Noah Gordon
With the Strait of Hormuz still effectively closed, the world faces a severe economic crisis. One-fifth of global trade of oil and natural gas is blocked in. Prices and borrowing costs are rising in the United States, while countries across Eurasia are cutting fuel consumption by decree: Egypt is closing restaurants early, the Philippines is closing public offices on Fridays, and Bangladesh is closing its universities altogether. Europe fears it must ground planes for lack of fuel, while South Koreans are hoarding plastic bags. Their president, Lee Jae Myung, said he “can’t sleep at night.”
This energy supply shock, with 11 million barrels a day missing from markets, is the inverse of the COVID-19 demand shock, when oil demand fell by 9 million barrels a day in the lockdown-marred year of 2020. At nearly $120/barrel, oil prices are reaching the heights of the last major energy shock in 2022.
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