Analysis: A new oil crisis is underway. The next few weeks of the war will be important for the economy.

Time is ticking for the US-Israel war in Iran. Opinions emerging from oil industry executives and analysts are that the economic and market fallout from the conflict could increase significantly if the Strait of Hormuz is not reopened within the next week to three. However, enough damage may have already been done to keep energy and other prices high for a long time.

These risks have not been clearly reflected in other mass-followed markets, including broad stocks and benchmark Brent crude price. Stopgap measures to limit the rate of oil decline have kept crude prices very low in the US and European markets. But when those measures lose their effectiveness in early to mid-October, analysts warn there will be little the US or other governments can do to prevent energy prices from rising too much.

Iran has attacked civilian ships and energy facilities in its territory, bringing traffic in the Strait of Hormuz to a standstill. About 20% of the world’s oil supply usually passes through the 100-kilometer-long waterway that borders Iran. Some oil is diverted through pipelines, but it can carry too much. The US and others are freeing 400 million barrels of oil from strategic reserves – the largest release on record – and the US has temporarily lifted sanctions on some Russian and Iranian oil to give the market some breathing room.

The White House says it believes the president’s military strategy will soon end the Iranian threat, allowing price concerns to fade.

But everyone agrees that there is no room to reopen the strait. Oil industry executives in recent days have expressed the risk of increased disruption from the war.

“There are very real manifestations of the closure of the Strait of Hormuz that are taking place around the world,” Chevron CEO Mike Wirth said Monday at S&P Global’s CERAWeek in Houston. Shell CEO Wael Sawan spoke to him a few days later at the annual meeting of industry heavyweights. Disturbances that started in South Asia “have moved into Southeast Asia, Northeast Asia, and even more into Europe as we enter April,” Sawan said Wednesday.

The topic of the conference was the difference between the so-called paper and physical prices, said Ben Cahill, director of energy markets and policy at the Center for Energy and Environmental Research, University of Texas at Austin.

Stock prices reflect trading in financial markets and are often the main oil prices discussed in the press. They have generally remained lower than crude oil supply prices, particularly in Asia, the main consumer of crude from the Middle East.

Brent crude futures prices rose 36% from Feb. 27 – the last trading day before the start of the war – until March 27, when they traded above $ 113 a barrel. But the price in Dubai, which tracks physical shipments from other Middle East exporters, rose 76%, more than double the paper price, to $126. That price has been fluctuating a lot lately.

Another reason paper prices have fallen is that they have repeatedly fallen in response to President Donald Trump’s suggestions that the war could end soon or be reduced. Marketers call that “jawboning.”

“In that sense, it’s working, preventing a major stock market reaction,” Cahill said of Trump’s statement. “But the reality of physical market disruption is really hard to ignore.”

The disruption is not limited to oil and its effects on US gas prices. Liquefied natural gas prices are also a concern. LNG prices in Japan and South Korea have risen by 48%. The cost of jet fuel is increasing, as well as that of more esoteric products such as helium. Without relief, these prices could continue to rise, raising inflation around the world and eating into growth.

Markets have been down for the past few days. The S&P 500 rose half a percent on Tuesday amid hopes that Trump will delay plans to attack Iran’s energy facilities, but fell 3.4% from Wednesday to Friday’s close. The 10-year Treasury yield followed a similar pattern. It is now up about half a point during the war to 4.4%, reflecting concerns about inflation and expectations that the Fed may not cut interest rates as much as it had hoped.

The looming possibility of a physical supply shortage in the oil market appears to be undermining the impact of Trump’s gloom. Financial markets are reflecting the fact that Trump has successfully avoided the worst-case scenario, including when he attacked Iran’s nuclear program in June. Oil futures rose but soon fell once it became clear that the war would not escalate.

Trump is now deploying thousands of new troops to the region. He could use them to attack Iran’s oil-exporting Kharg Island, cutting off an important source of income for the government and forcing it to accept the reopening of the strait. He can try to regain the strait by military means. The regime may simply fall, or any number of consequences would restore the flow of power.

Futures markets indicate that relatively optimistic prospects exist. But they may not be able to do so forever.

Political analyst Marko Papic of the market consulting firm BCA Research put together an estimate of supply sources and their constraints. Currently, as of April 19, Papic estimates that the world has lost 4.5-5 million barrels per day due to the conflict, which is about 5% of global supply. But, he writes in a research note sent out this week, “that number will double by mid-April, marking the largest ever supply loss.”

The world will hit an oil cliff in mid-October, according to Papic’s budget, because the supply from the strategic oil reserve, as well as Russian and Iranian oil exempted from sanctions, will run out. There is no place to pump oil from the ground and send it directly to consumers.

But the oil industry’s ability to resume supply is also being questioned. Middle East producers don’t have enough storage for all the oil they pump but can’t export, so they have to shut down production, temporarily shutting down wells. Changing that will take time.

Sheikh Nawaf al-Sabah, CEO of Kuwait Petroleum Corp., said at the energy conference that it could take three to four months to return to full production once the war ends.

That end could come soon if Trump gets his way.

“The light at the beginning of the tunnel is getting brighter and brighter,” a White House official said on condition of anonymity. The official disputed the oil industry’s doubts about the prospect.

“I think those killed in oil are not political experts,” the official said. The administration is making headway in the military, the official said, and still has plenty of resources to draw on to gain leverage in the market.

“We are also seeing progress as Russia steps in to expand its exports to fill that gap, so there is still some breathing room here,” the official said.

That breathing room is real, but it seems to be shrinking fast. Every day that Iran is willing and able to threaten shipping in the strait puts the world closer to serious economic damage.