How the Iran war is also unleashing an economic world war

"20% of the world's oil and other energy products go through the Strait of Hormuz, and Iran has effectively shuttered traffic. When supply drops sharply and demand doesn't change, prices go up and shortages result. Governments do what they can to manage both supply (tapping oil reserves or restricting exports), as well as demand - price controls, restrictions on working hours and even shutting down businesses to conserve energy."

"By the end of this week, 'we expect crude supply cuts to approach 12 million barrels a day, making the deficit highly visible across physical markets,' JPMorgan commodities analysts wrote in a note last week. The only way markets can deal with this shortfall is a 'comparable reduction in consumption.'"

"The world's most populous nation is awash with reports of hoarding, theft and price gouging as citizens rush to secure supplies of increasingly scarce cylinders of liquefied petroleum gas. Hotels in Mumbai are shutting down. It is like a second COVID-19 lockdown for us, the chairman of a popular restaurant chain told Indian Express."

Iran has effectively shut down traffic through the Strait of Hormuz, which handles 20% of the world's oil and energy products. This supply disruption, combined with unchanged demand, drives prices up and creates shortages. Governments respond by tapping oil reserves, restricting exports, implementing price controls, and limiting business operations to conserve energy. The disruption affects not only crude oil but also diesel, jet fuel, and liquefied petroleum gas used for heating and cooking. Over 80% of petroleum products through the Strait go to Asia. JPMorgan analysts project crude supply cuts approaching 12 million barrels daily, requiring comparable consumption reductions. India faces severe shortages with widespread hoarding, theft, and price gouging of liquefied petroleum gas cylinders, forcing hotel closures and suspension of gas-based cremations.

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