How is this round of energy crisis different from that in 2022?

The supply shock triggered by the Iran war is shaking global markets, but this time, the boundaries of the shock are much clearer than four years ago.

According to Chasing Wind Trading Desk, a Goldman Sachs global economic commentary released on March 15 pointed out that this round of supply shock is fundamentally different from the 2021-2022 episode—in nature, the current shock is highly concentrated in the energy sector, rather than spreading across the entire supply chain. This greatly reduces the risk of a repeat of the secondary inflation effect.

Goldman Sachs stated that the blockade of the Strait of Hormuz led to significant increases in oil and gas prices, and is expected to cause a 0.3% drop in global GDP, as well as boost overall inflation by 0.5 to 0.6 percentage points over the next year. Accordingly, Goldman Sachs has lowered its global economic growth forecast from 2.9% (pre-war) to 2.6%, and raised the global overall inflation forecast from 2.3% to 2.9%.

Meanwhile, the global short-term interest rate markets have already responded—the pricing for policy rates by end-2026 has risen by 63 basis points in the UK, 50 basis points in the eurozone, 40 basis points in the US, 39 basis points in Canada, and 31 basis points in Australia since the conflict began. Goldman Sachs noted that it has accordingly postponed its forecasts for rate cuts in several economies including the US and UK.

Energy Shock: Significant Scale, but Clear Boundaries

The blockade of the Strait of Hormuz is the core trigger of this crisis.

Goldman Sachs’ commodities team has raised its oil and gas price forecasts and calculated the quantitative impact on the global economy: the rise in oil prices will pressure global GDP by 0.3%, overall inflation will rise by 0.5 to 0.6 percentage points over the next year, and core inflation will only rise slightly by 0.1 to 0.2 percentage points. The simultaneous surge in natural gas prices will create additional price pressure and growth obstacles for Europe and Asia.

Goldman Sachs pointed out that as long as the Strait of Hormuz stays blocked, the risk for the aforementioned impacts leans toward greater levels. This uncertainty is also the main driving force behind the market's repricing of central bank policy paths.

Key Difference from 2022: Much Narrower Supply Chain Shock Scope

The inflation surge of 2021-2022 stemmed from a global supply chain crisis—rising energy prices were only one aspect, compounded by massive port congestion, failures in "just-in-time" inventory management, and widespread production bottlenecks.

Goldman Sachs believes that the structural characteristics of this shock are completely different from that period, and demonstrates this from three dimensions:

First, major economies have extremely limited exposure to non-energy trade from the Middle East. Non-energy exports from the Middle East only account for 1% of total global trade, with exposure in major developed and emerging market economies generally even lower. In comparison, the post-pandemic disruption of East Asian trade affected over 20% of global trade. This intuitive comparison shows that the scale of supply chain shock caused by the war is far less than during the pandemic.

Second, bottleneck risks in chemicals and metals are limited, and the inflation impact is quantifiable and small. Gulf states hold significant shares in global production of certain chemicals and metal products, such as helium, sulfur, methanol, polyethylene, ammonia, nitrogen, and aluminum. However, these products generally account for less than 0.2% of global GDP, with the Gulf states’ production share even lower, at below 0.02% of global GDP. In contrast, the disruption of worldwide semiconductor production in 2022 affected trade equivalent to about 1% of global GDP. Goldman Sachs estimates that even if current spot prices for these chemical and metal products (average increase about 25%) persist, the boost to global overall inflation would be only about 0.1 percentage points.

Among specific categories, Goldman Sachs believes methanol is the most worthy potential risk—Iran accounts for about 20% of global methanol capacity, and permanent loss of its capacity could trigger chain reactions in downstream acetic acid, industrial adhesives, and paint production. While helium is a key input for semiconductors and aerospace, communication between Goldman Sachs and equity analysts shows that helium supply contracts are generally long-term fixed, and stocks held by several major producers are sufficient to offset supply disruptions for the foreseeable future.

Third, the shipping bottlenecks of 2021-2022 are unlikely to be repeated. Goldman Sachs notes that Gulf countries are not the main transshipment hubs for most goods (except for yachts and similar vessels), so interruptions in transshipment have limited impact on other goods. Real-time data shows the Baltic Dry Index indicates that non-tanker sea freight costs have actually declined slightly since the outbreak of war. Air cargo prices have risen sharply due to disruption of Middle Eastern airspace—routes between Asia and North America/Europe have seen average price increases of about 25%—but Goldman Sachs estimates this only contributes about 3 basis points to global inflation.

Central Bank Policy: Cautious but Not Fully U-Turned

The sharp repricing of short-term rates reflects market concerns about central bank policy paths—the memory of post-pandemic inflation losing control is still fresh. The market expects central banks to remain highly alert to any inflation signal.

Goldman Sachs states that the scale of the energy shock is indeed sufficient to prompt central banks to take a cautious stance and has accordingly postponed forecasts for rate cuts in economies such as the US and UK. But Goldman Sachs also emphasizes that the core mechanism behind the loss of inflation control in 2021-2022 lay in widespread supply shocks triggering massive secondary effects, and the narrowed nature of the current shock reduces this risk significantly.

Goldman Sachs adds that its European economic team’s research also shows Europe’s sensitivity to energy shocks has declined compared to 2022. However, if the energy crisis deepens, nonlinear effects of energy cost transmission and inflation expectations remain tail risks not to be ignored.

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The above content is from Chasing Wind Trading Desk.

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