Everyone now knows that as much as 20 million barrels per day (MBD) of the world’s 100 MBD of demand for oil needs to come through the Strait of Hormuz. Yes, the Saudis and UAE can move as much as 6.5 MBD through pipelines to the Red Sea and the Gulf of Oman, but even those areas are not 100% secure. [1]
Oil makes up about 34% of global primary energy (the others are coal, natural gas, nuclear, hydro, geothermal, solar, wind and biomass).[2] 20% of 34% is 7%. The ratio of changes in global GDP to changes in global primary energy demand is about 2:1. If global GDP grows at 3%, primary energy will grow at about 1.5%.[3] But it works in reverse too. Since energy enables global GDP (not the other way around), in theory a decline of 7% of primary energy could cause a 14% decline in global GDP.
As a portfolio manager, the single most important part of my job description is to worry….about everything. Whatever one may think about the probability of an extended shutdown, that probability times a really bad GDP outcome is still bad. Commodity markets seem to take note, equity markets, not so much. Maybe both are right.
But what about GDP choke points where the absence of a small amount of one raw material hinders a very large part of the economy? For the hydrocarbon world that choke point might be styrene. Those annoying brittle clear plastic cups near the punch bowl at the church social are made of styrene. No real threat there. Switch to paper cups. But styrene is the “S” in ABS plastic that is used in so many high value-added products like the housing of your laptop, computer monitors and smart phones, medical devices, interior and exterior components of your car, appliances, precision industrial equipment and of course Lego blocks.
The only path to make styrene is via benzene, and 75% of benzene comes from naphtha-based processes (in petrochemical plants or refineries).[4] Since about 17% of global Naphtha supply is now shut off in the Persian Gulf, roughly 10-15% of styrene supply is at risk.[5] That means all the products that are made from styrene, including ABS plastic, are also at risk.
While the U.S. has plenty of petrochemical capacity, virtually all of it uses natural gas liquids (ethane, propane, butane) as feedstocks but those feedstocks produce only trace amounts of benzene.
My grandson has other toys to play with besides Lego blocks, but the industrial capacity of the world does not have any short- or medium-term substitutes for ABS plastics. So even if we can replace the lost oil and gas by powering our cars with electricity generated from nuclear and renewables, we still need hydrocarbon-based feedstocks to make the plastics that go into everything.
Or maybe I just need to stop worrying.
[1] IEA, Strait of Hormuz, February 2026.
[2] 2025 Energy Institute Statistical Review of World Energy
[3] 2025 Energy Institute Statistical Review of World Energy; IEA, Global Energy Review 2025.
[4] Global Benzene-Petrochemicals Market 2026 – PW Consulting Chemical & Energy Research Center, February 12, 2026.
[5] BloombergNEF: Petrochemical Feedstock Demand Outlook 2025; IEA.