The Strait of Hormuz and the Global Economy: What Leaders Need to Know

Key takeaways

• The Strait of Hormuz normally carries roughly 20% of the world’s petroleum liquids and about 20% of global LNG, making it a first-order risk factor for any organization exposed to energy costs, supply chains, or macroeconomic volatility.
• A Strait disruption is no longer just an energy story. The Gulf’s economic shift toward AI infrastructure and data centers means a crisis there also touches technology supply chains and great power competition.
• Even markets that don’t import Gulf oil directly are feeling the price shock, since global energy markets are interconnected and disruptions ripple through diesel, jet fuel, and petrochemical costs everywhere.
• Crisis resilience is the part leadership teams control. They can’t stop a Gulf conflict, but they can build the continuity plans and “fail safer” muscle memory that limit the fallout.
• The economic effects compound: energy price spikes feed inflation and shape monetary policy, while trade policy compounds the same pressure from a second direction, turning a regional conflict into a fiscal and trade event.
• Four Stern Strategy Group advisors, Daniel Benaim, Daniel Yergin, Juliette Kayyem, and Natasha Sarin, bring combined expertise spanning Gulf geopolitics, energy markets, crisis management, and fiscal policy.

The Strait of Hormuz is 21 miles wide at its narrowest point. Through it flows roughly 21% of the world’s petroleum liquids and 25% of global LNG. When the ceasefire between the United States and Iran unraveled this summer, that geography stopped being a hypothetical and became the first conversation in every boardroom managing supply chain exposure, energy costs, or macroeconomic risk.

The question is not whether disruption is possible. The question is what it is costing, how long it will last, and which parts of the global economy are absorbing the shock first. For senior leaders, the answer depends on understanding three overlapping systems: the geopolitics of the Gulf, the structure of global energy markets, and the fiscal and trade mechanisms through which a Middle East crisis moves through the rest of the world.

Stern Strategy Group represents four advisors whose work sits at that intersection. Each has shaped policy or analysis at the highest levels, and each has been part of the real-time conversation as the situation has developed. Together, their frameworks give leadership teams the tools to think through scenario planning, exposure assessment, and the second-order effects that follow when a regional conflict becomes a global economic event.

What does Daniel Benaim’s practitioner view reveal about Gulf geopolitics and U.S. policy?

Daniel Benaim served as Deputy Assistant Secretary of State for Arabian Peninsula Affairs from 2021 to 2025, the top State Department official covering the Gulf. He was in the room for diplomacy on regional wars, commercial strategy, semiconductor exports, and competition with China in the Middle East. He also served as President Biden’s senior national security speechwriter and previously advised Vice President Biden on Middle East policy. He is a Distinguished Diplomatic Fellow at the Middle East Institute.

In his Foreign Affairs essay “Compute Is the New Oil,” Benaim examines the Gulf’s economic transformation and its implications for American strategy. The Gulf states are no longer defined solely by hydrocarbon exports. They are building AI infrastructure, competing for data center investment, and positioning themselves as nodes in the global technology supply chain. That shift changes what a Hormuz disruption actually means: it is not only an energy story, but a technology story, a trade story, and a great power competition story.

Benaim made the same point on NPR’s Morning Edition in July, discussing the new U.S.-Saudi nuclear agreement. Saudi Arabia, he explained, is trying to transform its economy to look past the moment when the world looks to its oil, building energy-intensive industries, data centers, and desalination capacity, while preserving crude for export revenue. The kingdom has been burning up to 1.4 million barrels a day of its own crude at the height of summer to do it.

Benaim is a lifetime member of the Council on Foreign Relations and has published in Foreign Affairs and The New York Times. His sessions give executives the situational awareness to anticipate how policy changes in Washington or in capitals across the Gulf will affect their operations.

How does Daniel Yergin map energy markets against climate policy?

Daniel Yergin is vice chairman of S&P Global, chairman of CERAWeek, and the author of The Prize: The Epic Quest for Oil, Money and Power, for which he received the Pulitzer Prize. His most recent book, The New Map: Energy, Climate, and the Clash of Nations, examines how the shale revolution, climate policy, and rivalry among the United States, Russia, and China are reshaping global power structures. The Washington Post called it “a tour de force of geopolitical understanding.”

Yergin’s work provides the framework for understanding what the disruption means for energy markets. The United States is less dependent on Gulf oil than it was before the shale boom, but the global market is interconnected. Constrained flows through the Strait raise prices everywhere, even for countries that do not import a barrel from the region. Refineries recalibrate, traders hedge, and the cost shows up in diesel, jet fuel, and petrochemical feedstocks.

Yergin has argued for several years that the era of open trade and open commerce that followed the Cold War has given way to strategic rivalry and great power competition. “The world of open trade and open commerce that became the norm after the last cold war is under great pressure,” Yergin has said. “We have gone from an era of openness and easy travel to one of strategic rivalry and great power competition.”

Hormuz is that argument made concrete. He took up the ceasefire’s collapse directly in a July 19 conversation with Puck, reading what the unraveling means for oil markets and where prices go from here. The following day, he told Rigzone that U.S. LNG growth is exceeding all expectations: what became a $44 billion annual industry in a decade is now positioned to be the country’s second largest net export within five years. Those two conversations are the same story from both ends. Global LNG prices remain elevated because of reduced flows through the Strait, and that is precisely what is pulling American export capacity forward. For companies with energy exposure, the question is whether their procurement assumptions have caught up with a market where supply is being rerouted rather than simply constrained.

Yergin also addresses the intersection of energy security and climate policy. Carbon capture, hydrogen, and other technological innovations are part of the long-term answer, but in the near term, the world still runs on oil and gas. Leadership teams planning five years out need to weigh the risks of relying on energy chokepoints against the timeline for decarbonization. Yergin gives them the data to model those tradeoffs.

He serves as a director of the Council on Foreign Relations and a trustee of the Brookings Institution, and was named 2020 Energy Writer of the Year by the American Energy Society. CERAWeek has been described by CNBC as “the Super Bowl of energy.” TIME wrote, “If there is one man whose opinion matters more than any other on global energy markets, it’s Daniel Yergin.”

What is Juliette Kayyem’s homeland security lens on crisis management?

Juliette Kayyem is the Robert and Renee Belfer Senior Lecturer in International Security at Harvard Kennedy School, where she is faculty chair of the Homeland Security and Global Crisis Resilience Projects. She served as President Obama’s Assistant Secretary for Intergovernmental Affairs at the Department of Homeland Security and as homeland security advisor to Massachusetts Governor Deval Patrick. She is also CNN’s senior national security analyst and the author of The Devil Never Sleeps and Security Mom.

Kayyem’s framework centers on the distinction between prevention and resilience. A Hormuz crisis was never preventable from the standpoint of a corporate leadership team, but the consequences are not fixed. “The key isn’t not to fail, it’s to have the capacity to fail safer,” she argues. The Devil Never Sleeps was described in a New Yorker profile as an “engagingly urgent blueprint for rethinking our approach to disaster preparedness and response.”

For organizations managing exposure to Middle East instability, Kayyem’s advice is to model the cascades. Energy price spikes affect transportation costs, which affect inventory management, which affect working capital. Cyberattacks targeting critical infrastructure in the Gulf can spill into Western networks. Workforce disruptions follow when expatriates evacuate or supply chain partners shut down operations.

“What makes crises different is the short runway,” Kayyem explains. “Time is limited and decisive action is critical. Rather than dwelling on what could go wrong, the best leaders focus on preparation and resilience strategies.” She works with leadership teams to pressure-test their continuity plans, identify single points of failure, and build the muscle memory to respond when destabilizing events happen.

She has been tracking the war’s trajectory in her Substack newsletter, Early Warning, throughout the summer. Her July 22 essay argues that the United States has already lost the narrative of the conflict, and that no ceasefire yet to be brokered changes that. Whatever a reader concludes about the politics, the operational implication is the one leaders should sit with: the end state is no longer the useful planning horizon. Organizations are managing a disruption with no clear terminal date, which is a different exercise from waiting out a shock.

A Pulitzer Prize finalist and contributing writer for The Atlantic, Kayyem received the Lifetime Achievement Pinnacle Award from the Greater Boston Chamber of Commerce in 2023. Her sessions give managers the situational awareness to anticipate and prepare for the pressures that arrive when geopolitical shocks move through their organizations.

How does Natasha Sarin explain the fiscal and trade impact of tariffs and AI investment?

Natasha Sarin is a professor of law at Yale Law School with a secondary appointment at the Yale School of Management, and the president and co-founder of the Budget Lab at Yale. She previously served at the U.S. Treasury Department as deputy assistant secretary for economic policy and as counselor to Treasury Secretary Janet Yellen. Before that, she was a professor at the University of Pennsylvania Carey Law School and the Wharton School.

Sarin’s work on tariffs, tax policy, and AI’s effects on the labor market provides the tools to model how a Middle East conflict becomes a fiscal and trade event. Constrained energy supply raises costs, which feed into inflation, which shape monetary policy, which affect borrowing costs and consumer demand. When tariffs and export controls compound the pressure, the second-order effects multiply.

That is precisely the dynamic she described to NPR on July 25, as a new round of tariffs landed on top of war-driven energy costs. Revenue gains, she argued, have to be weighed against the economic costs: the way tariffs raise revenue is not efficient, and the growth forgone is never recovered. The Budget Lab’s estimate in that piece is concrete enough to plan against: the latest tariffs add just under a percentage point to consumer inflation, roughly $1,100 per household per year, on top of the gas price increases the war has already produced. Two separate pressures are landing on the same household budget and the same input costs. The Budget Lab has become a leading nonpartisan source on tariff data, and Sarin’s research helps organizations anticipate the sector, household, and market effects of trade policy changes. She has argued that tariffs may end up being the most significant middle-class tax increase in U.S. history: a $3 trillion revenue shift with constitutional, fiscal, and business implications.

Sarin also examines AI investment, with capital expenditures estimated to reach 2 percent of U.S. GDP in 2025. She argues that AI’s growth has outpaced the rules governing it, and that today’s regulatory choices will shape economic outcomes for decades. She helps organizations align talent and investment strategies with an AI-driven economy, and gives boards the data to anticipate workforce shifts, plan pricing, and prepare for the next economic era.

A Washington Post contributing columnist and frequent guest on CNBC’s Squawk Box, Sarin is also a panelist on MS NOW, where she has assessed the administration’s handling of the conflict. She holds a B.A. from Yale College, a J.D. from Harvard Law School, and a Ph.D. in economics from Harvard University. Her scholarship has been covered in The New York Times, The Washington Post, and the Financial Times.

What should leadership teams be debating right now?

Six months in, the question for boards and C-suites is not whether to plan for a Hormuz disruption. It is whether the plan they have accounts for the full range of consequences: energy price spikes, supply chain disruption, workforce displacement, regulatory shifts, and the compounding effects of trade policy layered on top of a war.

The frameworks these four advisors bring to that conversation are grounded in the decisions they made inside government, the research and analysis they have published, and the counsel they provide to leadership teams managing uncertainty in real time. The Gulf is more economically diversified, more technologically sophisticated, and more geopolitically contested than it was a generation ago. The playbook for managing exposure to Middle East instability has to account for that.

Who To Book

Daniel Benaim is exclusively represented by Stern Strategy Group for keynotes, board sessions, and confidential advisory work with leadership teams navigating Gulf geopolitics, commercial diplomacy, and competition with China in the Middle East.

Juliette Kayyem is exclusively represented by Stern Strategy Group for keynotes, board sessions, and confidential advisory work with leadership teams building crisis preparedness and resilience strategies.

Daniel Yergin is exclusively represented by Stern Strategy Group for keynotes, board sessions, and confidential advisory work with leadership teams thinking through energy security, geopolitical risk, and the collision of climate policy with global markets.

Natasha Sarin is exclusively represented by Stern Strategy Group for keynotes, board sessions, and confidential advisory work with leadership teams assessing tariff exposure, fiscal policy shifts, and AI’s implications for regulation and growth.

Contact Stern Strategy to discuss who fits your conversation.