Energy markets have been jolted in recent weeks. Rising tensions in the Middle East have sparked disruptions and sent global oil and gas prices higher. And that\u2019s turned investors\u2019 focus to the Strait of Hormuz, the narrow waterway that carries roughly a fifth of the world\u2019s oil supply and a hefty amount of its LNG trade.<\/p>\n\n\n\n
For now, most of the reaction reflects the market\u2019s uncertainty, not an actual supply shortage. Ships are still moving, and energy is still flowing. The real issue is whether higher prices stick around.<\/p>\n\n\n\n
Short price spikes often fade within weeks as markets adjust. But if oil and gas prices stay elevated for months, the effects begin to spread \u2013 pushing up inflation<\/a>, raising costs for businesses, and influencing financial markets more broadly.<\/p>\n\n\n\n So, let\u2019s take a look at what higher energy prices could mean in the longer term.<\/p>\n\n\n\n When oil and gas prices stay high for a long time, the impact gradually spreads across the global economy. Countries that import<\/a> lots of oil \u2013 like Japan, India, South Korea, and much of Europe \u2013 tend to feel the effects first. Higher oil prices push up the cost of fuel for transport and everyday goods, increasing the cost of living.<\/p>\n\n\n\n These charts show how heavily these countries rely on oil (or gas) in their energy mix and how much they depend on importing those fuels. Countries in the upper-right corner of the charts are the most exposed to price increases. Energy exporters, meanwhile, are left out here because their import vulnerability on this score is effectively negative.<\/p>\n\n\n\n Many Asian and European economies sit in the most vulnerable zone because of their high oil use and heavy reliance on imports. Sources: Energy Institute, IEA, JP Morgan Asset Management.<\/em><\/p>\n\n\n\n Europe appears particularly exposed, reflecting its heavy reliance on imported natural gas. Sources: Energy Institute, IEA, JPMorgan Asset Management.<\/em><\/p>\n\n\n\n Natural gas shocks tend to hit industrial economies much harder, especially in Europe. Gas is widely used to generate electricity and power factories, so higher gas prices quickly feed into utility bills and manufacturing costs. Countries such as Italy, Germany, the Netherlands, Taiwan, and Korea appear particularly exposed because they rely heavily on imported gas and also use a lot of it across their energy systems.<\/p>\n\n\n\n That said, the global economy today is less energy-intensive than it used to be, which helps soften the overall impact of energy shocks. Economies now generate far more economic output per unit of energy than they did decades ago \u2013 thanks to efficiency gains, technological advancements, and the rise of service sectors. In practical terms, this means that higher oil and gas prices still matter, but the drag on global growth is often smaller than many people fear compared with past oil crises.<\/p>\n\n\n\n The world now produces far more economic output (as measured by gross domestic product, or GDP) per unit of energy than in the past, meaning energy price shocks tend to have a smaller economic impact than in previous decades. Sources: Energy Institute, IEA, JPMAM, 2025<\/em><\/p>\n\n\n\n Higher energy prices still make inflation<\/a> harder to bring under control. Heating, electricity, transportation, and food all become more expensive when energy costs rise. If those pressures persist, central banks might be forced to delay cutting interest<\/a> rates, since lowering borrowing costs while inflation is high risks reigniting price pressures on other things, too.<\/p>\n\n\n\n From there, the ripple effects start showing up across markets, creating clear winners and losers across different industries.<\/p>\n\n\n\n Here are five ways markets are impacted:<\/p>\n\n\n\n Rising oil and gas prices represent a major risk for the airline industry, mainly because fuel can easily account for a third of an airline\u2019s total operating expenses. When oil prices spike, the “crack spread” \u2013 the cost of refining crude into jet fuel \u2013 often widens as well, compounding the financial pressure on carriers.<\/p>\n\n\n\n The impact is negative for three core reasons:<\/p>\n\n\n\n Costly rerouting<\/strong>. Geopolitical instability often forces airlines to avoid certain airspaces. Rerouting around conflict zones can add up to four hours to a long-haul flight, jacking up the fuel burn and the labor costs per trip.<\/p>\n\n\n\n In the chemicals and fertilizer industries, a “higher-for-longer” energy price scenario triggers a real shift in global competitiveness. These companies are especially vulnerable because oil and gas are their main feedstocks \u2013 the raw materials used to make plastics, resins, and nutrients. When energy costs stay elevated, so do the prices of these base inputs, trapping commodity<\/a>-type companies in a stubborn margin squeeze.<\/p>\n\n\n\n That\u2019s particularly harsh for fertilizer producers. Natural gas can account for as much as 80% of the cost of making ammonia, so long-lasting price increases can make production in energy-importing regions like Europe almost impossible to swing. In those situations, plants sometimes close permanently, and production shifts toward lower-cost regions like the Middle East or North America.<\/p>\n\n\n\n Because these companies mainly produce commodity-grade products, they often lack the pricing power needed to pass 100% of those higher costs on to customers without losing market share. Investors typically see these businesses as high-beta<\/a>, cyclical stocks that are especially at risk when the ratio of energy costs to product prices stays unfavorable for a prolonged period.<\/p>\n\n\n\n Some of the companies most likely to be impacted include BASF<\/strong>, Yara<\/strong>, CF Industries<\/strong>, The Mosaic Company<\/strong>, Nutrien<\/strong>, LyondellBasell<\/strong>, and Lanxess<\/strong>.<\/p>\n\n\n\n For the global shipping industry, geopolitical disruptions in key maritime chokepoints can have the opposite outcome compared with airlines or chemicals. Instead of squeezing margins, disruptions can often push freight rates sharply higher by reducing the effective supply of ships available to move goods.<\/p>\n\n\n\n The mechanism is simple. When routes like the Strait of Hormuz, the Red Sea, or the Suez Canal become dangerous or restricted, ships are forced to take longer alternative routes. Vessels travelling between Asia and Europe, for example, may bypass the Suez Canal and sail around the Cape of Good Hope instead \u2013 which adds roughly ten to 14 days to a typical voyage. That longer trip ties ships up for longer, meaning fewer vessels are available globally to carry cargo.<\/p>\n\n\n\n The impact tends to be positive for shipping companies for three main reasons:<\/p>\n\n\n\n Historically, tanker operators have benefited the most from geopolitical disruptions, because oil flows are highly flexible and quickly rerouted when conflicts interfere with traditional supply routes.<\/p>\n\n\n\n A sustained period of higher energy prices tends to create a powerful earnings lift for oil, gas, and LNG producers. When those prices stay elevated, revenue<\/a> rises almost directly alongside the price of the product those firms trade in.<\/p>\n\n\n\n The global energy system also remains sensitive to supply disruptions because a handful of shipping routes carry enormous amounts of fuel. The Strait of Hormuz, for example, handles roughly a fifth of the world\u2019s oil supply and about a fifth of global LNG trade each day. Any disruption or constraint in chokepoints like this can tighten markets quickly and reinforce upward pressure on prices.<\/p>\n\n\n\n That said, today\u2019s market is better at absorbing shocks than it used to be, which can make price spikes more manageable \u2013 and sometimes shorter-lived \u2013 than they were in earlier decades. One of the biggest changes is supply flexibility. A much larger share of global production now comes from \u201cshort-cycle\u201d sources, especially US shale, where drilling and ramping up output can happen in months (rather than years).<\/p>\n\n\n\n At the same time, global supply is more diversified than it was in earlier eras when a smaller group of producers controlled most of the marginal barrels.<\/p>\n\n\n\n On the gas side, LNG has also made the market far more fluid. Cargoes can be redirected toward whichever region is paying the highest price, which helps ease regional shortages, even if it sometimes amplifies volatility<\/a> for areas that lose supply. None of this removes the risk around chokepoints like the Strait of Hormuz \u2013 those still matter because they concentrate huge physical flows \u2013 but it does mean the global system has more ways to respond than it did in the 1970s or early 2000s.<\/p>\n\n\n\n Periods of rising uncertainty often trigger a classic \u201cflight to quality\u201d across financial markets. When risks increase, investors tend to shift capital away from assets that depend heavily on economic growth or market optimism and toward those perceived as safer and more stable.<\/p>\n\n\n\n Government bonds, gold, the US dollar, and big companies with dependable cash flows usually benefit as investors prioritize liquidity, balance sheet strength, and predictable earnings. At the same time, riskier assets often fall out of favor. Highly leveraged companies, small-cap stocks, emerging market names, and speculative assets like unprofitable technology firms or cryptocurrencies often see capital flow in the other direction, as traders seek to reduce their exposure to volatility.<\/p>\n\n\n\n The result is a classic \u201crisk-off\u201d environment, where markets reward stability and resilience while punishing assets whose valuations depend more heavily on future growth or favorable financing conditions.<\/p>\n\n\n\n For now, energy markets remain on edge. Whether this turns out to be a temporary spike or a longer-lasting shock will ultimately determine how deeply the effects spread across the global economy and financial markets.<\/p>\n\n\n\n —<\/p>\n\n\n\nWhat does this mean for the economy?<\/h2>\n\n\n\n
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<\/figure>\n\n\n\n1. The jet fuel squeeze for airlines<\/h2>\n\n\n\n
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2. The feedstock crisis for chemicals<\/h2>\n\n\n\n
3. The freight rate windfall for shipping<\/h2>\n\n\n\n
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4. The price boost for oil and gas producers<\/h2>\n\n\n\n
5. The flight to quality<\/h2>\n\n\n\n