Original title: The World Only Lost 20% of Its Oil. Why Is Everything Breaking?
Original author: Garrett
Original translation by Peggy, BlockBeats
Editor's Note: The article points out that the current global oil supply is only in short supply by about 20%, but what really caused the crisis to escalate was not the "physical shortage", but the triple behavioral chain triggered by scarcity: hoarding, speculation and the capital logic of "waiting for the opponent to collapse and then buy the dips".
From a 20% supply gap to the disruption of shipping in the Strait of Hormuz, and then to the short-term "filling" of strategic reserves, alternative pipelines, and capacity mismatch, the system appears to be still functioning on the surface. However, at a deeper level, hoarding, speculation, and capital behavior of "waiting for collapse" are amplifying the gap itself, transforming it from a manageable supply and demand problem into a potential systemic risk.
The article further points out that the triggering mechanism of this type of risk does not follow the intuitive "gradual deterioration" pattern, but is closer to a run on the market—everything seems stable before confidence collapses; however, once key variables are confirmed (stockpiles run out, the gap widens, and transportation cannot be restored), the market will complete the repricing in a very short time. From the 1973 oil crisis to the 2008 financial crisis, and then to the 2022 energy shock, the path is highly consistent.
Within this framework, the current market "calm" itself becomes the most alarming signal: the real economy has seen production cuts, traffic restrictions, and supply contraction, yet asset prices continue to reflect risk appetite. This divergence is essentially the last consensus that "the system is still effective."
The core argument of this article is that the problem is not whether oil is already insufficient, but rather that once enough people begin to believe it may be insufficient, the system will prematurely enter a period of contraction and reassessment. Strategic reserves can only extend the window of opportunity, but cannot provide the answer; and this window is rapidly closing.
Mid-to-late April will be a crucial juncture. At that time, the market will no longer be concerned with "whether it will happen," but rather "when it will be confirmed."
The following is the original text:
The world is facing a shortage of approximately 20% of its oil reserves. Theoretically, if everyone tightens their belts a bit, the economy can continue to function.
But in reality, "shortages" never operate this way. When a critical resource becomes scarce, people don't allocate resources rationally; instead, they hoard and speculate. And those who have surplus resources? They wait for you to collapse, then buy up your best assets at rock-bottom prices.
These three behaviors can amplify a controllable gap into a civilization-level problem.
Hoarding, speculation, and vulture-like waiting
The first thing that happens is hoarding. Once a "shortage" makes the headlines, everyone starts panic buying—not because they really need it, but because they're afraid. They're not buying oil, but a sense of "security." And this panic itself is enough to double the actual shortage.
Then comes speculation. Once oil becomes scarce, traders flock in, and prices quickly deviate from fundamentals. This isn't theory, but an ironclad rule of the commodities market. Historically, almost every energy crisis has unfolded along this path.
The last layer, and also the cruelest: waiting for you to fall.
Why don't people with oil sell it?
Omani spot crude oil is trading at $150 to $200 per barrel. However, oil-deficient countries may still not be able to buy it, as players with US dollars have already locked in supplies.
Some countries, despite having ample reserves, still refuse to sell to their neighbors.
Why? Because they see a much larger game: waiting for a debt crisis to erupt, waiting for social unrest, and then acquiring the world's best assets at incredibly low prices. A company worth $50 billion in normal times might only cost $5 billion to acquire when a country is on the verge of collapse—without firing a single shot.
Berkshire Hathaway currently holds nearly $375 billion in cash, a record high. This accumulation began long before the war, with 12 consecutive quarters of net asset sales. But the key is not the accumulation itself, but the timing of the sales.
What is Buffett waiting for?
This script has existed for three thousand years.
In Genesis chapter 47, Joseph helped Pharaoh store up grain during seven years of plenty. Then came a seven-year famine. The Egyptians first bought grain with money; when the money ran out, they exchanged it for livestock; when the livestock were exhausted, they surrendered their land.
When the famine ended, the Pharaoh possessed almost all of Egypt.
There is no war, no violence. Only control over scarce resources and enough patience.
The logic behind the blockade of the Strait of Hormuz is the same. Conquering a country by force requires hundreds of thousands of troops; while blockading a strait and patiently waiting? Only requires a navy and time.
Joseph was at least trying to save the people. But those involved in the crisis were not.
This is precisely why a 20% oil shortage is enough to cripple the entire world. The problem isn't a lack of oil, but rather that some are hoarding, some are speculating, and others are waiting for you to fall.
Collapse never happens gradually.
Most people assumed that the economic crisis would unfold gradually. But the reality was quite the opposite. Lehman Brothers was still operating normally the day before it filed for bankruptcy; Silicon Valley Bank showed no obvious abnormalities in the 48 hours before its collapse.
A systemic collapse is more like a bank run. When everyone trusts a bank, it functions almost perfectly; once that trust cracks, everyone will withdraw their funds at the same time. The bank doesn't die slowly; it collapses instantly within 48 hours.
The current global energy market is in the same situation.
Everyone is betting that Trump will quickly resolve the issues, and everyone still "believes the system is still working." But once that trust is broken—for example, if reserves begin to run low, or the International Energy Agency confirms the gap is widening further—the sell-off will erupt like a bank run.
It wasn't gradual; it happened instantly.
Five weeks have passed.
Note: The Strait of Hormuz typically carries approximately 20 million barrels per day of oil transport. Therefore, the current loss of about 18-19 million barrels per day of transport capacity due to the blockade exceeds the global supply gap of 8-11.4 million barrels per day. This gap is being partially offset through measures including the release of strategic petroleum reserves (SPR), alternative pipelines (such as the Saudi East-West Pipeline and the UAE bypass), and resupply from non-Hormuz oil-producing countries. However, this filling of the gap is temporary.
The scale of this shock has surpassed that of the 2022 Russia-Ukraine energy crisis, and it has even been called "the most serious energy crisis in human history."
Our assessment is that this statement is likely not an exaggeration.
Strategic reserves: Buffer time ≠ security
Currently, only two things are supporting the market: the continued release of strategic petroleum reserves, and Trump's policy statements and market expectations.
These figures themselves are problematic: the release of the Strategic Petroleum Reserve (SPR) has a physical limit, historically around 2 million barrels per day. This means the actual capacity to fill the gap is far lower than the headline figures on paper.
OPEC+ nominally has 2.5 million to 3.5 million barrels per day of spare capacity, but these export routes themselves pass through the Strait of Hormuz, so this portion of capacity is actually trapped.
Some countries' reserve data also include delayed deliveries and overestimated inventories. Once the buffer period ends, the supply gap will widen rapidly. Reserves can only buy time, not solutions. The market had a window of opportunity, but that window is closing.
The market is sleepwalking
The current market situation is quite surreal: Israel has just suffered its most intense missile attack since the start of the war, yet the stock market has barely reacted. Chemical plants in Japan, South Korea, Singapore, and Thailand have begun to reduce production or even shut down, but the market hasn't factored these changes into prices. Australia has shifted to working from home due to fuel shortages, and South Korea has implemented nationwide travel restrictions, yet the stock market continues to rise.
Trump says Iran is negotiating every day, while Iran denies it every day, yet the stock market continues to rebound. Semiconductors are still surging, AI concepts remain hot, and quantitative and algorithmic trading is amplifying this optimism. But a closer look reveals that many things have actually turned red, but everyone is pretending not to see it.
This divergence between market performance and the real economy will not last long. It has never happened before in history.
Iran's cards
Many are betting that Trump will resolve the issue quickly. But let's first look at Iran's current position.
The Iranian Islamic Revolutionary Guard Corps (IRGC) has made it very clear: "The Strait of Hormuz will not be reopened because of Trump's absurd performance. We have not held any negotiations, and we will not hold any in the future."
Another practical issue is communication itself. Iranian leaders no longer handle any operational matters by phone or encrypted software—this bias is not without reason, given Israel's past actions, including the assassination of Haniyeh in Tehran and the detonation of Hezbollah pagers. Therefore, genuine communication between Tehran and Washington relies on intermediaries such as Oman, Iraq, and Switzerland, with each round taking several days.
Iran's calculations
Iran doesn't need to win; it just needs to hold out longer. The Straits blockade is its biggest card; it has found America's Achilles' heel. Russia is supporting it, and China is providing "humanitarian aid," so it won't go hungry.
The toll revenue from the Strait of Hormuz alone could bring in tens of billions of dollars annually. If the United States backs down or becomes bogged down in a protracted war of attrition, Iran could retain control of the Strait. Wealth that would otherwise flow to the Gulf monarchies would be diverted to Tehran.
Trump's dilemma
If not, the petrodollar system is beginning to loosen.
If the war drags on, oil prices will surge further. If Gulf oil cannot be shipped out, the funding channels supporting the US stock market will dry up.
The real risk lies in the potential for a sharp devaluation of the dollar. If the petrodollar loses its anchor, all dollar-denominated assets will be repriced. Most alarmingly, it seems no one within the White House has a clear and concise answer to this problem.
What to watch next?
US SPR Weekly Report. The rate of reserve depletion is the most direct signal. Brent crude oil spot and futures curves. A deep contango indicates the market is pricing in a long-term shortage. Trump's tone. The harsher the words, the worse the situation usually is.
Asian factory operating rates. Declining output in chemicals, automobiles, and semiconductors will be the leading indicator. Fertilizer prices. Compared to oil prices, which are often distorted by verbal intervention, fertilizer prices tend to be more honest. IEA monthly report. If the confirmation buffer from the mid-April update has run out, market confidence could collapse overnight.
Timeline
According to data from the Dallas Federal Reserve, if the Strait of Hormuz remains closed throughout the second quarter, the US annualized GDP will contract by 2.9%. Several institutions are also continuously raising their recession probability estimates. All of these probabilities are predicated on the assumption that the closure continues into each phase. If the strait reopens to navigation ahead of schedule, then the subsequent phases will no longer apply.
Now → April 15: Reserves are still being released
Strategic reserves continue to be deployed, and Trump continues his pronouncements. The impact on GDP is currently limited. However, if the April 6th ultimatum yields no results, the supply gap will widen rapidly. Probability of global economic disorder: 20%–30%.
Late April → Early May: Reserves depleted
Strategic reserves in various countries are beginning to bottom out, and the IEA has confirmed that the shortfall has doubled. The impact on the real economy is starting to materialize: fertilizer shortages, delayed spring planting, chemical plant shutdowns, LNG shortages, and reduced industrial production in Europe. Probability: 45%–65%. This is a critical inflection point.
Mid-May to End of June: Deterioration of the Real Economy
Oil prices have broken through $150 to $200 per barrel. High oil prices are beginning to suppress all economic activity. Countries are scrambling for supplies from Russia and India, but with limited success. Europe and Asia will be the first to enter a recession. Probability: 65%–80%
After June: Systemic Collapse
No new alternative supply routes have emerged. Stagflation, unemployment, and central bank failure are occurring simultaneously. Raising interest rates will make the US$40 trillion debt unsustainable; not raising rates will lead to completely out-of-control inflation. A food crisis and social unrest will follow, and gold is highly likely to reach new historical highs. Probability: 80%–90%
Upgrade Scenario
If the United States directly attacks Iran's energy infrastructure, the probability of each of the above stages increases by another 20 percentage points.
The script has never changed: the 1973 oil crisis, the 2008 Lehman Brothers crisis, and the 2022 Russia-Ukraine energy shock. Before the data is truly confirmed, everyone pretends not to see it; and once the data is confirmed, the real sell-off begins.
We are currently in that "pre-confirmation" phase. April 15th to 25th is the critical window. The ultimatum was the first catalyst.
If the strait reopens, the market will gradually return to normal; if it does not reopen, or if the situation continues to escalate, the market will begin trading in the collapse itself before it does.
The world doesn't need to actually "run out of oil" for things to go wrong. It just needs enough people to believe that this could happen.
