It is only the sixth day of Operation Epic Fury, and roughly the fourth or fifth day that commercial traffic through the Strait of Hormuz has been paralyzed (except for one Chinese-linked bulk carrier), whether by IRGC drone threats or by insurers suspending vessel coverage, and already energy economist Anas Alhajji warned on a webinar with top UBS analysts that "if this is going to last for four weeks, that's where things will be completely out of control."

Bhanu Baweja, Chief Strategist at UBS, asked Alhajji on the webinar: "How many days would the Strait of Hormuz need to remain shut for us to see a non-linear move in oil, with prices rising to $100 or $120 per barrel? Is there a timeline you can give us?"

Alhajji responded, "Our main scenario is that if this lasts four weeks, things will be completely out of control. And when I say out of control, I mean that even if China starts releasing oil from its inventories, the problem is that my guess is China would also restrict exports, which means that oil would remain in China. We were counting on that oil being in the market, and now it is not going to be in the market."

He continued, "The impact of the U.S. SPR is limited. Saudi Arabia is completely out of the picture. All of that spare capacity in OPEC is out of the picture. So what do we do? We are then left relying on demand destruction to curb prices. And because of the panic buying, prices would go above $100 easily in this scenario."

Alhajji warned about panic hoarding in the oil market. He said he questioned back in January why the Trump administration was hoarding Venezuela's oil after the Maduro raid, instead of bringing it to market.

Alhajji then emphasized, "I'm not talking about conspiracy theories. We were criticizing the Trump administration, companies, and trading houses that bought Venezuelan oil, and asking why they weren't able to sell it to end users and why they were hoarding it. Now we know." He was implying that this hoarding was in preparation for Operation Epic Fury.

Earlier in the webinar, Alhajji outlined critical questions:

• Is the war about Iran's nuclear program, or is something much larger at play, with Iran serving more as a trigger or for broader strategic objectives?

• The distinction matters significantly because the medium- and long-term outcomes would look very different.

• Should attention be focused narrowly on Iran's nuclear program and regime change, or should the situation be analyzed within the much wider context of China, trade wars & tariffs, AI competition, Panama Canal, Red Sea, Venezuela, Syria, & Greenland?

• Are we observing "conflicts" within a larger "CONFLICT," where some groups are opportunistically exploiting the situation to pursue their own "local" objectives?

As well as the problem:

• The problem now is attacks that spark panic buying while Saudi Arabia cannot react. Thus, U.S. SPR release is limited, and China might ban exports. Prices would go above $100 easily, but fear would contain demand growth, limiting the increase in oil prices. The impact on LNG and NGLs is higher than on oil.

• We cannot go back quickly to normal. It will take at least 2 months if the war stops tomorrow. (logistics and technical issues)

• Lack of international cooperation (Every country for itself)

Who benefits from the Middle East in flames?

• The US and Russia benefit the most.

• Losers are the rest of the world, with the EU, India, and Arab Gulf countries losing the most.

• China is prepared for the short run. If the war lasts months, China will be among the biggest losers.

Related:

The key question for readers is whether President Trump's Operation Epic Fury has effectively triggered an energy shock that, while not explicitly aimed at China, hits Beijing the hardest. It appears as if energy markets remain disrupted for at least a month, then the real issue is whether Asia's energy shock morphs into a financial crisis.