.” But Iran’s new supreme leader, Mojtaba Khamenei, rejected the claim in remarks broadcast on state television, vowing that Tehran would continue the fight.

Iranian officials have warned that the consequences for global energy markets could be severe. Earlier this week, military spokesman Ebrahim Zolfaqari cautioned that oil prices could climb as high as $200 per barrel if regional security deteriorates further.

Emergency measures have struggled to calm markets.

Governments have attempted to contain the rally through emergency measures aimed at boosting supply. The International Energy Agency has approved a release of 400 million barrels of crude from strategic reserves, the largest coordinated drawdown of emergency stockpiles in history.

Washington has also temporarily eased certain sanctions on Russian oil exports to allow more crude to reach international markets. Even so, the response has done little to calm traders, underscoring the scale of the potential supply disruption should the Strait of Hormuz remain constrained.

Economic Shock Beginning To Loom

Beyond the energy markets, economists warn that the war’s economic consequences may soon begin to surface more clearly across the global economy.

Oil is a fundamental input for transportation, manufacturing, and power generation. Sustained price increases typically cascade through supply chains, raising the cost of everything from shipping and aviation fuel to food production and industrial output.

For central banks already battling stubborn inflation, another surge in energy costs could complicate efforts to stabilize prices. Strategists at Barclays said markets had initially assumed the conflict would be brief, but investors are becoming increasingly uneasy as it drags on.

“Investors still believe in the Trump put, hence global equities are not down as much as in past oil shocks,” wrote Emmanuel Cau in a research note. “But nervousness is growing by the day and the longer the Strait of Hormuz stays closed the more stagflationary markets will turn.”

Stagflation — the toxic combination of weak economic growth and high inflation — remains one of the most feared outcomes for policymakers because it limits the effectiveness of traditional monetary tools.

The potential timing of such a shock is particularly sensitive. Many economies are already grappling with high interest rates, slowing industrial activity, and fragile consumer demand following several years of inflation and tightening monetary policy.

A prolonged spike in oil prices could amplify those pressures, raising fuel costs for businesses and households while undermining economic recovery in both advanced and emerging markets.

Currently, energy markets remain intensely focused on developments in the Middle East. But with the conflict showing little sign of easing and shipping routes still constrained, analysts warn that the real economic impact of the crisis may only begin to emerge in the weeks ahead.