Experts predict the "Hormuz Crisis" will last longer. Trump issues a warning of "20 times the attack power"!

U.S. energy giant ExxonMobil Chief Economist Tyler Goodspeed warned on Monday that the Strait of Hormuz is likely to remain closed “for a longer period” than current market expectations.

In a recent interview, he questioned the widespread consensus that the U.S.-Iran conflict will be quickly resolved, believing that the possibility of the strait remaining closed is much higher than the chance of normal traffic resuming.

Earlier Monday, President Trump told reporters in a phone interview that the war could end soon. But he quickly warned that if Iran takes any action to block oil shipments through the Strait of Hormuz, the U.S. will respond with a “20 times more severe” strike than before. He also said the conflict with Iran would “end soon,” but “not” within this week.

Goodspeed said, “When I consider the probability distribution of possible outcomes, it seems to me that the likelihood of the strait remaining closed, and more thoroughly and for a longer time, is much greater than the chance of normal traffic resuming.”

Meanwhile, he also expressed skepticism about the idea that “ample oil and strategic reserves can offset any short-term supply gap.” U.S. Energy Secretary Chris Wright said Monday that the U.S. government is “discussing” coordinating the release of strategic petroleum reserves to address current energy market conditions. The G7 agreed to closely monitor energy market developments but has not announced any release plans yet.

Recession

Regarding the impact of this energy crisis, Goodspeed issued a warning about a recession. The economist emphasized that a recession is “fundamentally unpredictable,” so all possible outcomes must be considered, not just consensus estimates.

He expressed concern that the market initially failed to signal policymakers how serious the situation could become.

“What I worried about last week was that the market didn’t send a signal to the president indicating how serious the situation could get, leading to a major energy crisis unfolding unnoticed,” he explained.

From a historical perspective, Goodspeed analyzed the dangers of energy supply disruptions deeply. He said, “Historically, energy supply crises—any energy supply shocks—have been the killer of economic expansion over the past four centuries, not just the last century.”

He explained that recessions are usually triggered by a very large shock or a series of smaller shocks, rather than gradual changes.

Finally, when asked about the intersection of the energy crisis and artificial intelligence development, Goodspeed dismissed concerns that AI could trigger a bubble and ultimately lead to economic expansion.

He further pointed out that the infrastructure development of transformative technologies like AI typically follows a “smooth S-curve” and is unaffected by market fluctuations, making AI more likely to be “a victim of recession shocks rather than their cause.”

(Source: Caixin Global)