The world only lost 20% of its oil. Why is everything breaking?
Original author: Garrett
Compiled by: Peggy, BlockBeats

Editor’s Note: The article points out that global oil supply is currently only about 20% short; however, what truly escalates the crisis is not a physical shortage, but a threefold behavioral chain triggered by scarcity: hoarding, speculation, and the capital logic of waiting to buy low after opponents collapse.

From a 20% supply gap, to disruptions in oil transport through the Strait of Hormuz, to short-term "filling" via strategic reserves, alternative pipelines, and capacity mismatches, the system appears to be functioning on the surface; but beneath the surface, hoarding, speculation, and capital behavior centered on "waiting for collapse" are amplifying the gap itself, transforming it from a manageable supply-demand issue into a potential systemic risk.

The article further points out that the trigger mechanism for such risks does not follow the intuitive pattern of gradual deterioration, but rather resembles a bank run—everything appears stable until confidence remains intact; however, once a critical variable is confirmed (reserves depleted, gap widening, supply chains unrecoverable), the market reprices itself in an extremely short time. From the 1973 oil crisis, to the 2008 financial crisis, to the 2022 energy shock, the path has been highly consistent.

Under this framework, the current market's "calm" itself becomes the most concerning signal: the real economy has already seen production cuts, traffic restrictions, and supply contractions, yet asset prices continue to reflect risk appetite. This divergence is essentially the final consensus that "the system is still functional."

The core judgment of this article is: the issue is not whether oil has already run out, but that once enough people begin to believe it might run out, the system will prematurely enter contraction and reassessment. Strategic reserves can only extend the time window, but cannot provide an answer—and this window is rapidly closing.

Mid to late April will become a critical turning point. At that time, the market will no longer be questioning whether it will happen, but rather when it will be confirmed.

The following is the original text:

The world is currently short about 20% of its oil. Theoretically, if everyone tightens their belts a little, the economy could still keep running.

But in reality, "shortages" don't work this way. When a critical resource becomes scarce, people don't ration rationally—they start hoarding and speculating. And those who have surplus? They’ll wait for you to break down, then buy your best assets at rock-bottom prices.

These three behaviors can turn a previously manageable gap into a civilization-level issue.

Holding, speculation, and vulture-like waiting

The first thing that happens is hoarding. Once "shortage" makes the headlines, everyone starts panic-buying—not because they truly need it, but because they're afraid. They're not buying oil; they're buying a sense of "security." And this panic alone is enough to double the actual shortage.

Next comes speculation. Once oil becomes scarce, traders rush in, causing prices to rapidly diverge from fundamentals. This is not theory—it is a hard rule of commodity markets. Almost every energy crisis in history has followed this pattern.

The final layer, and the harshest: waiting for you to fall.

The spot price of Omani crude oil has reached $150 to $200 per barrel. However, oil-importing countries may still struggle to secure supplies, as players holding dollars have already locked in the available supply.

Some countries, despite having sufficient reserves, still refuse to sell to neighboring countries.

Why? Because they’re playing a much larger game: waiting for a debt crisis to unfold, waiting for social unrest, then acquiring the world’s most valuable assets at rock-bottom prices. A company worth $50 billion in normal times might be acquired for just $5 billion when a country is on the brink of collapse—without firing a single shot.

Berkshire Hathaway currently holds nearly $375 billion in cash, a record high. This accumulation began long before this war, with 12 consecutive quarters of net asset sales. But the key is not the accumulation—it’s when to act.

What is Buffett waiting for?

In Genesis chapter 47, Joseph helped Pharaoh store grain during seven years of plenty. When the seven years of famine followed, the Egyptians first bought grain with money; after their money was gone, they traded livestock; and when the livestock were exhausted, they surrendered their land.

By the time the famine ended, Pharaoh owned nearly all of Egypt.

No war, no violence. Only control over scarce resources and sufficient patience.

The logic behind blocking the Strait of Hormuz is the same. Conquering a country by force requires hundreds of thousands of troops; blocking a strait and waiting patiently? All you need is a navy and time.

Joseph, at least, was trying to save the people. But the participants operating around this crisis were not.

This is precisely why a 20% oil shortfall is enough to cripple the entire world. The issue isn't "not enough oil"—it's that some are hoarding, some are speculating, and others are waiting for you to fall.

Most people assume economic crises unfold gradually. But the reality is the opposite. Lehman Brothers was operating normally the day before it filed for bankruptcy; Silicon Valley Bank showed no obvious signs of trouble 48 hours before its collapse.

A systemic collapse, more like a "bank run." When everyone trusts the bank, it operates nearly perfectly; but the moment trust cracks, everyone withdraws their funds at the same time. A bank doesn't die slowly—it collapses instantly within 48 hours.

The global energy market is currently in the same state.

Everyone is betting that Trump will quickly resolve the issues, and everyone still believes “the system is still working.” But once this trust is broken—such as when reserves start to run low, or the International Energy Agency confirms the gap has widened further—selling will erupt like a bank run.

Not gradual. It happens instantly.

Note: The Strait of Hormuz typically carries about 20 million barrels per day of oil transport; thus, the current loss of approximately 18–19 million barrels per day due to blockades has already exceeded the global supply gap of 8–11.4 million barrels per day. This shortfall is partially offset by releases from strategic petroleum reserves (SPR), alternative pipelines (such as Saudi Arabia’s East-West pipeline and UAE detour routes), and supplies from non-Hormuz-producing countries. However, this compensation is temporary.

The scale of this shock has exceeded the 2022 Russia-Ukraine energy crisis and has even been called "the most severe energy crisis in human history."

Our assessment is: this claim is likely not exaggerated.

Strategic reserve: Buffer time ≠ Security

Currently, only two factors are supporting the market: the continued release of the Strategic Petroleum Reserve and Trump’s policy statements alongside market expectations.

These numbers themselves are problematic: the release of the Strategic Petroleum Reserve (SPR) has a physical cap, historically around 2 million barrels per day. That means the actual ability to fill the gap is far lower than the headline figures suggest.

OPEC+ has nominal spare capacity of 2.5 to 3.5 million barrels per day, but these export routes themselves must pass through the Strait of Hormuz, rendering this capacity effectively stranded.

Some countries' reported reserve data include delayed deliveries and overestimated inventories. Once the buffer period ends, the supply gap will rapidly widen. Reserves can buy time, but not solutions. The market still has a window of opportunity, but it is closing.

The current market situation is surreal: Israel has just endured its most intense missile attack since the war began, yet the stock market barely reacted. Chemical plants in Japan, South Korea, Singapore, and Thailand have begun cutting production or shutting down entirely, but the market hasn’t priced this in. Australia has shifted to remote work due to fuel shortages, and South Korea has implemented nationwide driving 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 are amplifying this optimism. But a closer look reveals that many things have already turned red—everyone is just pretending not to see.

This divergence between market performance and the real economy will not last long. It has never happened in history.

Many are betting that Trump will solve the issue quickly. But first, let’s look at Iran’s current position.

The Islamic Revolutionary Guard Corps (IRGC) has been very clear: "The Strait of Hormuz will not reopen because of Trump's absurd performance. We have not engaged in any negotiations, and we will not negotiate in the future."

Another practical issue is communication itself. Iranian officials now avoid handling any operational matters via phone or encrypted messaging apps—Israel has previously assassinated Haniyeh in Tehran and detonated Hezbollah pagers, so this paranoia is not unfounded. As a result, genuine communication between Tehran and Washington can only occur through intermediaries such as Oman, Iraq, and Switzerland, with each round of exchanges taking several days.

Iran doesn’t need to win; it just needs to outlast. The blockade of the strait is its strongest card, and it has already identified America’s weakness. Russia is supporting it, China is providing it with “humanitarian aid,” and it won’t go hungry.

The tolls from the Strait alone could generate tens of billions of dollars annually. If the United States pulls back or becomes embroiled in a prolonged stalemate, Iran could maintain control of the Strait, diverting wealth that would otherwise flow to the Gulf monarchies toward Tehran.

Not breaking: The petrodollar system is beginning to loosen.

Rising oil prices. If the war drags on and Gulf oil cannot be shipped out, the funding pipeline supporting the U.S. stock market will also dry up.

The real risk is that the U.S. dollar could experience a sharp depreciation. If the petrodollar loses its anchor, all dollar-denominated assets will be repriced. And most alarming is that it seems no one in the White House has a clear, straightforward answer to this issue.

What to look at next

U.S. SPR weekly report. The rate of reserve depletion is the most direct signal. Brent crude spot and futures curve. A deep contango indicates the market is pricing in long-term shortages. Trump’s tone. The harsher the language, the worse the situation often is.

Asia's factory utilization rate. Declines in chemical, automotive, and semiconductor production will be the leading indicators. Fertilizer prices. Compared to oil prices distorted by verbal interventions, fertilizer prices are often more honest. IEA monthly report. If the mid-April update confirms that buffers have been exhausted, market confidence could collapse overnight.

According to data from the Dallas Fed, if the Strait of Hormuz remains closed for the entire second quarter, U.S. annualized GDP would contract by 2.9%. Multiple institutions continue to raise their recession probabilities. These probabilities are contingent on the blockade persisting through each successive phase; if the strait reopens earlier, subsequent phases will no longer apply.

Now → April 15: Reserves are still being released

Strategic reserves continue to be released, and Trump continues to make statements. The impact on GDP remains limited for now. However, if the "ultimatum" on April 6 yields no results, the supply gap will expand rapidly. Probability of global economic disorder: 20%–30%

Late April to early May: Reserves depleted

Strategic reserves in various countries are beginning to hit bottom; the IEA confirms that the gap has doubled. Real economic impacts are now concentrating: fertilizer shortages, delayed spring planting, chemical plant shutdowns, LNG shortages, and industrial slowdowns in Europe. Probability: 45%–65%. This is a critical turning point.

Mid-May to end of June: Real economy deteriorates

Oil prices surge above $150 to $200 per barrel. High oil prices begin to suppress all economic activity. Countries scramble for supplies from Russia and India, but with limited success. Europe and Asia will be the first to enter 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 would make America’s $40 trillion debt unsustainable; not raising them would cause inflation to spiral completely out of control. Food crises and social unrest are following in quick succession. Gold is highly likely to reach a new all-time high. Probability: 80%–90%

Upgrade scenario

If the United States directly targets Iran's energy infrastructure, add 20 percentage points to the probability of each of the above stages.

The 1973 oil crisis, the 2008 Lehman moment, the 2022 Russia-Ukraine energy shock—the script has never changed: everyone pretends not to see until the data is confirmed; only then does the real selling begin.

We are currently in the "before confirmation" stage. April 15 to 25 is the critical window. The ultimatum is the first catalyst.

If the strait reopens, the market will gradually return to normal; if it remains closed or the situation escalates further, the market will begin trading the collapse itself before it happens.

The world doesn’t need to actually run out of oil to face problems—it only needs enough people to believe that it might happen.

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