Oil Shock

Looks Like the Economy Is Hitting a “Nightmare Scenario”

Wall Street is seeing red.

By Victor Tangermann

Published Mar 9, 2026 10:56 AM EDT

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Tankers in the Strait of Hormuz have ground to a halt, cutting off much of the world from vital oil supplies due to the United States’ war on Iran.

Dwindling supplies and cut output by oil producers are sending rippling effects across global markets. As S&P Global vice chair Daniel Yergin argued in a Financial Times essay, it’s looking like a “nightmare scenario” is now unfolding as skyrocketing oil prices “send the world economy plummeting into a deep recession” — a reckoning that’s been decades in the making.

The Strait of Hormuz has turned into a major chokepoint, with around 20 percent of the world’s liquefied natural gas and oil supply typically traveling through its waters.

Now that tankers aren’t taking the risk of being targeted by Iranian drones or weaponized speedboats, that crucial artery has been largely cut off. While Yergin argues Asia could be hit hardest sooner, global oil and gas markets across the world will be “grappling with the crisis.”

The price of crude oil soared past $100 a barrel over the weekend as production slowed significantly. Americans are already feeling the effects at the gas pump, with prices surging for both gasoline and diesel.

On Wall Street, grim effects are playing out, with Dow, S&P 500, and Nasdaq futures plummeting. Both the Dow Jones Industrial Average and S&P 500 slid by a percent or so when trading resumed Monday morning.

Put simply, investors are seriously on edge as they fear the worst: a prolonged war in Iran causing major oil shortages.

Worse yet, domestically, a “flashing red warning light” went off last week when the US Bureau of Labor Statistics issued its February jobs report, finding that the economy had shrunk by 92,000 jobs — far more than expected, raising the unemployment rate to 4.4 percent.

And impossible to ignore are existing fears and uncertainty over enormous investments in AI. Companies are spending hundreds of billions of dollars on enormous data centers across the country, unprecedented capital expenditures that are seemingly propping up a waning US economy — while also making investors nervous.

While it sounds like a perfect storm, the budding crisis takes place in a very different economic order compared to previous oil supply shocks.

It’s a precarious moment. And President Donald Trump indicated over the weekend that the administration won’t be tapping into the Strategic Petroleum Reserve to ease the pressure.

“We’ve got a lot of oil,” he told reporters on Air Force One. “Our country has a tremendous amount. There’s a lot of oil out there. That’ll get healed very quickly.”

The Trump administration also promised a $20 billion reinsurance — insurance for insurance — program to get oil flowing through the Strait of Hormuz again.

But whether the president’s reassurances will be able to calm the situation as Wall Street sees red remains to be seen, as the end of his war on Iran is seemingly nowhere in sight.

The “world is looking at the biggest disruption in oil production in history as well as a resounding shock to global gas markets,” Yergin concluded. “The key question for global energy markets now is the duration of this explosive war.”

More on oil prices: Gas Prices Spiking After Trump’s War in Iran

Victor Tangermann

Senior Editor

I’m a senior editor at Futurism, where I edit and write about NASA and the private space sector, as well as topics ranging from SETI and artificial intelligence to tech and medical policy.