Francis Kim talks stagflation and the Strait of Hormuz

Furman University’s Francis Kim, associate professor of finance and a regular contributor to the Korea JoongAng Daily, writes about the situation in the Iran-controlled Strait of Hormuz compared to the 1973 Syrian and Egyptian attack on Israel to reclaim the Suez Canal and the Golan Heights. Following the U.S.’s involvement in the conflict to bolster Israel’s military capacity, Saudi Arabia led a nine-nation oil embargo on the U.S. and its allies, which led to a raft of consequences.

Kim warns that shock to global oil supplies due to the Strait of Hormuz’s closure risks triggering stagflation and notes the vast difference in scale between the two geopolitical events. “The 1973 embargo cut about 4.5 million barrels per day,” he writes. “In contrast, disruptions linked to Iran’s closure of the Strait of Hormuz have reduced supply by roughly 20 million barrels per day.” Kim says the lesson is clear: “Supply disruptions often begin underestimated, but their costs exceed expectations.”