Market Basics · 8 min read
Energy Crises: What Happened Before, and What Is Expected Next
By George Matis · Regimic ·
The world is living through an energy crisis. Since the end of February 2026, the Strait of Hormuz — the route for around a fifth of the world's oil — has been largely blocked. The International Energy Agency calls it the largest supply disruption in the history of the oil market. Oil, diesel and European gas prices have all jumped, and central banks are raising interest rates again.
Two questions matter for anyone with savings or investments: what happened during previous energy crises, and what do forecasters expect from this one?
1973–74: the embargo
In October 1973, Arab oil producers imposed an embargo. Oil rose from about $3 to nearly $12 a barrel — roughly four times higher.
Inflation was already rising before the embargo, and the oil shock made it much worse. The S&P 500 fell 48.2% between January 1973 and October 1974, and did not regain its January 1973 level until July 1980. The decline had started before the embargo; energy turned a difficult market into one of the worst bear markets on record.
1979–82: the Iranian Revolution
The revolution cut Iran's oil output by 4.8 million barrels a day — about 7% of world production at the time. Oil more than doubled, from about $14 to over $35 by early 1981.
The heavier damage to stocks came later, through interest rates. To break inflation, the Federal Reserve raised rates aggressively, and the S&P 500 fell 27.1% between November 1980 and August 1982.
1990–91: the Gulf War
Iraq invaded Kuwait on 2 August 1990, and the world lost about 4.3 million barrels a day of supply. From the invasion to the oil peak on 11 October, oil rose 90.2% and the S&P 500 fell 16.9%.
Then oil turned. From 11 October to the end of 1990, oil fell 30.7% and the S&P 500 rose 11.8%. In the first quarter of 1991, oil fell another 31% and stocks gained 13.6%. This was the short crisis.
2022: Europe's energy crisis
After Russia invaded Ukraine, Brent briefly hit $139.13 on 7 March 2022. But Europe's crisis was above all about gas: the main European gas benchmark (TTF) reached an all-time high of €340 per megawatt-hour at the end of August 2022, and averaged €120 for the year — nearly eight times its 2016–2020 average. Electricity prices across the EU hit records.
Stocks were already under pressure from rising interest rates. The S&P 500 ended 2022 down 19.4%. The energy sector, by contrast, rose 59%.
Three lessons from the past
Looking at these four crises together, three patterns stand out:
- The backdrop matters more than the size of the spike. The worst stock-market damage came when energy shocks met high inflation and rising interest rates.
- Duration matters. A short crisis (1990) was recovered within months; crises that kept inflation high (the 1970s) lasted years.
- The index hides big differences. In 2022, energy companies rose 59% while the S&P 500 fell 19.4%.
Four episodes are not a statistical sample. Each one had different causes, and today's market is not the market of 1973. History gives us better questions to ask, not answers to copy.
Where we are now
This crisis has come in waves. Brent averaged $69 a barrel in 2025. After the war began on 28 February, it moved above $120 by late April. In June, prices fell back and erased their wartime gains as tanker traffic picked up. Then hostilities resumed in July, flows through the strait collapsed again, and Brent spot averaged $114 in September, touching $131 on 15 September after a pipeline disruption. In early October, Brent traded around $100.
Europe faces a second front: gas. Qatar's LNG exports also depend on the strait. European gas prices rose above €80 per megawatt-hour in September for the first time in three years, and EU gas storage was 72% full on 1 October — well below normal for the start of winter. Rating agency Scope has placed Greece and Cyprus among the European economies most exposed to an energy-price shock.
Inflation has followed. The Federal Reserve raised rates in September for the first time since 2023, and the European Central Bank raised rates in June and again in September, saying inflation would only return to its 2% target at the end of 2027.
Stock markets, so far, have looked through it. The S&P 500 closed at a record 7,818.93 on 6 October, supported by technology and AI-related stocks — while the 10-year US Treasury yield climbed to its highest level since 2002.
What is expected for oil: higher for now, lower in 2027
Most major forecasters expect prices to stay high in the coming months and ease in 2027 as Gulf production returns:
- US EIA (6 Oct 2026): Brent averaging $96 in 2026 and $105 in the fourth quarter, then $84 on average in 2027 and $74 by the end of 2027.
- IMF (13 Oct 2026): an average oil price of $95.74 in 2026 and $87.39 in 2027.
- Goldman Sachs (11 Oct 2026): Brent at $90 in December 2026 and $80 on average in 2027.
- World Bank (April 2026): Brent averaging $86 in 2026 and $70 in 2027.
The IMF figure is a simple average of Brent, Dubai and WTI prices. The World Bank forecast predates the September spike.
The EIA assumes that most of the region's production returns to pre-war levels by the end of the second quarter of 2027. The IEA expects the oil market to stay in deficit until the end of 2026, with diesel and other middle distillates tight well into 2027. World oil demand is forecast to fall by 2.6 million barrels a day in 2026 — high prices are already reducing consumption.
European gas and interest rates
Forecasts for European gas this winter vary widely. Morgan Stanley expects the TTF price to average €85 per megawatt-hour, and above €100 if the winter is cold and supplies from Qatar are disrupted again. Citi's probability-weighted estimate is about €61. The EU network operators' winter outlook says Europe can meet demand in an average winter from current storage. The EU ban on Russian LNG imports from 1 January 2027 adds another source of uncertainty.
On interest rates, some analysts expect the ECB to raise rates again in October and December 2026, and the Fed in December 2026 and March 2027. The next decisions are on 28 October (Fed) and 29 October (ECB). History suggests this is the channel to watch most closely: in 1979–82 and in 2022, it was interest rates, more than energy prices themselves, that hurt stocks most.
A reminder about forecasts
A year ago, the consensus was very different. In late 2025, Goldman Sachs expected Brent to average $56 in 2026, JPMorgan $58, and the World Bank $60 — a five-year low. One event changed everything.
Forecasts are scenarios, not promises, and they are revised often: in October alone, the EIA raised its fourth-quarter Brent forecast by $14.
Three scenarios — and their closest historical parallels
It helps to think in scenarios, and to compare each one with the past:
- Faster normalisation: if Gulf output recovers faster than expected, Goldman Sachs says Brent could fall into the $60s in 2027. Closest parallel: 1990–91, when stocks recovered as energy prices turned down.
- Gradual recovery (base case): most Gulf production back by mid-2027, with Brent easing toward $74–87 during 2027 (EIA) and further rate hikes in the near term. Closest parallel: 2022–23, when energy prices eased but interest rates set the tone for markets.
- Prolonged disruption: if Gulf output stays about 5 million barrels a day below pre-war levels through 2027, Goldman Sachs sees Brent around $125 on average; Morgan Stanley sees EU gas above €100 in a cold winter. Closest parallel: the 1970s — persistent inflation, rising rates, and deeper, longer market damage.
None of these is a prediction by Regimic. They show the range that serious forecasters are working with — and how different the outcome can look depending on one variable: how quickly energy flows return to normal.
What to watch
A few questions are worth following in the weeks ahead:
- The Strait of Hormuz: are tanker and LNG flows recovering, or are new attacks disrupting them?
- Oil and gas prices: are they making lower highs, or new highs?
- European gas storage and the weather, as the winter starts.
- Inflation data: is energy spreading into food, goods and services?
- Central banks: the Fed (28 October) and ECB (29 October) decisions, and what they signal next.
- Bond yields and market breadth: are long-term yields still rising, and are stock gains spreading beyond a few large technology companies?
Where Regimic fits
Regimic's Historical Analogs page is built around the first question of this article: what happened the previous times? The Global Regime view brings the broader market backdrop, signals and drivers into one place, so you can see whether conditions are becoming more supportive, more fragile, or mixed.
Neither is a forecast. History and today's forecasts help frame the range of possible outcomes; they do not tell us which one will happen.
Forecasts are those of the institutions named and can change at any time. All prices are nominal (not adjusted for inflation). S&P 500 figures refer to the price index and exclude dividends. Data as of 16 October 2026.