We are witnessing the greatest resource crisis in living memory, maybe ever. People, especially redditors, are drastically underestimating the potential outcomes of this situation, a modest amount of which is either already happening or is going to happen no matter what happens. Oil is going to $200 a barrel. Gas in the US to $6+. The developing world will be in a new great depression. The developed world will be in recession by Q4.
The Strait of Hormuz has been closed by Iran and it is not going to open up, period. There is no situation moving forward that leads to a peace deal unless there is a coup inside Iran that puts a leader in place that does so (fat chance) or the US and Israel both capitulate on their demands.
Even if the Strait of Hormuz opens the second I post this, it will take months before we see signs of normalcy, and years before it gets back to pre-war status.
The Strait is currently mined by an unknown amount, with unknown types of mines, in largely unknown locations. That will take 6 months to clear.
There are some 1500 tankers of various sizes owned by various companies and corporations stuck in the Persian Gulf. Even in peace time, there are only a few safe lanes of travel through the 22 mile wide waterway, so who goes 1st? 2nd? There are empty tanks trying to get in.
(And Kharg Island, home to Iran's largest oil storage facility, is leaking oil into the gulf as I type this. Link)
These tankers move at like 15mph. It takes a month to reach any given destination, 40 days to reach California. Then they have to turn around and head back to refill, which is a shorter journey because they are lighter, but we are looking at 90+ days, 3 months before a tanker can make 2 trips to refill inventories in storage tanks around the world. A Fun gifted NYT article for you
An unknown number of pumps have been shut off or slowed down significantly due to storage tanks in the Gulf States reaching max capacity. Oil pumps are not faucets. They utilize immense amounts of pressure to operate, and shutting it off risks devastation to the pump. Then once you "shut a pump off" it takes time to restart again and more time to get back to pre-war production levels.
There has been a significant amount of oil infrastructure destroyed in the region and a proper account of the damage is yet to be made. In the beginning of the war, Iran struck a number of oil refineries, storage, and so forth across the Persian Gulf. Qatar's Ras Laffan LNG facility was hit and it will take years to get back online.
20% of the world's oil moves through the Strait of Hormuz, some 15 million barrels of oil, and large quantities of other vital resources like fertilizer, helium, and liquified natural gas. Each and every day. 15 million barrels of oil. Every day. And it's been closed off for 70 days with a small number of tankers able to successfully navigate through it.
In the 1970s, there was an oil crisis caused by OPEC who decided to flex their muscles and show the world who they were (to dramatically oversimplify it) and they managed to disrupt some 7% of the world's oil supply. This led to mass shortages of the stuff leading to rationing even in places like the US.
In 2022, Russia invaded Ukraine and there was another oil disruption. Oil futures reached $130 a barrel and gas in the US reached $5.01 a gallon. That was a 5% disruption.
We are looking at what might just be the biggest disruption of resources in the world since World War II. If the Strait remains closed through May, or god forbid through the summer, the Late Bronze Age Collapse might be a better corollary.
"But why is the stock market at an all time high?" you ask. I don't fully know. No one wants an economic recession or depression. No one wants to lose money or see equities go down or oil to go up. Everyone is honestly financially traumatized by Covid and the Trump administration that I don't think anyone is really thinking clearly about this. The psychology of this is weird.
In no particular order, here are a list of things already going on:
Oil Rationing:
The IEA has made a brilliant chart showing us how countries reliant on Hormuz oil traffic are rationing oil to reduce demand.
Link to 2026 Energy Crisis Policy Response Tracker
Jet Fuel:
Europe and the rest of the world is facing a massive jet fuel crisis leading to 10s of thousands of canceled flights. SocGen is saying that the US at best can replace missing inventory stores by 50% which means mass flight cancellations between June and July.
(Reddit hates my source, so I guess just trustmebro)
Oil Inventories are very low everywhere including the US:
The API and EIA reports released May 5 show draw downs on US crude oil, gasoline, and other oil product stores across the board.
Reuters brief on EIA report for May 5IEA Report on Global Oil DisruptionJPM report and projection for oil inventories
All the CEO's agree this is bad:
Every CEO of just about every major oil and energy company is saying a shortage is either here or eminent.
Shell CEO Wael SawanChevron CEO Mike WirthCitigroup's Global Head of Commodities Research Max Layton
Fertilizer:
UN report
All of this is to say, you are not taking this crisis seriously enough. All you "stocks go brrrr" kids are only familiar with financial crises. This is not a financial crisis. This is a resource crisis.
Oil is the most important resource in the world. The entire world is currently in a deficit, using more than it makes, and it is at risk of running out.
Oh and American credit and auto loan debt just hit a collective $2.8 trillion.
If Iran strikes more oil refineries, storage facilities and pumps in the region, like the ones that pump oil out of the Ghawar oil field, a nuke might be better.
We are Slow Walking into the Biggest Resource Crisis in Living Memory.
byu/Cmd_WillRiker ineconomy
Posted by Cmd_WillRiker
7 Comments
[deleted]
Did you try looking up what the benefits are if the strait was permanently shut down?
There are always pros and cons.
EDIT: obviously not with that quick downvote.
EDIT2: Is this the same group of redditors that want the planet to go green? The ones that USED to be against oil? LMAO the doublethink is hilarious.
I don’t see that happening, really.
I truly do not understand why the environmentalists aren’t taking advantage of the situation to promote green energy solutions. It’s handing their agenda on a platter, take it and run. EV’s are looking pretty good about now.
Yup. And that’s the entire point. The rich factions running the world want this to happen. If their assets are secure before the closing, they can easily batten down their hatches as the rest of the world burns itself, which will then make whatever new ship thats made, so much easier for billions to jump onto. Right now there isn’t a strong enough reason. But if the old ship gets torched, well…even that would make Captain Ron’s ship look like the greatest ship in the world.
I mean. How else do we square the two narratives of Trump? He’s paradoxically a genius for figuring out how to own the strongest country in the world, yet a complete idiot for failing to understand that closing the Straits will lead to global ruin, something that any dude watching YouTube videos could tell you.
The only way that makes sense to me is that he was allowed to win the presidency and do the things that he’s doing because his entire job is to be a wrecking ball for people we didn’t vote in. There’s no way he was able to get away with half of what he’s done so far. He’s being protected and given license and perhaps instructions to some extent. He’s not in charge. He has no control. His control is in the marketing and he’s doing a great job because he’s scaring the shit out of everyone. Fear leads to anger. Anger leads to hate. Hate leads to action.
We are being primed and manipulated into destroying the old system so we can usher in the new. The rot and inefficiencies were always there and the system was destined to decline as we accelerate into the future. But some people decided to pour gasoline on the problem, so that we will be forced to make the rational decision to accept a new system that will bring stability and safety, which we will desperately accept.
I see you never waited in gas lines during the last energy crisis
I think people, especially Redditors, are overestimating the potential outcomes.