Economists: The shock from the closure of the Strait of Hormuz is about to crush demand.

The oil shock from the Strait of Hormuz has not yet caused a demand collapse because wealthy countries are using their inventories and securing supplies at high prices. But traders are now warning of a severe demand contraction. Traders say the longer the Strait of Hormuz remains closed, the more consumption will need to adjust downwards to match at least a 10% drop in supply. To achieve this, people will have to reduce their purchases, either through unaffordable prices or through government intervention to suppress consumption. Trafigura Group chief economist Saad Rahim said demand destruction is happening in those intangible pricing centers. This contraction is already underway, but if it continues, the scale of the demand contraction will only grow larger. We are at a critical turning point. (Jinshi)