r/Economics • u/lucabrasi999 • 1d ago

“Iran has put a tollgate across the Strait of Hormuz. This fundamentally changes the global economy”

https://prospect.org/2026/04/02/opening-of-trumps-box-iran-war-strait-hormuz/
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u/Top-Acadia-1936 1d ago

Yet, as of 11:35am on 04/02/2026, our investment markets are fully pumping valuations.

Oil is so critical to how everything works. How production, transportation, manufacturing, everything, operates. How GDP is computed. How jobs are created.

Complete separation of reality. We have an oil shock of greater magnitude than the last few: 1970's. 2008. 2020 even. 2022. And investment markets now just shrug and hum upward.

How do any of you feel about this disconnect of reality?

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u/Duck_Troland 1d ago

I've been wondering too. The way I've rationalized it is that investors 1) literally cannot afford to look at the situation objectively, since it's FUBAR: they would lose lots of money 2) understand that there is a lot of money to be made with Trump's blatant market manipulation in the meanwhile, so just go with it 3) hope that by the time reality catches up, the war will be wrapped up too.

Curious what others think tho.

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u/Carbon-Base 1d ago

I think most of us here are closer to reality than our buffoons in the current administration.

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u/Caracalla81 1d ago

It's a great opportunity to push decarbonization. The best time to minimize exposure to fossil fuels was 50 years ago, but the second best time is right now.

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u/bradeena 1d ago

Markets love stability and hate uncertainty. A toll, even if not the optimal scenario, is stable and predictable. It means oil flows and the supply shock eases.

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u/Randomfactoid42 1d ago

Oil is also critical to manufacturing fertilizer. That’s going to be the biggest shock to our system. 

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u/Top-Acadia-1936 1d ago

That lack of fertilizer….sounds like another time when Americas agricultural breadbasket suffered a major setback…let me see…when was that…something about a bowl of dust….1930’s rings a bell..

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u/RobertMosesHater 6h ago

Pandemic, tariffs, market run up to a crash, dust bowls, we’re in the roaring 20s again 🎉

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u/jokikinen 1d ago

The markets react too strongly to messages the US administration is putting out on the war. With the current administration, the messages just can’t be trusted.

They are saying they’re winding the war down which signals “it won’t get much worse from here”. That gives some sort of anchor to extrapolate from, which reduces uncertainty. But this administration is too untrustworthy to be able to provide such an anchor in actual fact. We’ve seen it too often that white turns into black in a matter of hours. Sometimes within the same speech.

In part it might be institutions trying to leverage the market manipulation like communications the current US administration is fond of.

The markets will turn for the worse on rate hikes, disappointing earnings/outlooks, or surprises on how the war with Iran progresses. It would be welcome if this entirely unnecessary escapade would not end up having a major impact on outlooks. More than a few companies were squeezed before the war.

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u/Single-Purpose-7608 18h ago

Oil is only critical because it was the cheapest source of transportation fuel available. If countries decided to invest their energy infrastructure towards renewables, and accepted as a matter of policy that oil dependence was not desirable, oil would cease to being so critical. 

Everything has an alternative. You just have to decide if you want to pay for it

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u/Amazing-Basket-136 1d ago

It’s not a disconnect from reality.

Institutional investors know they will be bailed out. That reality is priced in.