World markets are once again facing difficulties due to geopolitical tensions. The current conflict between Iran and Israel, and its possible escalation, has the potential to impact the global oil output, prompting prices to skyrocket and for crude to reassert its former nickname of “black gold.”

The Strait of Hormuz, which provides passage out of the Persian Gulf to over 20% of the world’s oil production, is the key for this to happen. According to recent reports, the government of Iran is considering closing it as a retaliation for the Israeli attacks, potentially unleashing changes in local and foreign oil markets.

The statement came from Sardar Esmail Kowsari, Commander of the Iranian Revolutionary Guard, who also declared that Iran would take “the best decision with determination” regarding this subject.

If this happens, security expert Claude Moniquet assessed it would represent “a disaster for Europe,” affecting the energy market all over the world. As a consequence of this, oil prices would skyrocket as the oil supply would be reduced by 20%. In the same way, the closure would bring disruptions to the supply chains of European and Asian industries, prompting a production pause for many goods.

Oil prices have already risen as a result of the ongoing escalation of the conflict. Since the first bombings, oil futures have maintained over the $70 mark, having touched $77.

But the worst outcome of all would be the expansion of the ongoing standoff as other countries become involved to avoid the effects of the closure. This could spark a global recession and bring further conflict to the region.

Ultimately, the outcome will depend on how far the Iranian government is willing to go and if it has the military power to close the strait, but the consequences of this should not be belittled.

Read more: Polymarket Data: Strait of Hormuz Closure Odds Nearly Double After Israel’s Strikes on Iran

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