Nearly every major oil crisis since the 1970s has followed the same script: rising energy costs trigger a domino effect that ends in a recession. Since the launch of Operation Epic Fury at the end of February, global oil prices have undergone their most violent surge since the 70s. If the Strait of Hormuz remains closed, the outlook for the US economy is likely to worsen.

Even though the US now produces about as much oil and natural gas as it consumes, weak labor numbers have driven much of the worsening US outlook. The latest reading on fourth quarter GDP was just revised lower again and showed growth of just 0.5% during the last quarter of 2025.

Every recession since World War II, except for the brief COVID-19 pandemic recession, was preceded by a jump in oil prices. Rising oil prices and an unsustainable tech capex boom, excessively high home prices, and stresses in private credit and other parts of the financial system also are contributing to the risk of recession.

The bottom line is that there's nothing more instantaneous to a consumer than standing there holding down the gas nozzle and watching numbers tick higher. If they were paying $80 last week and they're paying $85 this week, but they were paying $60 a month ago, that could have an immediate effect on the economy.