Abstract: Hoarding, Speculation, and Waiting for Others to Fall Become Consensus
Original Title: The World Only Lost 20% of Its Oil. Why Is Everything Breaking?
Original Author: Garrett
Translation: Peggy, BlockBeats
Editor's Note: The article points out that the current global oil supply is only short by about 20%, but the real cause of the crisis escalation is not a "physical shortage," but a triple chain of behavior triggered by scarcity: hoarding, speculation, and the capital logic of "waiting for opponents to collapse before buying low."
From a 20% supply gap to transport disruptions in the Strait of Hormuz, to short-term "filling" through strategic reserves, alternative pipelines, and capacity mismatches, on the surface, the system still seems to be operating; but at a deeper level, hoarding, speculation, and the capital behavior of "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 triggering mechanism of such risks does not follow the intuitive idea of "gradual deterioration" but is closer to a run on a bank—everything seems stable until confidence is shattered; once key variables are confirmed (reserves are depleted, gaps widen, transport cannot be restored), the market will reprice within a very short time. From the 1973 oil crisis to the 2008 financial crisis, to the 2022 energy shock, the path is highly consistent.
Within this framework, the current "calm" in the market itself has become the most alarming signal: the real economy has begun to reduce production, implement restrictions, and experience supply contraction, yet asset prices continue to reflect risk preference. This divergence is essentially the last consensus on "the system is still effective."
The core judgment of this article is: the problem is not whether there is enough oil, but once enough people start to believe that it might not be enough, the system will prematurely enter contraction and reevaluation. Strategic reserves can only extend the time window, but cannot provide answers; and this window is rapidly closing.
The late April period will be a critical juncture. By then, the market will have to face not "whether it will happen," but "when it will be confirmed."
Below is the original text:
There is approximately a 20% shortage of oil globally. Theoretically, if everyone tightens their belts a bit, the economy can still keep running.
But the reality of "shortage" never works like that. When a key resource is in deficit, people do not engage in rational allocation but start hoarding and speculating. And what about those who have excess? They will wait for you to collapse and then buy your best assets at bargain prices.
These three behaviors can amplify a manageable gap into a civilization-level issue.
Hoarding, Speculation, and Vulture-like Waiting
The first thing that happens is hoarding. Once "shortage" hits the headlines, everyone starts panic buying—not because they really need it, but out of fear. They are not buying oil; they are buying a sense of "safety." This panic alone is enough to double the perceived shortage.
Next comes speculation. Once oil becomes scarce, traders flock in, and prices quickly detach from fundamentals. This is not theoretical; it is a law of the commodity markets. Every energy crisis in history has almost unfolded along this path.
The final layer, and the most ruthless one, is waiting for you to fall.
Why Those Who Have Oil Do Not Sell
The trading price of Oman crude oil has reached $150 to $200 per barrel. However, countries in need of oil may still not be able to purchase it because players holding US dollars have already locked in their supplies.
Some countries clearly have ample reserves yet still refuse to sell to neighboring countries.
Why? Because they see a bigger game: waiting for a debt crisis to erupt, waiting for social unrest, and then acquiring the world's best assets at extremely low prices. A company worth $50 billion under normal circumstances might be available for just $5 billion when a country is on the brink of collapse—without any soldiers or weapons needed.
Berkshire Hathaway currently holds nearly $375 billion in cash, a record high. This accumulation began long before this war, with a net sell-off of assets for 12 consecutive quarters. But the key is not the accumulation, but when to take action.
What is Buffett waiting for?
This Script Has Existed for Three Thousand Years
In Genesis Chapter 47, Joseph helps Pharaoh store grain during seven years of plenty. Then came seven years of famine. The Egyptians first use money to buy grain; when the money runs out, they barter livestock; when the livestock is exhausted, they give up land.
By the end of the famine, Pharaoh almost owned all of Egypt.
No war, no violence. Just control over scarce resources and enough patience.
The blockade of the Strait of Hormuz follows the same logic. Conquering a country by force requires hundreds of thousands of troops; while blockading a strait and patiently waiting? It only requires a navy and time.
Joseph was at least trying to save the people. But the players operating around this crisis are not.
This is precisely why a 20% oil shortage can drag down the entire world. The problem is not "there isn’t enough oil," but that—some are hoarding, some are speculating, and others are waiting for you to collapse.
Collapse Never Happens Gradually
Most people think economic crises unfold gradually. But the reality is exactly the opposite. Lehman Brothers was still operating normally the day before it filed for bankruptcy; Silicon Valley Bank appeared to have no significant abnormalities 48 hours before its collapse.
A systemic collapse is more like a "run." When everyone trusts the bank, it operates almost perfectly; once trust begins to crack, everyone will withdraw funds at the same time. Banks do not die slowly; they collapse instantly within 48 hours.
The current global energy market is in the same state.
Everyone is betting that Trump will solve the problem quickly, and everyone still "believes the system is functioning." But once this trust is broken—say, reserves begin to run low, or the International Energy Agency confirms an expanded gap—selling will burst forth like a bank run.
It will not be gradual. It will happen instantly.
Five Weeks Have Already Passed
Note: The Strait of Hormuz typically carries about 20 million barrels per day of oil transportation, so the current loss of approximately 18–19 million barrels per day due to the blockade exceeds the global supply gap of 8–11.4 million barrels per day. This gap is being partly offset by releases from the Strategic Petroleum Reserve (SPR), alternative pipelines (such as Saudi Arabia's East-West pipeline, UAE's bypass routes), and supplies from non-Hormuz oil-producing countries. However, this fill is temporary.
The scale of this shock has already surpassed the 2022 Russia-Ukraine energy crisis, being described as "the worst energy crisis in human history."
Our judgment is that this statement is likely not exaggerated.
Strategic Reserves: Buffer Time ≠ Safety
Currently, the market is supported by only two things: the ongoing release of strategic oil reserves and Trump's policy statements and market expectations.
These numbers themselves also have issues: the release of Strategic Petroleum Reserves (SPR) has physical limits, historically around 2 million barrels per day. This means the real capability to fill the gap is far lower than the paper headline number.
OPEC+ nominally has 2.5 to 3.5 million barrels per day of idle capacity, but these export routes themselves have to go through the Strait of Hormuz, so this capacity is effectively trapped.
Some countries' reported reserve data also includes delayed deliveries and overestimated inventories. Once the buffer period is over, the supply gap will rapidly expand. Reserves can only buy time, not solutions. The market still has a window, but this window is closing.
The Market is Sleepwalking
The current state of the market is very surreal: Israel has just experienced the most intense missile attacks since the start of the war, yet the stock market hardly reacted. Chemical plants in Japan, South Korea, Singapore, and Thailand are beginning to reduce production or even halt operations, but the market has not factored these into prices. Australia has turned to working from home due to fuel shortages, and South Korea is implementing nationwide restrictions, yet the stock market continues to rise.
Trump says Iran is negotiating every day, while Iran denies it daily, yet the stock market keeps bouncing back. Semiconductor stocks are still soaring, AI concepts remain popular, and quantitative and algorithmic trading are amplifying this optimistic sentiment. But a closer look reveals that many things have actually 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.
Iran's Cards
Many are betting that Trump will resolve the issue quickly. But let's first look at Iran's current position.
The Islamic Revolutionary Guard Corps (IRGC) of Iran has made it very clear: "The Strait of Hormuz will not reopen because of Trump's absurd performances. We are not negotiating and will not negotiate in the future."
Another practical issue is the communication itself. The Iranian leadership is currently not processing any operational-level matters through phone calls or encrypted software—Israel has assassinated leaders in Tehran and has even blown up Hezbollah’s pagers, such paranoia is not without reason. Thus, real communication between Tehran and Washington can only happen through intermediary channels in Oman, Iraq, Switzerland, etc., and each round trip takes several days.
Iran's Calculations
Iran does not need to win; it just needs to last longer. The blockade of the strait is its strongest card, and it has found America's soft spot. Russia supports it, and China provides it with "humanitarian aid," so it will not go hungry.
Just the income from the strait tolls could bring in hundreds of billions of dollars each year. If America backs down or becomes mired in a prolonged conflict, Iran can continue to control the strait. Wealth that would have flowed to the Gulf monarchies will also divert to Tehran.
Trump's Dilemma
Not hitting: The oil dollar system begins to loosen.
Hitting: Oil prices skyrocket further. If the war drags on and Gulf oil cannot be exported, the financial lifeline supporting the US stock market will also dry up.
The real risk is that: the dollar could sharply devalue. If the oil dollar loses its anchor point, all dollar-denominated assets will be repriced. And the most terrifying part is that it seems no one in the White House has a clear-cut answer to this question.
What to Watch Next
The weekly report on the US SPR. The speed of reserve consumption is the most direct signal. The Brent crude spot and futures curve. If a deep contango appears, it indicates the market is pricing in a long-term shortage. Trump's tone. The heavier the words he uses, the worse the situation often is.
Asian factories' operating rates. A decline in chemicals, automotive, and semiconductor output will be leading indicators. Fertilizer prices. Compared to oil prices distorted by verbal intervention, fertilizer prices are often more honest. IEA monthly report. If the mid-April update confirms the buffers have been exhausted, market confidence could shatter overnight.
Timeline
According to the Dallas Fed, if the Strait of Hormuz remains closed throughout the second quarter, the US annual GDP could shrink by 2.9%. Many institutions are also continuously raising recession probabilities. The probabilities listed below come with the premise that the blockade continues into various stages. If the strait reopens early, then subsequent stages will no longer apply.
Now → April 15: Reserves still being released
Strategic reserves continue to be released, and Trump is still making statements. The impact on GDP is temporarily limited. However, if the "ultimatum" on April 6 yields no results, the supply gap will quickly broaden. Probability of global economic disorder: 20%–30%
Late April → Early May: Reserves hitting bottom
Countries' strategic reserves begin to deplete, with the IEA confirming the gap has doubled. The real impacts on the economy begin to concentrate: fertilizer shortages, delayed spring farming, chemical production halts, LNG shortages, and reduced European industrial output. Probability: 45%–65%. This is a critical turning point.
Mid-May → End of June: Deterioration of the real economy
Oil prices surpass $150 to $200 per barrel. High oil prices begin to suppress all economic activities. Countries scramble for supplies from Russia and India, but results are limited. Europe and Asia will be the first to enter recession. Probability: 65%–80%
After June: Systemic Collapse
No new alternative supply routes emerge. Stagflation, unemployment, and central banks malfunctioning appear simultaneously. Raising interest rates will make the US's $40 trillion debt unsustainable; not raising rates will lead inflation to spiral out of control. Food crises and social unrest follow, with gold likely reaching new historical highs. Probability: 80%–90%
Escalation Scenarios
If the US directly attacks Iranian energy infrastructure, then the probability for every stage mentioned above increases by 20 percentage points.
The scripts from the 1973 oil crisis, the 2008 Lehman moment, and the 2022 Russia-Ukraine energy shock have actually never changed: before data confirms the truth, everyone pretends not to see it; and once data is confirmed, the real sell-off begins.
We are now in the "before confirmation" stage. April 15 to 25 is a critical window. The ultimatum is the first catalyst.
If the strait reopens, the market will gradually return to normal; if it does not open, or the situation continues to escalate, the market will begin trading on the collapse itself before it happens.
The world does not need to actually "run out of oil" for problems to occur. It only needs enough people to believe: this kind of thing could happen.
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