Central banks face an excruciating dilemma. Surging energy prices are pushing inflation higher just as economic growth shows signs of weakening—the dreaded stagflation scenario that characterized much of the 1970s. The European Central Bank had been expected to cut interest rates in June; those plans are now in doubt.

"Monetary policy is essentially helpless against supply shocks of this magnitude," said Robin Brooks, senior fellow at the Brookings Institution. "Central banks can't create more oil. All they can do is try to prevent second-round effects where higher energy prices feed into broader inflation."

In the United States, gasoline prices have surged to an average of $4.87 per gallon, with prices above $6 per gallon in California and other high-cost markets. The political ramifications for President Trump, who campaigned on promises of "energy dominance," are significant.

The Trump administration has authorized releases from the Strategic Petroleum Reserve, but the 180 million barrels held in salt caverns along the Gulf Coast cannot substitute for the sustained flow through Hormuz indefinitely. At current consumption rates, releasing 1 million barrels per day from the SPR would deplete it in six months.

Some relief may come from alternative sources. Saudi Arabia, the world's largest oil exporter, can route some crude through pipelines that bypass Hormuz, but that capacity is limited to about 5 million barrels per day. The United Arab Emirates operates a similar pipeline, adding another 1.5 million barrels per day of bypass capacity.

American shale producers, who can respond relatively quickly to price signals, are ramping up activity. But even under optimal conditions, it takes months for new wells to begin producing, and U.S. production increases cannot offset the loss of Gulf barrels entirely.

The International Energy Agency warned Thursday that global oil inventories are falling at a rate of 2.7 million barrels per day—the fastest drawdown since the 1970s. If the Hormuz situation persists into summer, when seasonal demand typically peaks, prices could climb higher still.

"The fundamentals support three-digit prices for as long as the strait remains closed," Sen said. "The only question is how high they go."

For developing countries that import oil, the crisis is particularly acute. Pakistan, Sri Lanka, and several African nations have requested emergency assistance from the International Monetary Fund to finance energy imports. Food prices are rising in tandem, as diesel costs make transportation and fertilizer more expensive.

Financial markets initially reacted with alarm to the oil spike, but equities have since stabilized as investors bet on a relatively quick resolution. That optimism may be misplaced. As this correspondent reported from previous oil crises, supply disruptions in the Middle East have a tendency to last longer than markets initially expect.

Diplomatic efforts to reopen the strait have produced no breakthrough. Iran has demanded a complete cessation of American military operations against its territory as a precondition for negotiations—a condition Washington has rejected. Without a diplomatic off-ramp, the crisis may grind on for months, keeping prices elevated and economic risks mounting.