Hormuz Shock Explains Oil Spike

A modest disruption that halves flow through the Strait of Hormuz (from ~20 to ~10 million barrels per day) plausibly explains the current ~60–70% rise in Brent when combined with low short‑run price elasticity of demand (~0.15). Markets currently near $115 per barrel therefore appear to be pricing a large but not fanciful risk premium tied to Gulf transit disruption rather than irrational exuberance. — If markets are rationally pricing a Hormuz‑derived supply shortfall, that has immediate implications for inflation, central‑bank policy, and geopolitical bargaining over freedom of navigation and sanctions enforcement.