The Strait of Hormuz Energy Shock Is About to Head to the West

Closure of the strait would trigger a sharp, immediate spike in oil and gas prices and subsequently force a dramatic reduction in global oil and gas consumption as consumers and businesses cut flying, driving and spending. Expect outsized volatility and inflationary pressure in energy and commodity markets, demand destruction in travel and transport, and a risk-off environment—position portfolios for energy market stress and higher inflation.

Analysis

Closure of the strait would trigger a sharp, immediate spike in oil and gas prices and subsequently force a dramatic reduction in global oil and gas consumption as consumers and businesses cut flying, driving and spending. Expect outsized volatility and inflationary pressure in energy and commodity markets, demand destruction in travel and transport, and a risk-off environment—position portfolios for energy market stress and higher inflation.