Executive Summary
The Hormuz shock is no longer a scenario. It happened. On 28 February 2026 a US–Israeli air war against Iran closed the Strait of Hormuz. Iran mined the waterway and struck merchant shipping; tanker traffic fell to almost nothing and the IEA called it the largest supply disruption in the history of the oil market. Brent ran from $70.9 to a peak of $138.2 on 7 April — the day before the ceasefire — and has since round-tripped to about $69.
But the strait has not normalised. Mines remain, war-risk premiums remain, transits sit well below pre-war levels, vessel attacks continue, and Iran now asserts standing authority over passage. The live question is no longer whether a Hormuz shock occurs. It is whether this armed truce holds, normalises, or breaks.
Our Armed Truce case (P=50%) is therefore a description of the present, not a forecast of a war: Brent grinding $75–95 with headline-driven spikes toward $102, roughly 1.2 points of excess inflation, and a persistent shipping-cost tax rather than a supply crisis. Re-escalation (P=25%) reopens the closure from a worse starting point — inventories drawn down, mines already laid, insurers withdrawn — with Brent at $150–180. Normalisation (P=25%) sees the MOU hold, mines cleared and premiums decay, with Brent settling $70–78.
What the war actually did to portfolios (measured, net of market): energy producers +19.4%, LNG +26.4%, tankers +25.1%, defense +6.1%, utilities +10.1% — against aviation −9.9% and luxury −19.7%. Gold, notably, delivered +0.9%: it did not show up. Every sector sensitivity in this model is now fitted to those observed moves rather than to a proxy conflict. Read the methodology →
Not financial advice. Sector sensitivities are estimates fitted to one six-week war and one secondary analogue. A longer closure could transmit through earnings in ways this sample never observed.
Scenario Framework
- Armed Truce (P=50%): Iran retains leverage over the strait; transits below pre-war; Brent peaks ~$102
- Normalisation (P=25%): MOU holds, mines cleared, premiums decay; Brent settles $70–78
- Re-escalation (P=25%): Truce collapses, strait closes again from a worse base; Brent $150–180
- Betas fitted to the 2026 Hormuz war itself (70%) + Ukraine 2022 (30%), net of market
Historical Precedents
- 1973 Oil Embargo: CPI +9%, GDP −2.9% OECD (18-month lag)
- 1990–91 Gulf War: Oil spike +140%, receded in 6 months
- 2003 Iraq: Minimal oil disruption; different dynamics
- 2022 Russia-Ukraine: Energy price +200%, Europe CPI +10%
- Hormuz closure analog: 1987–88 Tanker War partial disruption
Energy Assumptions
- Iran produced ~3.3M bbl/day pre-war; ~20% of seaborne oil and up to ~30% of traded fertiliser transit Hormuz
- Hormuz: 20% of global oil, 18% of LNG transits daily
- SPR releases offset ~8–12 weeks of supply gap
- Saudi spare capacity: ~2.5M bbl/day short-term relief
- Shale ramp: 6–9 month lag to meaningful volume increase
Macro Model Inputs
- +$10/bbl oil → +0.3% CPI (import-heavy economies)
- Shipping +100% → −0.4% global trade volume
- War confidence shock: −0.5 to −1.2% GDP premium
- Defense crowd-out: +1% GDP defense = −0.2% private invest.
- Flight-to-USD: −10–20% EM FX basket
Data Sources
- EIA.gov: Oil supply, reserve capacity (live via /api/eia-oil)
- IMF WEO: GDP baselines and forecasts
- BIS: EM currency and debt exposure
- SIPRI: Defense expenditure data
- FAO: Food price and food security indices
- Baltic Exchange: Shipping rate benchmarks
Key Uncertainties
- Iranian ballistic missile accuracy vs Saudi oil infrastructure
- Chinese policy: sanctions compliance vs sanctions-busting
- US domestic political appetite for sustained engagement
- Alternative energy substitution speed (LNG, renewables)
- Global recession contagion via credit market tightening
💼 Portfolio Impact Simulator
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| Region | GDP Yr1 | Inflation Add. | Energy Exposure | Food Security | Currency Risk | Debt Stress | Recovery | Signal |
|---|
| Sector | 12M Signal | 3-Yr Signal | 12M Return Est. | 3-Yr Return Est. | Key Driver | Key Risk | Top Names |
|---|
🔴 Hormuz Full Closure (>90 Days)
- Probability: 18% baseline → 55% pessimistic
- Oil: $190–220/bbl within 3 weeks of closure
- Global recession virtually guaranteed in 2 quarters
- G7 emergency coordination + SPR drawdown
- Petrodollar fracture risk; BRICS rails accelerate
🔴 Saudi Oil Infrastructure Strike
- Abqaiq/Ras Tanura precision strike (2019 analog ×10)
- Removes 8–10M bbl/day for 3–12 months
- Oil: $200+; airline industry collapse in 4 weeks
- IMF emergency SDR; sovereign downgrades cascade
🟡 Regional Expansion (Lebanon/Iraq/Syria)
- Probability: 35% baseline; rises with duration
- Mediterranean shipping disruption; Suez transit risk
- European energy crisis 2.0 (LNG re-routing)
- Turkish geopolitical pivot; NATO Article 5 ambiguity
🟡 Chinese Sanctions Defiance
- China buys sanctioned Iranian oil at 40% discount
- Secondary sanctions on Chinese banks → decoupling
- USD reserve share drops 3–5% by 2030
- Global trade fragmentation accelerates 2–3 years
🟤 EM Sovereign Debt Crisis
- Pakistan, Egypt, Ghana, Sri Lanka forex crunch
- IMF bailout pipeline overwhelmed; frontier contagion
- Political instability in 5–8 countries by Year 2
- Refugee surge into Europe and Gulf states
🟢 Reconstruction Opportunity
- Post-conflict: $800B–$1.2T demand (MENA, 5–15yr)
- Defense/dual-use stocks surge 40–80% at ceasefire
- Gulf SWF deploy into Western infrastructure
- LNG terminal investment boom in EU
- Green energy: $500B+ in solar/wind mandates by 2030