Are Markets Underestimating the Risk of a Prolonged Energy Crisis?
- Iran has executed its pre-war threats, effectively closing the Strait of Hormuz and disrupting a critical share of global energy flows.
- Financial markets, outside of oil, are underreacting to what could become a prolonged and systemic global supply shock.
- Escalation scenarios, including infrastructure strikes and regional spillover, could trigger a deep global depression and humanitarian crisis.
Shortly before the war with Iran began, I noted that the apparent complacency among government officials and financial market participants relied on two unlikely assumptions: first, that President Donald Trump would reach a last-minute deal with Iran and declare victory; and second, that if no deal occurred, Iran would not follow through on its threats if attacked.Now, three weeks into the conflict between the United States, Israel, and Iran, there has been no last-minute deal, and Iran has acted on its threats. Below is what I reported before the war regarding Iran's stated intentions: Read more