Thread by @ProfessorPape

Within 10 days, parts of the global economy will start running short of critical goods
After 30 years studying economic sanctions and blockades, I don’t say this lightly:
--Not just higher prices
--Shortages.
Markets are not ready for this

Everyone is still talking about oil prices
That’s already outdated
--This is no longer a price shock
--It is the early stage of a system-wide supply shock

Here’s the mechanism:
price spike → physical shortage → economic contraction
We are now crossing into step 2
That’s when things break.

~20% of global oil flows through the Strait of Hormuz.
That flow is now constrained -- by Iran AND US
And it’s not just oil—it’s the base layer of modern production:
fuel, fertilizer, plastics, much more

Once inventories run down, this stops being about expensive inputs
It becomes about missing inputs
Factories don’t slow because costs rise
They stop because materials don’t arrive

We’ve seen the smaller version of this.
1973: ~7% supply disruption → shortages, rationing, industrial decline in under 90 days.
Today’s shock is larger.
The system is tighter -- We are at Day 45

The sequence from here is predictable:
Asia first → Europe next → global compression
Not collapse
Contraction

The U.S. won’t be spared
Energy independence doesn’t protect a globally integrated economy
When supply chains seize, the shock transmits via trade reductions

This is the real shift:
Prices no longer determine outcomes
Access does
And once that flips, governments start choosing winners and losers

Watch one thing this week:
Ships through Hormuz
--Not statements
--Not markets
If flows don’t recover, the system tightens further -- necessarily

By the time shortages show up in headlines, it’s already too late
That’s how these shocks work
Full breakdown—mechanism, timeline, what happens next: new analysis: Escalation Trap substack