Gregory Brew
Despite a fragile cease-fire between the United States and Iran, the global economic crisis sparked by the closure of the Strait of Hormuz continues unabated. Dueling blockades have kept 20 percent of the global oil supply, 20 percent of the global supply of liquefied natural gas, and critical commodities such as helium, aluminum, and urea trapped inside the Persian Gulf, unable to reach markets. U.S. efforts to evacuate ships from the strait have been met with a renewed barrage of Iranian missiles and drones, and very few ships have managed to get through.
The economic impacts of this crisis have already begun to crystallize: shortages of fuels and other products in East Asia and Australia, skyrocketing jet fuel prices, and a drop in the global demand for oil for the first time since the COVID-19 pandemic in 2020. In the United States, gasoline has exceeded $4 a gallon and could break $5 by the end of May. Should the strait remain closed, these economic pressures will worsen, causing rising inflation and slowing GDP growth.
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