Why the ‘Hormuz Shock’ Isn’t the ’70s All Over Again

Things would be a lot worse absent our current energy diversity

Letter to The WSJ.

"Daniel Yergin’s analysis of the worldwide oil market in his op-ed “Energy Markets Limit the Hormuz Shock” (June 3) is right on target. Diversification of energy sources, together with normal supply and demand responses, is limiting the Hormuz shock. We are experiencing pain, but this is clearly not, as many have claimed, a historic energy crisis. Today’s oil prices, adjusting for inflation, are more than 15% below their peak four years ago, indicating that markets worked then and are working now.

Two implications follow. First, whatever Iran’s degree of control over the strait going forward, its incentive will be to keep oil flowing. Continued restrictions on shipments through the strait will erode Iran’s future influence on energy markets, much as the Organization of Petroleum Exporting Countries’ clout diminished after the shocks in the 1970s. Second, the priority must be eliminating Iran’s nuclear capability rather than reopening the strait: Closing the strait is causing a temporary energy shock, whereas a nuclear-armed Iran would pose a permanent global threat."

Edward A. Snyder

William S. Beinecke professor of economics and management

Yale University" 

Related post:

Energy Markets Limit the Hormuz Shock (2026)