What is different about this round of the energy crisis compared to 2022?

The supply shocks triggered by the Iran conflict are shaking up global markets, but this time, the boundaries of the impact are much clearer than four years ago.

According to Wind Trading Desk, Goldman Sachs released a global economic review on March 15, stating that this round of supply shocks is fundamentally different from those in 2021-2022—currently, the impact is highly concentrated in the energy sector rather than spreading across the entire supply chain, significantly reducing the risk of a secondary inflation wave.

Goldman Sachs notes that the blockade of the Strait of Hormuz has led to a sharp rise in oil and gas prices, which is expected to reduce global GDP by 0.3% and push up overall inflation by 0.5 to 0.6 percentage points over the next year. Based on this, Goldman Sachs has lowered its global economic growth forecast from 2.9% pre-conflict to 2.6%, and raised its global inflation forecast from 2.3% to 2.9%.

Meanwhile, global front-end interest rate markets have responded first—since the conflict erupted, the UK 2026 policy rate has increased by 63 basis points, the Eurozone by 50 basis points, the US by 40 basis points, Canada by 39 basis points, and Australia by 31 basis points. Goldman Sachs states that it has accordingly delayed its interest rate cut forecasts for the US, UK, and other economies.

Energy Shock: Significant but Boundaries Are Clear

The blockade of the Strait of Hormuz is the core trigger of this crisis.

Goldman Sachs’ commodities team has raised its oil and gas price forecasts and quantified the impact on the global economy: rising oil prices will pressure global GDP by 0.3%, and overall inflation will increase by 0.5 to 0.6 percentage points over the next year, with core inflation rising only slightly by 0.1 to 0.2 percentage points. The simultaneous surge in natural gas prices will add additional price pressures and growth resistance in Europe and Asia.

Goldman Sachs points out that as long as the Strait of Hormuz remains blocked, the risks of these impacts are skewed toward greater severity. This uncertainty is also a primary driver behind market re-pricing of central bank policy paths.

Key Difference from 2022: Narrower Supply Chain Disruption

The inflation wave of 2021-2022 was rooted in a global supply chain crisis—energy prices were just one dimension, compounded by massive port congestion, “just-in-time” inventory management failures, and widespread production bottlenecks.

Goldman Sachs believes that the structural characteristics of this round of shocks are entirely different, supported by three dimensions:

First, major economies have very limited exposure to Middle Eastern non-energy trade. Middle Eastern energy exports account for only 1% of global trade, with most developed and emerging markets having even lower exposure. In contrast, the disruption of East Asian trade post-pandemic affected over 20% of global trade. This comparison clearly shows that the scale of supply chain disruption caused by this conflict is far less than during the pandemic.

Second, bottleneck risks in chemicals and metals are limited, and inflation impacts are quantifiable and small. Gulf countries hold significant shares in global production of certain chemicals and metals, including helium, sulfur, methanol, polyethylene, ammonia, nitrogen, and aluminum. However, these products generally account for less than 0.2% of global GDP, with Gulf production representing less than 0.02%. In comparison, the 2022 global semiconductor production disruptions affected about 1% of global GDP. Goldman Sachs estimates that even if prices of these chemicals and metals stay at current spot levels (average increase of about 25%), the overall push on global inflation would be only around 0.1 percentage points.

Among specific categories, Goldman Sachs considers methanol as the most concerning potential risk—Iran accounts for about 20% of global methanol capacity, and a permanent loss could have chain effects on downstream acetic acid, industrial adhesives, and coatings production. Helium, critical for semiconductors and aerospace, is less risky because most helium supply contracts are long-term fixed agreements, and inventories held by major producers are sufficient to offset supply disruptions in the foreseeable future.

Third, the shipping bottlenecks of 2021-2022 are unlikely to recur. Goldman Sachs notes that Gulf countries are not major transshipment hubs for most commodities (except yachts and ships), so disruptions in transshipment have limited impact on other goods. Real-time data shows that Baltic Dry Index freight rates for non-oil shipping have actually declined slightly since the war began. Air freight prices have risen sharply—by about 25% on routes between Asia and North America/Europe due to Middle Eastern airspace disruptions—but Goldman Sachs estimates this only adds about 3 basis points to global inflation.

Central Bank Policies: Cautious but Not Fully Reversed

The sharp re-pricing of front-end interest rates reflects market concerns about the trajectory of central bank policies—memories of inflation running out of control post-pandemic remain fresh, and markets expect central banks to remain highly vigilant to any inflation signals.

Goldman Sachs states that the scale of the energy shock is sufficient to prompt central banks to adopt a cautious stance, and accordingly, it has delayed its interest rate cut forecasts for the US, UK, and other economies. However, Goldman emphasizes that the core mechanism behind the 2021-2022 inflation runaway was widespread supply shocks triggering large secondary effects, whereas the narrowing scope of current shocks significantly reduces this risk.

Goldman Sachs adds that its European economic team’s research also indicates that Europe’s sensitivity to energy shocks has decreased compared to 2022. Nonetheless, if the energy crisis escalates further, nonlinear effects of energy cost pass-through and inflation expectations remain tail risks that cannot be ignored.

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