A recent post by Jason Miller highlighted the current level of instability that surrounds not only the price of oil, but indeed the impact of recent events on the global supply chain, and hence, the global economy.

The Federal Reserve Bank of Dallas published a supplemental quarterly update asking market participants when they believed that the flow of oil tankers through the Strait of Hormuz would return to normal levels. The chart below shows the proportion of respondents (99 in total) who selected different scenarios (data from https://lnkd.in/eKbgDqiK):

The majority of respondents selected August 2026 as the data of normal tanker flows, with only 20% of respondents selecting May 2026. 40% of respondents selected November 2026 or later. The biggest insight from these results is the 40% who think we are 7+ month away from a return to pre-war traffic. It’s quite clear the oil futures curves for delivery in Q4 2026 aren’t pricing in this possibility.

In addition, Miller pointed out that there are an increasing number of publicly traded firms in the energy services and petrochemical space make public statements that they expect this crisis will take many months to resolve. Consider:

[1]: Baker Hughes now assuming return to pre-war traffic won’t occur until the second half of 2026 (https://lnkd.in/end8HcWV)

[2]: Dow Chemical expecting it will take almost 300 days to resolve this crisis (https://lnkd.in/eNBU8Jy5)

Anyone who believed that the world has moved on from an oil-based economy is now learning a hard lesson. Oil is the fundamental basis for all elements in the global economy, impacting gas prices for consumers, diesel prices which impacts trucking costs and thus all consumer goods, jet fuel which impacts airline prices and global cargo shipments, ocean freight costs, and thus all imported goods. On top of these industries, oil impacts all resin prices, which are a function of petrochemical industry production. Resin impacts everything with plastic, from housing construction costs, toys, appliances, furniture, and you name it. Because oil prices are set globally, any shift in oil dynamics impact everyone.

But it isn’t just oil that is being impacted by the conflict in the Middle East. The LNG facility is Qatar was bombed, which provides 17% of the world’s natural gas volume. Rebuilding LNG “tranes” doesn’t occur at the drop of a hat. And new capacity from US exporters such as Cheniere and Venture Global will not be coming on line until late 2026. Expect fuel and energy prices to remain high…. likely well into the midterms..The loss in LNG also affects non-USA manufacturers that increases the cost of the raw materials and sub assemblies that come into the US – a domino effect that many do not take into account. This will result in inflation regardless if US builds capabilities for domestic production, thus increasing costs globally. Even with the increasing focus on building domestic manufacturing, and with self-sufficiency in the energy sector, we remain a captive to oil and gas prices that are impacted by events across the globe.

Many believe these estimates are overly optimistic. Predictions on the outcomes to this situation generally agree that the most likely scenario is “Attrition Stalemate” (22%), whereby “”Neither side achieves decisive results. Iran sustains retaliatory fires at a reduced but persistent rate. The Strait of Hormuz remains contested. Oil prices stay elevated. The conflict becomes a war of economic and military attrition, ending when domestic political costs force one or both sides to seek an exit. Historical analogues: the Iran-Iraq Tanker War (1984–1988).” The second most likely scenario is “Regional War (21%): “The conflict expands to include active military engagement by actors beyond the initial belligerents. Qualifying events include Houthi activation in the Red Sea, Gulf state transition to offensive operations against Iran, Hezbollah opening a sustained second front, or third-party military intervention.” The third most popular outcome, “Nuclear Sprint” (20%), is definitely the scariest: ” The risk pathway runs through desperation, pre-delegation, and miscommunication, not through deliberate US escalation.”

None of these forecasted scenarios suggest a quick resolution to the impact of the conflict. For this reason, supply chain managers need to factor these scenarios into their future planning – and begin “stress testing” their supply chain networks to consider the domino effect of these different potential outcomes. Running such scenarios should produce a realistic annual budget, proactive mitigation plans to find ways to offset these costs. Tools such as value engineering, product standardization, design reviews, and commodity hedging may provide potential offsets to these highly likely patterns of cost increase.

Often overlooked with all this is the effect of other global conflicts, including the War in Gaza, the War in Ukraine, and the on-going global tariff landscape, which are also adding additional costs to the mix. Also, the growth of data centers is placing increasing pressure on the energy grid, which everyone agrees is likely unable to serve the massive growth in energy consumption in local communities. The global economic situation is a ‘perfect storm’ of disruption, tariffs, energy blackouts, port management, bombing of Middle East refineries and LNG facilities, destruction of oil fields, and on-going damages to logistics infrastructure. Refineries simply don’t “ramp up” once they’ve incurred damage or personnel demobilization. The future for the normalization of global market conditions remains highly uncertain.

It is imperative that supply chain executives review their current supplier and 3PL contracts, and have candid discussions with network partners on how to collaborate to offset these costs. There will be also be a higher likelihood of strained negotiations on pricing expectations after force majeure and demurrage are declared. In effect, building flexibility into agreements in this environment is a significant condition for successful outcomes. Commitments to regular quarterly (or even monthly) business reviews can produce important insights given reviews of on-going events. Innovative thoughts that helps manage this environment are welcome.