This article was originally published by Michael Snyder at The Economic Collapse Blog. 

A worst-case scenario could be just weeks away. Traffic through the Strait of Hormuz has been essentially paralyzed by the war with Iran, and there is a lot of speculation that the Houthis could soon bring commercial traffic through the Red Sea to a screeching halt. If such a scenario actually materializes, it would be catastrophic for the global economy.

The good news is that so far, we are not witnessing widespread panic among investors. Most of them still seem to believe that this crisis is just temporary. So even though the price of oil is up over 40 percent since the start of the war, the overall global financial system is still relatively stable at this stage…

The S&P 500 is only down 3% so far this year and 5% off its all-time high, still far from reaching bear market territory or even a correction, suggesting investors aren’t panicking yet about the U.S.-Israel war on Iran. But that could change soon.

To be sure, oil prices have soared more than 40% since the war began two weeks ago and are up nearly 70% year to date. But they remain below the peak seen after Russia invaded Ukraine in 2022, despite one-fifth of the world’s oil supplies being bottled up by Iran’s de facto blockade of the Strait of Hormuz.

Of course, it certainly wouldn’t take much to push the financial markets over the edge.

Dan Alamariu, the chief geopolitical strategist at Alpine Macro, is warning that if this war with Iran persists, we could see “peak war panic” in approximately 1 to 3 weeks…

Alamariu acknowledged there’s a growing chance that the war lasts longer than his two-month outlook, and the Strait of Hormuz would likely remain closed for the duration. That means Brent crude prices will stay above $100 a barrel and possibly even top $150. And yet, the market hasn’t reached maximum panic yet.

“Peak war panic is more likely to hit in the next 1 to 3 weeks,” he predicted. “The longer the conflict lasts, the more investors price in economic damage.”

Using oil prices as a gauge for market panics, crude has historically peaked four to eight weeks into similar conflicts, according to Alamariu. The Iran war has now entered its third week.

If the price of oil surpasses $150 a barrel and stays there for an extended period of time, it will cause widespread panic.

I have no doubt about that at all.

What investors would really like to see is an end to the war, but an end to the war is not even on the horizon at this stage…

Iranian Foreign Minister Abbas Araghchi said Sunday that “we don’t see any reason why we should talk with Americans” as President Trump has claimed Iran is seeking a deal to end the war between the U.S. and Iran.

“We never asked for a ceasefire, and we have never asked even for negotiation,” Araghchi said on “Face the Nation with Margaret Brennan.”

As the war entered its third week, Mr. Trump has claimed in recent days that Iran wants to reach a deal. The president said in a post on Truth Social late Friday that Iran “is totally defeated and wants a deal – But not a deal that I would accept!” On Saturday, he told NBC News that “Iran wants to make a deal, and I don’t want to make it because the terms aren’t good enough yet.”

As long as traffic through the Strait of Hormuz is paralyzed, there is no way that the war will end.

An IDF spokesperson is telling us the Israelis are gearing up “for at least three more weeks of operations”…

An Israel Defense Forces (IDF) spokesperson said the military is preparing for at least three more weeks of operations against Iran and still has ‘thousands of targets’ remaining.

Brigadier General Effie Defrin told CNN that Israeli forces are coordinating closely with the United States and have plans extending beyond the Jewish holiday of Passover.

‘We have thousands of targets ahead,’ Defrin said. ‘We are ready, in coordination with our US allies, with plans through at least the Jewish holiday of Passover, about three weeks from now.’

Let us hope that the war will be over in just a matter of weeks.

But from where I am sitting, I think that is a very optimistic target.

There are so many ways that this war could become so much worse.

For example, if the Houthis were to shut down commercial traffic through the Red Sea by blocking the Bab el-Mandeb Strait, we really would be facing a nightmare scenario that would be unlike anything we have ever seen before…

Alamariu noted that it’s likely Iran’s Houthi allies in Yemen will try to close the Red Sea to commercial shipping, heaping additional economic pain on top of the closure of the Strait of Hormuz.

“A simultaneous two-strait disruption would compound the shock, impacting the additional ~5 mb/d oil flows that normally transit the Bab el-Mandeb and impairing a main Europe-Asia trade route,” he warned. “This could stoke inflation further, especially in Europe.”

If the Strait of Hormuz and the Bab el-Mandeb Strait were blocked simultaneously, hardly anything would be getting out of Saudi Arabia or other Gulf countries.

I have already written much about oil, natural gas, and fertilizer, but so many other industries would be deeply affected as well.

For example, the largest aluminum smelter in the entire world has just been forced to reduce its output…

The world’s largest single-site aluminium smelter in the Middle East cut its output by about 20% on Sunday, marking yet another troubling development for the global economy. The disruption in the Strait of Hormuz is no longer just an energy story – it’s now spreading into industrial metals. These second- and third-order effects could soon disrupt global supply chains and tighten aluminium availability, thus pressuring prices higher.

Bloomberg reports that Aluminium Bahrain (Alba) began a controlled, safe shutdown of three reduction lines on Sunday to preserve business continuity amid heavily disrupted maritime shipping routes through the Hormuz chokepoint.

The global economy has become far more integrated than most people realize.

When the price of oil rises, it rises for everyone.

And the pain is already starting to be felt throughout the entire U.S. economy…

Uber and Lyft drivers told us they’re getting more selective about which rides they accept as gas prices rise. That’s because Uber and Lyft control fares, meaning drivers can’t raise prices when their operating costs go up. Some gig drivers are rejecting shorter, lower-paying trips that burn fuel and instead are chasing longer fares that make the math work.

Meanwhile, EV drivers are having a moment. As gas-powered drivers wince at the pump, electric vehicle owners are taking what some have called a “victory lap.” Charging costs haven’t surged in step with oil prices. This is giving EV drivers, including those on rideshare platforms, a meaningful cost advantage.

Higher gas prices are also playing a role in the return-to-office debate. For people who drive to work, pricier fill-ups mean less money in their pockets for everything else.

“When gas prices spike, commuting effectively becomes a pay cut,” one chief operating officer told us.

If this war keeps going for a while, things will get a lot worse.

Just about everything that we purchase on a regular basis is affected by the price of oil, and that includes food.

It takes energy to grow food, and it takes energy to transport food to the stores.

If the price of oil goes up to $150 a barrel and stays there, it is going to become much more expensive to go to the grocery store.

Already, the average price of ground beef has risen almost 20 percent over the past year…

The average price of ground beef, 100% beef, excluding round, chuck, and sirloin, and excluding preformed patties, finally took a breather in February and barely budged, rising by just 0.2%, after spiking month after month almost uninterrupted for a whole year.

At $6.74 per pound, the average price is up by nearly 20% from a year ago and by 73% from January 2020.

By disrupting traffic through the Strait of Hormuz, the Iranians are hitting us where it hurts.

They know that U.S. consumers do not have a very high tolerance for pain.

So they figure that they can sit back and wait for the pain to reach unendurable levels.

But I don’t think that President Trump is going to end this war until he breaks Iranian control over the Strait of Hormuz.

That could take a while, and so it appears that this crisis will be with us for quite some time.

Michael’s new book, entitled “10 Prophetic Events That Are Coming Next,” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.

About the Author: Michael Snyder’s new book, entitled “10 Prophetic Events That Are Coming Next,” is available in paperback and for the Kindle on Amazon.com.  He has also written nine other books that are available on Amazon.com, including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”.  When you purchase any of Michael’s books, you help to support the work that he is doing.  You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter.  Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream, and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites.  These are such troubled times, and people need hope.  John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.”  If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.