More than a week into what experts say is the largest energy supply shock in modern history, markets are finally awakening to the gravity of the threat that the Iran war poses to the global economy, with oil prices rising to triple digits (before falling back) and stock markets around the worldplunging.

There is no immediate end in sight, with the United States still insisting on Iran’s “unconditional surrender” even as Tehran selected a new supreme leader believed to be even more hard-line than his father. Pain is baked in for weeks and months to come for developed and developing economies alike as prices rise for oil, natural gas, fertilizer, and petrochemicals. The only clear economic winner of U.S. President Donald Trump’s war so far is Russia, which has already seen some sanctions relief and is enjoying a windfall from higher oil revenues and demand for its once-forbidden crude.

More than a week into what experts say is the largest energy supply shock in modern history, markets are finally awakening to the gravity of the threat that the Iran war poses to the global economy, with oil prices rising to triple digits (before falling back) and stock markets around the worldplunging.

There is no immediate end in sight, with the United States still insisting on Iran’s “unconditional surrender” even as Tehran selected a new supreme leader believed to be even more hard-line than his father. Pain is baked in for weeks and months to come for developed and developing economies alike as prices rise for oil, natural gas, fertilizer, and petrochemicals. The only clear economic winner of U.S. President Donald Trump’s war so far is Russia, which has already seen some sanctions relief and is enjoying a windfall from higher oil revenues and demand for its once-forbidden crude.

Oil prices skyrocketed in overnight trading, with benchmark prices hitting $120 a barrel, before settling down after reports that the G-7 countries would meet Monday to discuss the biggest emergency release of reserve oil stocks in history. In the end, the G-7 decided not to tap emergency stocks just yet, even though that is what they are for, but talk of a coordinated response calmed the market. The group will meet again Tuesday to discuss the release, which is supported by the United States and Japan.

In afternoon trading, benchmark oil prices settled around $95 a barrel in London and around $90 a barrel in New York. For reference, the global benchmark price of crude has risen more than 60 percent since the beginning of the year.

The problem of rising oil prices is threefold and offers few easy fixes.

First, even the coordinated release of a large portion of the G-7’s reserve stocks of oil (the group discussed releasing between 300 million and 400 million barrels out of its 1.2 billion-barrel hoard) would be a patch, not a solution, to the underlying problem. That problem is that a very large chunk of the world’s oil supply is missing and is unlikely to return any time very soon, because the Strait of Hormuz is effectively closed, and a lot of big producers such as Iraq are throttling back oil output because they have run out of storage. 

To put it in perspective, as ClearView Energy Partners, an energy consultancy, did in a research note: In just over a week, the world has gone from being way oversupplied with oil to having a massive shortfall. ClearView expects a global supply deficit of 3 million barrels a day in March, and almost 7 million barrels a day in April. Just confronting that shortfall would drain 300 million barrels from global crude inventories. 

That shortfall itself has two explanations. Tankers can’t transit the Strait of Hormuz for fear of attacks (there have been more than a dozen incidents and attacks on shipping there since the war began) and because of sharply rising insurance costs. Iran can continue to disrupt shipping at low cost to itself, whatever fixes are offered for maritime insurance or whatever plans are floated for naval escorts.

“The one question that hangs over the market is how soon will the Strait of Hormuz open, and nobody in the Trump administration has a good answer to that,” said Matthew Reed, vice president of Foreign Reports, an energy consultancy specializing in the Middle East. “There is no substitute for reopening the strait.”

And major oil producers are throttling back oil production as they run out of storage space. Iraq was first. Then came Kuwait and the United Arab Emirates. Reports suggest Bahrain and Saudi Arabia are, too. Millions of barrels of oil that were being pumped every day aren’t anymore. Shutdowns of more than a few weeks risk damage to wells and future oil-production capacity.

And there is the escalation of the war more broadly. Over the weekend, Iran attacked civilian targets and desalination plants in Gulf neighbors; Israel set aflame a major fuel depot near Tehran. Turkey intercepted a second Iranian missile. Bahrain’s only refinery got attacked again. Saudi Arabia intercepted Iranian attacks on oil fields in eastern Saudi Arabia on Monday. 

“What the market is also pricing in is the current level of risk. The Iranians are actively trying to hit upstream assets around the Gulf. If they get a hit, prices are going to go through the stratosphere,” Reed said. 

But the fundamental problem remains passage out of the Strait of Hormuz, which normally sees one-fifth of global oil and natural gas pass by every day. Transits since the war began have dropped from about 100 ships per day to two or three, often Iranian tankers or other vessels that run the gauntlet. 

The U.S. offer of a partial insurance backstop, and promise of future naval escorts, will do little to assuage the concerns of shipping companies, and unless and until normal maritime traffic resumes, oil prices (and disruptions to other industries, especially agriculture) will remain elevated.

Trump said on Sunday that shipping companies should “show some guts” and transit the Strait of Hormuz, because the United States has all but eliminated the Iranian navy. But the Iranian navy is not the main threat to shipping in the region; drones, missiles, mines, and small boats are.

“Insurance is part of the problem, but you still need shippers to sign up and say to their crews, ‘You are going to risk your life to get an oil tanker in and out,’” Reed said. “Trump could declare victory tomorrow and it wouldn’t matter. What shippers need to hear is that Iran declares a cease-fire.”

The fallout after nine days of war has already been bad for consumers in the United States, with gasoline and diesel prices jumping. It’s worse for Asia, which is the most dependent on oil and natural gas from the Persian Gulf. But it’s also doubly bad for Europe, which has seen natural gas prices rise sharply along with oil prices, so much that some policymakers are mooting the idea of restoring energy trade with Russia. Days after threatening to cut off the gas flows that Moscow still sends to Europe, Russian President Vladimir Putin on Monday offered to supply a suddenly energy-starved Europe with oil and gas, if needed.

Russia is winning the war in Iran, if not the one in Ukraine. Not only do rising global oil prices drag up the price of Russia’s Urals grade of crude, thus increasing state revenues, but also the current shutdown of Persian Gulf oil shipments has made Russian oil a coveted commodity. India, which got into so much trouble with the Trump administration for buying cheap Russian crude that it got hit with 50 percent U.S. tariffs, just got a free pass from the same Trump administration to import formerly illicit Russian oil stranded at sea. What is more, that formerly discounted Urals crude is now trading at a premium to global prices, since it is oil that can actually reach its destination. 

U.S. Treasury Secretary Scott Bessent has floated the idea of further sanctions relief on Russia to ease the global oil shortage due to the war on Iran. Additional measures the administration is mulling to tackle the fuel-price spike include, as during the first Trump administration, waivers to the Jones Act, U.S. legislation that requires domestic shipping to use U.S.-built, owned, flagged, and crewed vessels, which raises costs for consumers, especially on the East Coast.

Just over a month ago, Russia was facing an economic reckoning because its fossil fuel earnings had been steadily curtailed by four years of ever-tightening sanctions, though some analysts believe the present oil-price spike will be too little to save a Russian budget that is deeply in the red. But it will still provide at least a short-term lifeline to the Kremlin.