The Econoclasts The West’s Iran crisis: Global recession & Russian revenue
27 snips
Mar 18, 2026 They analyze how a prolonged Strait of Hormuz closure could spark a lasting energy shock and global recession. They explore why higher energy costs alter AI investment and monetary policy. They unpack the military and logistical costs of protecting shipping and how regional conflict boosts Russian revenue. They debate strategic choices for Europe and the risks of underestimating adversaries.
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Hormuz Closure Triggers Long Permanent Shock
- Closure of the Strait of Hormuz will create cumulative, increasing economic damage rather than a short-lived shock.
- Yanis Varoufakis explains 20% of oil supply was removed and secondary effects (supply chains, energy costs) will amplify over months even if hostilities stop.
Why This Energy Shock Is Worse Than Tariff Panic
- Four structural differences make this shock worse than last year's tariffs: less elastic demand, end of AI investment wave, capital flow shifts, and less accommodative monetary policy.
- Yanis links rising electricity prices and rising unemployment to reduced NPVs for AI projects and stalled investment.
Plan For Months Of Supply Chain Disruption
- Prepare for broader supply-chain and industrial disruptions beyond oil, including chemical and manufacturing stoppages.
- Wolfgang Munchau warns rebuilding damaged Middle East infrastructure would take months and could produce a global recession.