‘Nightmare Scenario’ Unfolds as Strait of Hormuz Disruption Threatens Global Oil Markets, Says S&P Global Vice Chairman

In a recent interview, Yergin warned that more than a billion barrels of oil have been lost since March, and if the strategic waterway remains closed, the situation will become “more difficult” heading into the summer driving season.

“It’s always been a nightmare scenario, the Strait of Hormuz being shut. And yet people thought it would never happen, but it has,” Yergin said.

He noted that while the global oil and gasoline system is today “more resilient and diversified than it has been in a decade”—with the U.S. now the world’s largest producer, alongside new developments off Brazil and Canada—the closure of the strait changes the calculus entirely.

Yergin described Iran’s stance on the Strait of Hormuz as “unacceptable to Gulf Arabs and the world,” rejecting any suggestion that the waterway should become “an Iranian canal” used to collect tolls and fund its military.

Even if the strait were reopened tomorrow, Yergin cautioned that it would take seven or eight months to get the situation “unsnarled,” and oil prices would remain elevated. He recalled that at the beginning of the year, oil was $62 a barrel.

The impact is already being felt globally. According to Yergin, factories are shutting down and people are being put out of work across Asia due to shortages. He said the United States is not feeling the strain as strongly because it is in a “strong position energy wise”—a situation he said “we were not in” in past decades.

When asked about the possibility of suspending the federal gasoline tax—which funds road improvements and safety projects—Yergin predicted that almost every member of Congress, hearing from constituents, would want to help lower gasoline prices.