Jeff Currie and James Gutman examine how a disruption in the Strait of Hormuz could affect global energy security, commodity markets, and capital allocation during an incomplete energy transition.
A crude awakening
Carlyle
Jeff Currie, James Gutman
Research
8 Pages
Key Takeaways
Without Precedent: Thirty-one days at net 18.5 million barrels per day (b/d) is 575 million barrels of stopped flows — 1.4 times the entire US Strategic Petroleum Reserve. But this is not just an oil crisis. The strait carries gas, fertilizers, and metals.
Hoarding: They estimate that precautionary demand could be 2-3 million b/d over the next 3-6 months. The physical disruption is the trigger; the behavioral response is the multiplier.
Revenge of the Old Economy: Every major geopolitical inflection point of the past fifty years has triggered a rotation from asset-light to asset-heavy. Energy has compressed to 3% of the S&P, while technology has expanded to 53%. In the 1970s, energy at 25% provided a natural portfolio hedge. At 3%, that hedge has vanished.
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