An escalating conflict in the Middle East has thrust the world’s most important oil artery back into the global spotlight.

The Strait of Hormuz is widely recognized as a vital oil transit chokepoint. Situated between Iran and Oman, the waterway is a narrow but strategically important channel that links crude producers in the Middle East with key markets across the world.

In 2022, oil flow in the Strait of Hormuz averaged 21 million barrels per day, according to the U.S. Energy Information Administration (EIA). That’s the equivalent of about 21% of the global crude trade.

The inability of oil to traverse through a major chokepoint, even temporarily, can ratchet up global energy prices, raise shipping costs and create significant supply delays.

For many energy analysts, an event where there is a blockade or a significant disruption to flows via the Strait of Hormuz, is seen as a worst-case scenario — one that could prompt oil prices to climb far above $100 a barrel.

“The worst case could well be if Israel strikes Iran [and] Iran takes actions to slow down or potentially try to block the Strait of Hormuz,” Alan Gelder, energy analyst at Wood Mackenzie, told CNBC’s “Squawk Box Europe” on Monday.

“[This] would have a far more dramatic effect because that is where 20% of global crude exports travel through from the likes of Saudi Arabia, Kuwait and Iraq — and the UAE to some extent — that are the holders of the global spare capacity,” Gelder said.

“So, we contend the market is not pricing in the worst case, it is pricing in the potential impact on Iranian energy infrastructure,” he added.

Israel’s promise to hit back at Iran following a ballistic missile attack last week has stoked speculation that the country could soon launch an attack on Tehran’s energy infrastructure.

Iran, which has pledged a forceful response of its own in the event of any further Israeli actions, is a major player in the global oil market.

Energy analysts have questioned whether oil markets are being too complacent about the risks of a widening conflict in the Middle East.

Saul Kavonic, senior research analyst at MST Financial, said supply disruptions along the Strait of Hormuz could send oil prices significantly higher.

“If we see an attack on Iranian production, up to about 3% of global supply could be curtailed and even if we just see tighter sanctions, that could also start to curtail supply by up to 3%. That on its own could see oil approach 100 or even exceed 100 dollars per barrel,” Kavonic told CNBC’s “Squawk Box Asia” on Oct. 3.

“If [transit through the Strait of Hormuz] was to be impacted, we’re talking about an oil price impact that would be three times larger than the oil price shocks of the 1970s in the wake of the Iranian revolution and the Arab oil embargo, and now we’re talking about $150 plus a barrel of oil,” he added.

Oil prices traded more than 3% on Monday, extending gains even after notching their sharpest weekly gain since early 2023 last week.

International benchmark Brent crude futures with December expiry were last seen trading 1.5% lower at $79.74 a barrel, while U.S. West Texas Intermediate futures stood at $75.99, down 1.5%.

Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB, said the general rule of thumb in commodity markets is that if supply is severely restricted, then the price will often spike to between five and 10 times its normal level.

“So, if worst came to worst and the Strait of Hormuz was closed for a month or more, then Brent crude would likely spike to USD 350/b, the world economy would crater and the oil price would fall back to below USD 200/b again over some time,” Schieldrop said Friday in a research note.

“But seeing where the oil price sits right now the market doesn’t seem to hold much probability for such a development at all,” he added.

Warren Patterson, head of commodities strategy at Dutch bank ING, said any disruptions to transit along the Strait of Hormuz would have seismic consequences for global energy markets.

“The key concern, while still extreme, would be that these disruptions spill over to the Strait of Hormuz, affecting Persian Gulf oil flows,” Patterson said in a research note published on Oct. 4.

“A significant disruption to these flows would be enough to push oil prices to new record highs, surpassing the record high of close to $150/bbl in 2008,” he added.

ING’s Patterson said any supply disruption in relation to the Strait of Hormuz would not be isolated to the oil market.

“It could also potentially lead to disruptions in [liquified natural gas] flows from Qatar, which makes up more than 20% of global LNG trade,” he continued.

“This would be a shock to global gas markets, particularly as we move into the northern hemisphere winter, where we see stronger gas demand for heating purposes. While we are seeing a ramp-up in new LNG export capacity, this still falls well short of Qatari export volumes.”

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Stocks slumped on persistent fears
Major U.S. indexes retreated on Monday. The S&P 500 lost 0.96%, the Dow Jones Industrial Average dropped 0.94% and the Nasdaq Composite slumped 1.18%. But Super Micro shares were a bright spot, jumping 15.8%. Europe’s regional Stoxx 600 index added 0.18%. Household goods led gains, closing 0.97% higher, while tech shares fell 0.65%.

No more jumbo cuts
After last week’s expectation-busting jobs report for September, there’s virtually zero chance the U.S. Federal Reserve will reduce interest rates by half a percentage point at its next meeting, strategists told CNBC. Traders agree. A week ago, they bet on a 34.7% chance of another jumbo cut by the Fed; today, it’s 0%, according to the CME FedWatch Tool.

AI demand is still high
The artificial intelligence boom “still has some time to go,” Foxconn Chief Executive and Chairman of Foxconn Young Liu told CNBC. Foxconn, which reported better-than-expected earnings for the third quarter, manufactures electronics for technology giants like Apple and Nvidia. Demand for Nvidia’s latest chip Blackwell is “much better than we thought,” said Liu.

Tensions push oil prices higher
Oil prices jumped around 3.7% on Monday on worries Israel will attack Iran’s oil production facilities. If Israel hits Kharg Island, it could disrupt the transport of 90% of Iran’s crude exports, said an analyst. Last week was the best for West Texas Intermediate and Brent oil prices in more than one-and-a-half years. They surged 9.1% and 8.4% respectively.

[PRO] Goldman’s getting more bullish
The S&P 500 is in the red in October so far. But Goldman Sachs raised its 2024 target for the S&P to 6,000 from 5,600, making it the second-highest forecast on Wall Street, according to the CNBC Market Strategist Survey. Goldman also increased its 12-month S&P target to 6,300 from 6,000. Here’s why the bank is so bullish on stocks.

Oil prices spiked yesterday after having their best week in over a year. And September’s blockbuster jobs report, the futures market is pricing in a 13.7% chance the Fed will not cut rates at all at its November meeting. That’s a drastic change from a week ago when traders thought there was a 34.7% chance of a 50-basis-point cut.

But a recession?

Admittedly, that’s speculation on my part. But it bears pointing out that the yield curve between the 10- and 2-year Treasurys is “getting close to flipping back into danger territory,” as CNBC’s Jeff Cox noted.

Simply put, when the 10-year yield is lower than that of the 2-year, the yield curve is inverted – which has almost always preceded a recession since the mid-1970s. The yield curve inverted in early July 2022 and normalized in early September.

After Monday, however, the gap between the 10- and 2-year yields is now just 3.5 basis points. It’s not inconceivable, then, for investors who take stock in what the yield curve signals to panic a little.

That said, strategists think a recession is a far-fetched idea, considering the health of the U.S. economy.

As David Roche, founder and strategist at Quantum Strategy, put it, “the economy is fine, thank you very much.”

So much so that “the probability of the American economy going into recession, at least in the fourth quarter of this year, and probably in the first quarter of next year, is close to zero,” said Bob Parker, senior advisor at the International Capital Markets Association.

Concrete numbers are driving market movement. But there’s an undercurrent of fear that can perhaps run contrary to what some of those numbers are saying.

– CNBC’s, Jeff Cox, Lisa Kailai Han and Jesse Pound contributed to this story.   

Nearly two years after FTX spiraled into bankruptcy, a Delaware judge approved the company’s reorganization plan, which involves paying out more than $14 billion to customers of the collapsed cryptocurrency exchange.

“Looking ahead, we are poised to return 100% of bankruptcy claim amounts plus interest for non-governmental creditors through what will be the largest and most complex bankruptcy estate asset distribution in history,” said John Ray, who took over as FTX CEO following the company’s bankruptcy filing in late 2022, in a statement on Monday.

Ray, who also shepherded Enron through bankruptcy, added that the estate is working to finalize arrangements to make distributions to creditors around the world.

The company says it has collected between $14.7 billion and $16.5 billion worth of property for distribution. FTX previously estimated that it owes creditors around $11.2 billion.

According to the plan approved by Delaware bankruptcy Judge John Dorsey, 98% of FTX’s creditors will get 119% of the amount of their allowed claim as of November 2022, when the exchange filed for bankruptcy protection.

The price of bitcoin is up roughly 260% since FTX’s failure. FTX raised the money by selling a number of assets, including venture investments held by the exchange and other investments held by Alameda Research, Bankman-Fried’s crypto hedge fund.

One of FTX’s most high-profile investments was in artificial intelligence startup Anthropic, which is backed by Amazon. FTX sold most of its stake in Anthropic this year for nearly $900 million.

The bankruptcy estate says it will make a separate announcement about the date the payout plan will go into effect and when it anticipates the start of distributions.

FTX founder Sam Bankman-Fried was convicted of seven criminal counts last November, including charges related to stealing billions of dollars from FTX’s customers. He received a 25-year prison sentence.

WATCH: Caroline Ellison sentenced to two years in prison for role in FTX collapse