A World Where the Strait of Hormuz Has Stopped—The Market Is Still Optimistic

Article from March 7, 2026

The Strait of Hormuz, often called the world's energy artery. If it were truly blockaded and a situation arose where crude oil could not be delivered—.

While often discussed in the news as a "worst-case scenario," if it were to become reality, it would not end as merely an energy problem. It would be an event that shakes the very structure of the global economy.

And what is interesting is that even after one week has passed since the blockade, the financial markets still seem somewhat optimistic.

First, how will America move?

When considering this issue, the first thing to look at is America's actions.

Trump stated on 3/3 regarding an attack on Iran that his goals are: 1) destroying Iran's missile capabilities, 2) annihilating its navy, 3) preventing it from possessing nuclear weapons, and 4) stopping the regime's support for terrorist organizations.

He will likely continue to move toward these goals. However, Trump must also be watching crude oil prices and their impact on the U.S., specifically inflation and the U.S. stock market.

If crude oil prices skyrocket, gasoline prices within the U.S. will jump.
Gasoline prices are the "most easily understood inflation indicator" for American voters.

In other words, a blockade of the Strait of Hormuz becomes a political issue immediately.

Because of this, there are broadly three actions America can take.

1. Securing the safety of the strait via the Navy

2. Lifting the blockade through military pressure

3. Ceasefire negotiations

Especially in terms of naval power, America is preeminent in the world.
The possibility of attempting to secure the safety of the strait militarily is extremely high.

But the problem starts here.

Wars do not always end as planned.

The most troublesome scenario: a quagmire

Even if America sets out to secure the safety of the strait, since there is an opponent, there is no guarantee that the situation will end in a short period.

Missile attacks,
sea mines,
drones,
proxy forces

Middle Eastern conflicts tend to be prolonged by such "asymmetric warfare."

In other words,
“military action to lift the blockade → escalation of the situation → prolonged conflict”
—a quagmire scenario like this is entirely possible.

What the market hates most is this “state with no visible exit.”

Asia will be the first to collapse

So, when crude oil stops flowing, where is the weakest point?

It is neither Europe nor the United States.
It is Asia.

Of course, Japan and China have a certain amount of national reserves.
But the problem is India and Southeast Asia.

In recent years, the global manufacturing industry has been rapidly relocating to this region.

India,
Vietnam,
Thailand,
Indonesia

However, the crude oil reserves of these countries are by no means large.

If the crude oil supply stops, what will happen?

First, factories will stop.
And the next thing that will happen is power shortages.

If there is a power shortage, the problem will spread to society all at once.

• Transportation chaos

• Shutdown of refrigeration equipment

• Problems with water treatment facilities

• Degradation of medical infrastructure

As a result,

social unrest,
sanitation issues,
increased crime

These phenomena could occur in a chain reaction.

Energy problems turn into social problems.

Vulnerable Regions in the Stock Market

Given this structure, the regions most susceptible to impact in the stock market also become clear.

• Japanese stocks

• Chinese stocks

• Indian stocks

• Southeast Asian stocks

These are economies with a high dependence on energy imports.

In particular, the more a country relies on manufacturing, the more directly a halt in crude oil supply will hit them.

Conversely, the composition is that

• the United States

• and certain resource-rich countries

have relatively higher resilience.

Even so, the market is still optimistic

One week since the blockade.

If this situation were to continue, many in the financial markets would likely be thinking this:

"It will be lifted eventually."

The market always wants to price in
the most convenient future.

However, looking back at history, major crises always begin in the same way.

At first, no one takes it seriously.

As the problem drags on, the perception changes to, "This is bigger than I thought."

And at that moment, market prices will move all at once.

What long-term investors should look at

Short-term stock prices are unpredictable.

However, what long-term investors should look at is
the structural weaknesses of the world.

Energy
Geopolitics
Logistics

The extreme scenario of a blockade of the Strait of Hormuz brings these vulnerabilities, which are usually invisible, to the surface all at once.

Perhaps the real risk is quietly growing precisely when the market is still optimistic.

Things to exercise your mind with now

There is one event I would like to recall here.

Last April, when Trump announced tariff policies, the market was greatly shaken.
As a result, the S&P 500 fell by about 20%, and Japan's Nikkei Stock Average experienced a decline of almost the same level.

Until then, the policies were not withdrawn.

In other words, there is one thing that can be said from this.
Until the market falls by nearly 20%, there is a possibility that it will endure for a certain period as long as there is a policy objective.

If tensions surrounding the Strait of Hormuz drag on, the situation will not necessarily improve just because the stock market has fallen.

Rather,
it will last longer than the market thinks.

We need to fully consider such a scenario as well.

Financial markets always try to price in the future.
However, at times, world events last much longer than the market assumes.

Is it a crisis that will end in a week?
Or is it a structural problem that will last for several months?

Right now, the market has not yet provided an answer.

But investors, at the very least, need to consider both possibilities.

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