Oil: War risks, Hormuz disruption and policy cushions – Rabobank

FXStreet Insights Team FXStreet

Rabobank’s RaboResearch Global Economics & Markets team highlights that Oil prices have eased even as the IMF warns of a potential world recession if the Hormuz Strait remains closed. The report notes Spain’s release of strategic Oil reserves and stresses that normal Oil flows could take months to restore, while various governments deploy demand-side measures that may only temporarily cushion energy shocks.

Hormuz closure and energy shock risks

"The IMF just warned of a potential world recession ahead if Hormuz stays shut."

"That’s as Spain, for example, just released 4 of their 90 days of strategic oil reserves, with another 8 to follow."

"While that leaves 78, even if Hormuz reopened tomorrow, it would take at least 60 and possibly as many as 150 days before normal oil flows could be restored, according to IEA."

"Most governments are doing the kind of pumping oil wells aren’t."

"Provided the war ends soon, those kinds of policies could cushion the economy: but across all schools of economic thought, textbooks are clear about what demand-side boosts into structural supply-side shocks do – leave you stuffed."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

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