Just hours after President Trump announced a conditional two-week ceasefire with Iran — hinging on the reopening of the Strait of Hormuz — a sobering reality persists. The physical destruction from weeks of strikes across the Persian Gulf cannot be undone overnight. Even with diplomacy gaining traction in Islamabad and oil prices pulling back on hopes of de-escalation, the damage already inflicted on energy infrastructure ensures that shortages, rationing, and higher costs will continue well into 2026 and beyond.
Michael Snyder's recent Substack post puts it bluntly: widespread rationing and global energy shortages are now inevitable, no matter when the fighting stops. Dozens of oil, natural gas, and petrochemical facilities have been hit. Roughly 75 energy sites in the Gulf region were attacked, with about a third severely damaged. Rebuilding will cost tens of billions of dollars and take years.
Key facilities are offline or operating at reduced capacity. In Iran, major petrochemical plants in Assaluyeh (including Jam and Damavand, responsible for over 85% of the country's petrochemical exports) were destroyed. Retaliatory strikes damaged Saudi Arabia's SABIC complex in Al-Jubail, one of the world's largest petrochemical producers. Natural gas exports from the region have essentially halted. Refining capacity has taken hits too, tightening supplies of diesel, jet fuel, and other middle distillates.
The Strait of Hormuz — the chokepoint for roughly one-fifth of global oil and significant LNG volumes — has seen traffic reduced to a trickle since early March. Even if it fully reopens soon under the ceasefire terms, the lost production and damaged export terminals create a lag that markets cannot instantly fill. The International Energy Agency's Fatih Birol has described the shock as "more severe than those of 1973, 1979, and 2022 combined." April was already shaping up as a "black April," with losses of crude and refined products potentially doubling March levels due to pre-war cargoes running out.
What This Means in Practice
Oil and Refined Fuels: Global supply has dropped by millions of barrels per day. Refineries outside the Gulf are struggling with feedstock shortages, leading to reduced runs. Jet fuel constraints have already caused flight cancellations and refuelling restrictions (including at several Italian airports). Gasoline/petrol prices are climbing — some California stations have hit $7.50/gallon, with warnings of $10 possible if conditions worsen.
Natural Gas and Petrochemicals: LNG and gas flows are severely disrupted, hitting fertilizer production hard. A third of global fertilizer shipments normally pass through the region; plants in India, Bangladesh, and Pakistan have idled. This will ripple into lower food production later in 2026, as missed nitrogen application windows compound existing hunger challenges.
Rationing and Daily Life: Signs are already visible. South Korea has urged shorter showers to save energy. The Philippines suggested using stairs over elevators. In parts of Asia and the Middle East, panic-buying, long queues at fuel stations, and even violence over stockpiling have been reported. Factories in Asia are idling due to petrochemical shortages affecting textiles, plastics, and packaging.
Broader Economy: Higher energy costs feed into inflation, reduced manufacturing, and slower growth. Asia, heavily dependent on Gulf supplies, feels the brunt first, but Europe and even the US are not immune.
The optimistic view after Trump's announcement and Iran's acceptance of the pause is that markets can quickly normalise once shipping resumes. But infrastructure damage changes the equation. Destroyed plants and terminals don't restart with a press conference. Spare capacity that once acted as a buffer is now stranded or itself affected. Recovery timelines stretch into years for some facilities.
Why the Lag Persists
Physical repairs are slow and expensive. Supply chains for replacement parts, skilled labour, and safety certifications add delays. Insurance, legal, and security concerns will keep shipping rates and risk premiums elevated even after the Strait reopens. Demand destruction (higher prices reducing consumption) offers some relief, but it also signals economic pain.
This doesn't mean catastrophe is guaranteed everywhere. Strategic reserves have been released, alternative routes and non-Gulf suppliers (including ramped-up US or Russian output where possible) can help mitigate. Technological adaptations and efficiency measures may soften the blow. Yet the baseline has shifted: cheaper, abundant energy from the Gulf is no longer a given in the near term.
Looking Ahead from Australia
For those of us in Melbourne and across Victoria, the effects will show up at the bowser, in higher costs for imported goods, and potentially in electricity and food prices. Global energy markets are interconnected — what happens in Hormuz doesn't stay in Hormuz.
The ceasefire is a welcome step back from escalation. It buys time for negotiations on a longer-term deal. But it doesn't erase the scars of the past weeks. Policymakers, businesses, and households would be wise to plan for a period of tighter supplies and higher volatility rather than assuming an immediate return to pre-war normality.
True resilience comes from diversifying energy sources, investing in domestic production where viable, supporting efficient technologies, and avoiding over-reliance on any single chokepoint. Crises like this remind us how fragile complex global systems can be when critical infrastructure is targeted.
Even if the guns fall silent tomorrow, the energy shock is already underway. Preparation, not panic, is the prudent response.
https://michaeltsnyder.substack.com/p/widespread-rationing-and-global-energy