The seeds of the crisis go back to the late 1970s when Iranian oil workers went on strike and the revolution ushered in the Islamic Republic, Daniel Yergin, vice chair of S&P Global and the author of The Prize: The Epic Quest for Oil, Money & Power, wrote in a Financial Times op-ed this weekend.

“One legacy of all this has been the nightmare scenario of the oil that flows through the Gulf being interdicted by an extended and destructive war,” he added. “The fear? That this will result in skyrocketing energy prices that send the world economy plummeting into a deep recession. Ever since the war in Iran began a week ago, Tehran has done everything it can to turn this into reality.”

Indeed, crude prices soared 36% over the past week as Iran’s attacks on ships in the Strait of Hormuz, through which 20% of the world’s oil and liquefied natural gas (LNG) flow, effectively shut down the narrow waterway.

With top oil producers in the Persian Gulf unable to export their crude, they have started to pump less as storage capacity has already filled up.

Iraq has cut output by 60%, dropping it to 1.7 million to 1.8 million barrels a day from about 4.3 million a day before the war. Kuwait and the United Arab Emirates have also reduced production.

Meanwhile, the LNG market has suffered a shock as Qatar was forced to throttle production. Yergin pointed out that spot prices in Asia, which depends heavily on LNG, have almost doubled since the war began, while European natural gas prices are up about 50%.

“But the most difficult scenario would be severe damage to infrastructure and a lengthy closure of the strait,” he said. “That would fuel fears of longer-term supply shortfalls.”

Iran has already started targeting the oil infrastructure of its Gulf neighbors, though air-defense systems have prevented serious damage so far. At the same time, U.S.-Israeli air strikes hit a major refinery near Tehran that supplies fuel to the civilian economy and military.

To be sure, the global economy is vastly different than what it was during the oil crises of the 1970s, with the shale revolution transforming the U.S. into an energy powerhouse while top energy-importing countries have become more resilient, Yergin noted.

While other analysts have warned that oil could hit $100 a barrel with the Strait of Hormuz closed, markets aren’t there yet. On Friday, Brent crude settled at $92.69 per barrel, and West Texas Intermediate ended at $90.90.

“Current oil prices in the $90s are far from the worst-case scenario,” Yergin wrote. “But right now, the world is looking at the biggest disruption in oil production in history as well as a resounding shock to global gas markets. The key question for global energy markets now is the duration of this explosive war.”

So far, the U.S. and Iran have shown no signs of backing down. President Donald Trump has demanded “unconditional surrender” and a say in who Iran’s next supreme leader will be. Iran has vowed to continue fighting while expanding its targets to include civilian infrastructure like desalination plants that provide most of the Gulf’s water supply.

Wall Street is also not convinced that Trump can restore ship traffic in the Strait of Hormuz. He announced a $20 billion reinsurance program for oil tankers and said the U.S. Navy will escort tankers through the strait if necessary.

But the U.S. and its Gulf allies have had trouble shooting down Iran’s Shahed drones, which have hit several major military targets.

“Trying to protect so many ships is a massive logistical undertaking,” Robin Brooks, a senior fellow at the Brookings Institution, wrote in a Substack note Friday. “All Iran needs to do is to sneak through a couple of drones to blow up one ship and we’re going from what is currently a very serious incident to a massive oil shock. In short, I don’t think U.S. assurances of Navy escorts are all that credible. There’s just way too many oil tankers that need protecting.”