Dallas Fed: Hormuz Strait Closure Could Impact Oil Prices and Economic Growth

The Dallas Federal Reserve has projected potential impacts on oil prices and economic growth if the Strait of Hormuz were to close and subsequently reopen. According to Jin10, if the strait reopens after a one-quarter closure, oil prices could drop to $68 per barrel by the third quarter of 2026, with economic growth increasing by 2.2 percentage points. However, a more prolonged closure could lead to complex scenarios. Extending the closure to two quarters might push oil prices up to $115 per barrel by the third quarter of 2026, before falling to $76 per barrel in the fourth quarter. The positive impact on real GDP growth would not manifest until the fourth quarter of 2026. If shipping resumes after three quarters, oil prices could surge to $132 per barrel by the end of the year, with the negative impact on growth persisting throughout the end of 2026.