Economist: The Impact of the Closure of the Strait of Hormuz is About to Crush Demand

On April 25, the oil shock from the Strait of Hormuz has not yet led to a collapse in demand, as wealthy nations are tapping into reserves and securing supply at high prices. However, traders are now warning that a severe reduction in demand is imminent. They indicate that the longer the Strait of Hormuz remains closed, the more consumption will need to adjust downward to match at least a 10% decrease in supply. To achieve this, people will have to reduce purchases, either through unaffordable prices or through government intervention to suppress consumption. Saad Rahim, chief economist at the Trafigura Group, stated that demand destruction is occurring at those non-explicit pricing centers. This reduction is already happening, but if the situation persists, the scale of demand reduction will only grow larger. We are at a critical turning point. (Dongxin News Agency)