Tyler Goodspeed, Chief Economist at ExxonMobil, is warning that global energy markets may be underestimating the risks surrounding the Strait of Hormuz, one of the world’s most critical oil transit routes.
In a recent interview with CNBC, Goodspeed said the consensus view—that tensions involving Iran and the United States will quickly resolve and allow shipping to return to normal—may be overly optimistic.
“When I think of the probability distribution of possible outcomes here, it seems to me there are many more scenarios and more probable scenarios in which the strait remains closed, effectively closed harder for longer, than there are scenarios in which normal traffic resumes,” Goodspeed explained.
The Strait of Hormuz is the world’s most important oil chokepoint, with roughly one-fifth of global oil consumption moving through the narrow waterway each day. Any sustained disruption could significantly impact global energy supply and prices.
Goodspeed also challenged the assumption that existing oil inventories or strategic reserves could easily offset a prolonged disruption. Markets have largely been pricing in the idea that ample oil already in transit or stored globally would help bridge short-term supply gaps. However, he suggested that view may underestimate the potential duration and severity of the situation.
One concern, according to Goodspeed, is that markets may initially fail to send strong enough warning signals to policymakers.
“One of my concerns last week was the risk of sleepwalking into a major energy crisis precisely because markets were not giving the president the signals of how serious things could get,” he said.
As markets begin to price in more negative outcomes, he added, policymakers receive clearer signals about the economic risks of continued escalation.
Goodspeed also pointed to the historical impact of energy supply disruptions on economic growth.
“Historically, energy supply crises—any energy supply shocks—have been serial killers of economic expansions over the past, not just century, but over the past four centuries,” he noted.
According to Goodspeed, recessions are rarely triggered by gradual economic weakness alone. Instead, they are often caused by either a large external shock or the accumulation of multiple smaller disruptions, which he described as “death by a thousand cuts.”
While some analysts have speculated that rapid investment in artificial intelligence infrastructure could represent a potential market bubble, Goodspeed dismissed the idea that AI development would independently trigger an economic downturn. Instead, he said major technological investment trends typically follow long-term adoption curves and are more likely to slow as a result of economic shocks rather than cause them.
Goodspeed’s comments highlight the broader economic risks tied to geopolitical tensions in the Middle East. With energy supply disruptions historically capable of triggering recessions, the evolving situation in the Strait of Hormuz could become a key factor shaping global economic stability in the months ahead.
