Hormuz Crisis Is ’Biggest Energy Disruption Ever: S&P’s Yergin

S&P Global Vice Chairman Daniel Yergin warned that the Strait of Hormuz crisis represents “the biggest energy disruption we’ve ever seen,” despite oil prices not yet reaching the inflation-adjusted equivalent of previous highs.

The impact extends far beyond oil, affecting global supplies of natural gas, fertilizer, helium, aluminum and petrochemicals, with Asia bearing the brunt as “80 percent of the oil, 90 percent of the LNG went to Asia,” Yergin said during an interview on Bloomberg This Weekend.

While financial markets remain resilient, Yergin said this points to a stark “divergence” between markets and “the reality of people in Asia actually not having enough oil, shortages, rationing, businesses closing down, restaurants not operating because they don’t have energy.”

The crisis has evolved into what Yergin described as a clash between two blockades – the US economic pressure on Iran versus Tehran’s ability to “wage war on the world economy.” Time is the critical factor as inventories are drawn down and “the longer this goes on, the more the risk on the upside grow,” he said.

Yergin predicted the crisis would ultimately lead to “a bigger focus on energy security” among Gulf countries and accelerate the transition to electric vehicles, noting that “20 percent of the cars built in the world this year will be electric vehicles, and that’s gonna get a tick up from this, certainly.”