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?
You can’t pump gas out of an oil well. It has to be transported, refined, transported again, then burned. The price can fluctuate wildly in that time.
the 20% is the estimated reality now. the 60% is what the market is betting the real price will be.