Here's what smart people are saying about oil prices breaking $100

Financial markets are increasingly worried about a replay of the 1970s oil shock, veteran strategist Ed Yardeni wrote.

That was when energy shortages sent prices soaring, strained economies around the world, and contributed to stagflation.

"This oil shock won't end until ships can sail freely through the Strait," he wrote.

He pointed to prediction market Polymarket, where bets show the chances of a recession climbing to a three-month high.

"Now we can't rule out a bear market and even a recession. It all depends on how long the Strait will be closed, obviously," Yardeni wrote.

This oil shipping disruption's impact on the market is far more serious than the last "maximum disruption" during the 1956 to 1957 Suez crisis, wrote Bob McNally, the president of analysis firm Rapidan Energy, on X.

Major Gulf oil producers have started reducing oil output as they run out of storage capacity.

"This represents the largest oil supply loss in history, by a factor of two. Worse, unlike in past crises, there's zero spare capacity available," McNally wrote.

The markets are in "full panic mode," but Robin Brooks, a senior fellow at the Brookings Institution, said the upside from here looks limited.

"They were slow to price the de facto closure of the Strait of Hormuz, but at this point the Strait isn't going to get any more closed. If anything, it'll get more open, so I wouldn't chase this spike," wrote Brooks, a former chief foreign exchange strategist at Goldman Sachs, on X.

The longer oil fails to move through the Strait of Hormuz, the more prices are likely to rise, wrote Warren Patterson, the head of commodities strategy at ING.

"Even if flows through the Strait of Hormuz start to resume, it will take time for upstream production to ramp up," Patterson wrote.

He added that production shut-ins and a lack of de-escalation in the war are forcing markets to aggressively price in the risk of a prolonged supply disruption.

The fallout from the disruption in the Strait of Hormuz extends across the entire energy supply chain, wrote Felipe Elink Schuurman, the cofounder and CEO of Sparta Commodities.

Restarting the oil supply chain is complicated: Ports must reschedule shipments, production has to ramp back up, and refineries need a steady flow of crude before committing to full operations.

"Even if Hormuz reopens tomorrow, normalization takes months — not days," Schuurman wrote in a LinkedIn post.