The reason for the extreme range of potential impacts is the Strait of Hormuz offshore of Iran. The narrow, 104-mile strait is the main choke point separating the Persian Gulf—and the daily flow of nearly 20 million barrels of oil—from the Indian Ocean and global energy markets. Most of the crude oil from Saudi Arabia, Iraq, Iran, Kuwait, and the United Arab Emirates must pass through the strait.

“The stakes are so high,” said oil forecaster Dan Pickering, founder of the Pickering Energy Partners consulting and research firm. “The biggest risk to a disruption would be from Iran if they’re backed into a corner and have nothing to lose.”

The Middle East “playbook” for conflicts over the last 20 years is to avoid targeting oil infrastructure, Pickering said, including during the so-called Twelve-Day War between Israel and Iran last June that culminated with the U.S. dropping bunker-buster bombs on Iranian nuclear sites.

However, a desperate Iran could bomb or plant mines throughout the strait, creating a blockade. Iran also could target its neighbors, especially Saudi Arabia and the UAE. “All bets are off if the Supreme Leader (86-year-old Ayatollah Ali Khamenei) decides it’s truly a fight for regime survival,” said Matt Reed, vice president of the geopolitical and energy consultancy Foreign Reports. 

Reed said the situation today is “more alarming” than last summer because the U.S. and Iran seem far apart on any redefined nuclear deal—President Donald Trump pulled out of the previous nuclear agreement in 2018—and Iran already is under pressure as the regime violently tries to subdue civil unrest.

“Iran is infinitely more desperate today. It’s facing an existential fight, potentially, which means it’s more inclined to lash out if only to raise the cost of U.S. intervention,” Reed told Fortune. “Back against the wall, the regime in Tehran may choose to strike its oil-rich Arab neighbors because they’re easy targets and everyone stands to lose from a massive oil price shock.”

“The odds of diplomatic breakthrough are fading by the day,” he added. “Both sides are repeating the same tired talking points we heard a year ago.”

Pricing out a conflict

The U.S. benchmark for oil was hovering above $66 a barrel as of Feb. 20—up almost $10 per barrel already just from Iranian tensions. That premium suggests energy markets see a roughly 25% chance of a major Middle Eastern conflict, Pickering said.

So, the odds still favor a peaceful outcome or a more modest military conflict with some initial strikes that force stronger negotiations.

After all, Trump is focused on energy affordability during a midterm election year, and he has always desired bringing U.S. oil prices down to $50 per barrel—below the $60 threshold most oil producers need for profitability. The $50 level would pull the average retail price of a gallon of regular unleaded fuel down closer to $2.50. The current average gasoline price is $2.93 per gallon and rising, according to AAA.

The numbers point to Trump wanting a deal with Iran, Pickering said. But OPEC also is talking about hiking its volumes again—led by the Saudis and the UAE—which could help partially offset a more modest military conflict, he added.

Nothing would offset a blockade of the Strait of Hormuz, which is simply unsustainable over a long period for global energy markets, said Claudio Galimberti, chief economist for the Rystad Energy research firm.

A contained Iran conflict would push oil prices up by another $15 to $20 per barrel, above $80, Galimberti said. Any impact to the strait would force a spike above $100 per barrel, potentially sending gasoline closer to $5 per gallon.

On the other hand, a peace deal would push the U.S. benchmark below $60 per barrel. And a broader deal that would remove sanctions from Iranian oil and allow it to export to more markets could bring prices down another $5, closer to Trump’s desired $50 per barrel, Galimberti said. After all, global energy markets are currently oversupplied, and adding more Iranian barrels would trigger very low oil prices.

“We don’t discount the fact that you could have a diplomatic resolution and a new nuclear deal,” Galimberti told Fortune. “It does look like it’s a little bit of a long shot.”

 The bottom line is “everyone in the world wants to avoid” blocking the Strait of Hormuz, he said. But either a desperate Iran or an accidental errant bomb changes the equation.

As Pickering added, “Iran’s ability to wreak havoc is pretty high if it decides to take that step. It’s a really big step, because then you’ve poked the bear.

“They didn’t take that step when bombs were literally falling in June.”