A complete closure of the Strait of Hormuz, a critical global energy chokepoint, was previously considered unthinkable and unmanageable by energy experts. Despite its significance, which accounts for roughly one-fifth of the world's oil and liquefied natural gas, major planning exercises in 2007 and 2022 did not model a full shutdown due to its perceived unlikelihood and overwhelming scale. This oversight highlights how extreme, low-probability scenarios can fall outside conventional policy planning, a concept similar to the "dismal theorem" in climate risk analysis. The current closure, while not yet fully modeled, is causing oil prices to surge and challenging previous assumptions about the strait's vulnerability. AI
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IMPACT Challenges existing energy market models and policy frameworks, potentially requiring new analytical approaches for extreme geopolitical risks.
RANK_REASON Analysis of a critical global energy chokepoint's closure, previously deemed unmanageable and unmodelable, impacting energy markets and policy planning.
