Oil markets are starting to price in a nightmare scenario. The kind of thing that keeps energy traders up at night and sends economists scrambling to update their models.

Crude oil — tracked by the United States Oil Fund (USO) — just jumped 8.3% to $72.50 a barrel. That's its biggest single-day pop since March 2022, back when Russia's invasion of Ukraine first sent prices screaming past $100. The catalyst this time isn't a land war in Europe, but a very specific, very narrow strip of water: the Strait of Hormuz.

Think of it as the world's most important energy hallway. Roughly one-fifth of all the planet's oil and liquefied natural gas has to squeeze through this passage connecting the Persian Gulf to open seas. A sustained blockage here wouldn't just be a supply hiccup; it would be one of the largest energy shocks in modern history.

In a note Monday, Goldman Sachs commodity analyst Daan Struyven pointed out that tanker traffic already looks "significantly disrupted." Shippers, oil producers, and insurers are all getting skittish following reports of damaged vessels. It's the financial version of everyone slowing down to rubberneck at a car crash, except the crash could paralyze global energy flows.

Why This Tiny Strait Is a Giant Problem

Let's talk scale. About 20 million barrels of oil slosh through the Strait of Hormuz every single day. That's 20% of global supply. In 2025, that broke down to 13.4 million barrels per day of crude, plus a bunch of refined products and gases.

"Strait of Hormuz flows and any potential communication on the Strait by the U.S., Iran, China and GCC countries and on the broader conflict are now the most important variables to watch in energy markets," Struyven said. Translation: Forget inflation reports or OPEC meetings for a minute. Watch this water.

Saudi Arabia, Iraq, and the UAE together sent over 13 million barrels per day through last year, mostly to China. Iran itself produces about 4.3 million barrels per day of crude and condensate, which is roughly 4% of global supply.

Here's the scary part: you can't just drive this oil somewhere else. The International Energy Agency figures only about 4.2 million barrels per day could be rerouted through existing pipelines. So in a total closure, you're potentially looking at a 16 million barrel per day hole in the market. That's not a gap; that's a canyon.

Goldman's Calculator: How High Could Oil Go?

So, the big question: what does this do to the price? Goldman Sachs got out its financial modeling kit and ran some numbers.

First, they estimate that even a smaller disruption—say, 1 million barrels per day, which is about half of Iran's exports—could add $8 to the fair value of a barrel of oil. And that's before the market starts freaking out and adding a "panic premium."

But the real worry isn't just Iran's barrels. It's the domino effect. Iran has a history of targeting oil infrastructure across the region. As Struyven notes, future damage to production or export facilities in other countries can't be ruled out. It's not just one producer's problem; it's a regional infrastructure risk.

Goldman modeled several one-month disruption scenarios to put some numbers on the fear:

• Worst Case: A full, one-month closure with no workarounds. That could lift oil prices by about $15 a barrel.
• With Pipelines: If all available spare pipeline capacity is used, the price bump moderates to roughly $12.
• With Pipelines and Reserves: If pipelines are used and global strategic petroleum reserves are released at 2 million barrels per day, the impact narrows to about $10.

Smaller disruptions have smaller effects. A 50% closure for a month (with offsets) might mean a $4 increase. A 25% disruption could be just a $1 move.

With oil around $72 now, a full, unmitigated closure could theoretically push prices toward the mid-to-high $80s. But here's the crucial caveat from Goldman: these are "fair-value" estimates. When geopolitics gets scary, oil prices have a habit of trading way above what any model says they "should" be worth. The market starts pricing in the fear of what could happen next.

History's Playbook: Fear Sells

"History shows that oil prices can rise significantly, and well above fair-value estimates when geopolitical uncertainty is high and when the market puts some weight on supply disruptions persisting," Struyven said.

He's got receipts. The closest recent example is the September 2019 attack on Saudi Arabia's Abqaiq facility. It caused the biggest single-day production halt ever and sent oil prices on a nearly 20% intraday rollercoaster ride—even though the damage was fixed and output was back within about 10 days. The fear of a prolonged outage was enough to spike prices.

Flash forward to mid-2022: oil traded nearly $20 above Goldman's "fair value" thanks to the war in Ukraine. The point is, models are good for calm seas. In a storm, emotion takes the wheel.

Despite all this talk of spikes and risk, Goldman's base case hasn't changed. They still think Brent and WTI are headed down toward $60 and $56, respectively, by late 2026. That assumes, of course, that the Strait of Hormuz stays open and the world avoids a sustained supply catastrophe.

"Oil prices can normalize quite fast after short-lived geopolitical shocks and/or temporary supply disruptions," the bank noted. It's the financial version of "this too shall pass"—provided the disruption actually is short-lived.

For now, the market is holding its breath, watching a narrow strip of water, and wondering if we're about to relive the kind of oil price spike that reshapes economies. All eyes are on the Strait.