Several different industries work together to satisfy global demand for oil, ranging from companies that explore and drill for oil to retailers that sell gas to motorists. Each would react in its own way to a disruption in the Strait of Hormuz. When business conditions change, firms don't surrender. They adapt.
Companies that pump oil out of the ground around the world (producers), transport oil in ships from producers to consumers (tanker owners), and indemnify the oil trade against in-transit losses (maritime insurers) would face the most immediate need to adapt to attacks on shipping in the Strait of Hormuz. To understand how a disruption would affect the global economy " and how big a disruption would need to be to threaten global prosperity " we need to understand how the market works in each of these industries.
- To what extent can producers outside the Strait of Hormuz compensate for a supply disruption?
- Can Persian Gulf oil get to the global market via alternate transport routes?
- Will tanker companies be willing to send their ships into dangerous waters to try to bring oil to market despite the risk of military attacks? Will tanker crews be willing to accept the personal risk?
- Will the cost of insurance for oil tankers rise so much that it is no longer profitable to try to bring oil out of the Persian Gulf?