JPMorgan's New Hormuz Closure Math: Just 3 Days Until Commodity Chaos

While it is widely understood that a blockade of the Straits of Hormuz is bad for the global economy as it means oil can't reach its intended users, effectively shutting down the demand side as there is no raw product to process, a far more ominous downstream effect of a blockade is what happens on the supply side should global oil transit remain halted .

As a result, oil producers across the Middle East face a tense countdown as the Iran war blocks the strait, as the oil fills the countries’ short-term storage tanks, which threatens output cuts if the situation persists. And unlike demand, which can restart in an instant the moment product arrives, forced shut-ins take weeks to implement, and then weeks to undo, resulting in substantial supply-side lags which lead to dramatic long-term impacts.