Nouriel Roubini outlines four Iran war scenarios and recession risk
Updated
Updated · Business Insider · May 8
Nouriel Roubini outlines four Iran war scenarios and recession risk
11 articles · Updated · Business Insider · May 8
In the worst case, he said oil could top $200 a barrel, triggering 1970s-style stagflation, a global recession and a bear market in equities.
Roubini said markets are wrongly pricing a likely peace deal, even as the Strait of Hormuz remains closed and major stock indexes return to record highs.
His scenarios range from a negotiated reopening of the strait to prolonged talks or military escalation, as mixed signals from Washington and Tehran keep investors hopeful but uncertain.
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May 2026 Energy Crisis: 12 Million Barrels Per Day Lost as Iran Blocks Strait of Hormuz
Overview
Following U.S. and Israeli attacks on Iran in February 2026, Iran blockaded the Strait of Hormuz, halting oil and LNG exports from key Gulf producers and removing 12-13 million barrels per day from the market. This caused oil prices to surge above $100 per barrel, pushing U.S. gas prices over $4 per gallon and driving inflation worldwide as businesses passed higher fuel costs to consumers. The blockade strained Western alliances and pressured Iran economically, while also accelerating global energy transition efforts. Despite these disruptions, markets showed complacency, betting on a quick resolution, even as strategic reserves were rapidly depleted and supply chains faced growing risks.