The factoid thrown around is that roughly 20% of the world’s oil supply travels through the Strait of Hormuz. Since it closed, my local gas prices in one area of the US midwest have gone from $2.60 to now $4.10 presumably as reserves have been used up.
I could understand a 20~30% increase in price to correlate with the reduction in supply, but what are the economic factors that lead to what feels like such a disproportionate increase?
From a high level, this is about supply chain disruption and market confidence. This 20% impacts the entire world, and there is no clear time frame to any resolution.
Oil is used in almost everything, so the gas at your pump is competing against everything from medical plastics, to jet fuel, lubricants, fertilizer, you name it.
Gasoline for vehicles is a very easy place to squeeze out profits in a very uncertain environment.