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Zack Guzman 🎩
@zguz
NEW: Iran just responded to Trump's bombing raid by approving the closure of the Strait of Hormuz — a chokepoint where 1/5 of the world's oil flows $BTC and $ETH are now tanking, stocks are likely to fall 📉 Here's why closing the Strait could become an economic disaster 🧵
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Zack Guzman 🎩
@zguz
The Strait of Hormuz provides the only sea passage from the Persian Gulf to the open ocean. More than just passage for 1/5 of the world's oil, it also accounts for about 30% of the world's liquified natural gas supply Closing the Strait will have massive economic repercussions
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Zack Guzman 🎩
@zguz
Mainly, when the US is still reeling from a trade war and persistent inflation, an energy shock is the last thing the economy needs The immediate effects would be higher prices. Second order effects mean delayed interest rate cuts from the Fed, and slower growth as a result
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Zack Guzman 🎩
@zguz
President Trump has recently floated the idea of firing Fed Chair Jay Powell again — something most agree he doesn't have authority to do. (Removing Powell might actually trigger more market panic anyways) Either way, Iran's response is likely to cause lasting economic damage
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Zack Guzman 🎩
@zguz
So, the Strait being closed: Bad How the US reacts to the Strait being closed could be even worse, if it requires boots on the ground to re-open oil routes How has history looked upon America's oil wars or role in regime change in the past? Almost never been worth it.
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Evan
@evangreenberg
Does it hurt China more?
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Zack Guzman 🎩
@zguz
Not if they can get oil from Russia
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