Citi Research Sees Global Economy Weathering 20% Oil Supply Shock but Flags Inflation Risk
Citi Research says the global economy could endure a Strait of Hormuz closure—cutting 20% of oil supply—through new supply sources, alternative fuels and policy support, citing Brent at $110 per barrel in 2011–2014 without causing a recession. Analysts warn any conflict-driven crude surge remains a major inflation risk.
1. Citi Research Analysis
Analysts at Citi Research evaluated the impact of a sustained Strait of Hormuz shutdown, which handles about one-fifth of global oil flows. They identified adjustment channels including tapping new crude sources, shifting to alternative fuels and deploying macroeconomic policy measures, while underscoring private sector demand as the ultimate growth anchor.
2. Oil Price Surge Risks
The report cautions that any sharp rise in crude prices from Middle East conflict remains a key threat to inflation control, noting that shipping disruptions are already constraining supplies. Such spikes could curb consumer spending and complicate central banks’ efforts to balance growth with price stability.