Citi Says Strait of Hormuz Must Stay Closed Until Early 2027 to Recreate 1970s-Style Oil Shock
Summary
- Citi said a global oil shock on the scale of the 1970s would require the closure of the Strait of Hormuz to last until at least early 2027.
- It said short-term supply disruptions alone would have limited potential to recreate the prolonged stagflation shock of the 1970s.
- Still, Citi said a prolonged closure of the strait could worsen the global energy supply chain and inflation pressures, while markets remain focused on Middle East geopolitical risks and the path of international oil prices.
Forecast Trend Report by Period
Citi said a global oil shock on the scale of the 1970s would require a prolonged closure of the Strait of Hormuz, underscoring persistent concerns over energy supply disruptions.
Walter Bloomberg reported on May 19 that the strait may need to remain closed until at least early 2027 for a crude supply shock comparable to that of the 1970s to materialize.
Oil prices have surged recently as the Middle East conflict and rising tensions around the Strait of Hormuz stoke market anxiety.
The Strait of Hormuz is a critical oil shipping route, carrying about 20% of global seaborne crude shipments.
Citi said short-term supply disruptions alone would have limited potential to recreate the prolonged stagflation shock seen in the 1970s.
It added that an extended closure of the strait could significantly worsen global energy supply chains and inflation pressures.
Markets are watching how Middle East geopolitical risks and moves in oil prices could affect the global economy and monetary policy in major economies.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
