The global oil market is proving more resilient to disruptions in the Strait of Hormuz than commonly believed. Despite geopolitical volatility and on-again, off-again closures of this critical waterway, the impact on global inflation and economic growth has been muted.

This resilience is attributed to the modern oil market's ability to absorb shocks and oil's lighter burden on the global economy. Massive inventories, shifts in trade flows bypassing Hormuz, and incremental production increases elsewhere have mitigated price impacts. Furthermore, a significant decline in oil demand, partly due to improved efficiency in oil usage, has also played a role.

Historically, oil intensity—the relationship between oil consumption and GDP—has steadily improved since the 1970s. This means higher oil prices are needed to exert the same economic pressure as in the past. While current efficiency gains have narrowed the gap caused by potential supply shortfalls, a severe escalation in prices could still lead to devastating economic consequences, shifting from a loss of purchasing power to impaired economic activities.