Oil Market Disruption and Potential Implications for Venture-Backed Companies 

We spoke to Jonathan Waghorn, portfolio manager on the Guinness Global Energy and Guinness Sustainable Energy strategies at Guinness Global Investors about the ongoing energy crisis. He has published an update on how the current situation is evolving and how markets are responding. If you would like to hear more from Jonathan, you can access his latest podcast here: (1) Post | LinkedIn 

Is this the biggest oil crisis yet? 

Current conditions in oil markets have been driven by supply restrictions linked to the blockage of the Strait of Hormuz. 

Restrictions on transit through the Strait of Hormuz have disrupted the flow of approximately 20 million barrels per day of oil and oil product exports (about 20% of total global daily oil consumption). While pipeline re-routing, inventory releases and previously sanctioned supply have offset part of this, the net shortfall is estimated at around 10 million barrels per day. Better, but still exceptionally disruptive. 

This is one of the largest supply shocks on record, exceeding both the 2022 Russia-related disruption and the major Middle East supply interruptions of the 1970s. 

What will happen to oil prices? 

A supply shock of this scale requires demand to drop.  This is often engendered by raising prices. 

Precedent suggests that prices of around $120 to $125 per barrel begin to reduce consumption. If restricted flows persist, prices in the range of $125 to $150 may be required to bring supply and demand back into balance. 

Early signs of adjustment include reduced refinery activity in parts of Asia, lower petrochemical output and transport demand running below trend. 

Which countries will bear the brunt? 

The effects vary by region, depending on inventory levels and reliance on imported oil. 

South-East Asia is among the most exposed, given low inventories and high import dependence. Europe and North Asia also face pressure. The United States is relatively insulated, supported by domestic supply and inventory levels, with limited reliance on flows through the Strait of Hormuz. China remains a major importer but is supported by strategic reserves built over the past year. 

Exporting countries such as Russia, Canada and Norway are benefiting from higher realised prices. 

Several importing regions are beginning to experience physical shortages, reflecting delays between disrupted flows and delivery. 

What are the implications for the global economy? 

A useful measure of broader economic impact is the ‘burden of oil’, defined as the share of global GDP spent on oil: 

(Global oil consumption × average price) ÷ global nominal GDP 

At around $90 per barrel, oil accounts for just under 3% of global GDP, below historical peaks. In previous periods of stress, including the late 1970s and 2008, this rose to approximately 4% to 8%. 

On this basis, prices would likely need to approach $150 per barrel, or roughly 5% of global GDP, before exerting a clearly negative effect on overall economic activity. 

How long will this last? 

The duration of the disruption remains uncertain. 

Once transit through the Strait of Hormuz resumes, shipping flows are likely to take around one month to restart. A further two to three months may be required for supply chains to return to normal operating levels. 

Oilfields that have been closed may not immediately return to previous output levels and in some cases will never reach their expected potential. Inventories provide a buffer, but drawdowns are finite and stocks will need to be rebuilt (or increased) once flows resume. 

Are there negative implications for AI (Artificial Intelligence)? 

The impact extends beyond oil. Around 20% of global LNG supply typically transits the Strait of Hormuz, and restrictions have tightened global gas markets. 

There are also indications of damage to LNG infrastructure, which may extend the disruption. Even once conditions improve, supply may take time to recover as facilities restart and capacity is restored. 

Demand for gas and LNG continues to increase, particularly as electricity demand rises, including from AI-related compute requirements. 

Will alternative energy benefit? 

Current conditions reinforce the importance of energy security and resilience. 

There is likely to be continued focus on diversified energy sources, including wind, solar and battery storage, as countries and companies seek to reduce reliance on constrained transit routes. 

What is the impact on early-stage companies? 

At Guinness Ventures, we continue to monitor events closely. While Jonathan’s analysis relates to public energy markets, the effects of higher energy costs are clearly transmitted through the wider economy and are therefore relevant for venture-backed businesses. 

Higher transport and logistics costs, rising input prices and increased operating expenses can compress margins. At the same time, customers may reduce or delay spending. 

For early-stage companies, these pressures are often more acute. Limited scale, tighter margins and reliance on external capital increase sensitivity to changes in cost structures and demand. 

Periods such as this can also coincide with tighter financial conditions, leading to more selective capital allocation and longer fundraising timelines. 

In this environment, close attention to revenue, cashflow and runway is key. Maintaining visibility on cost structures, preserving liquidity and planning funding requirements early will be vital to navigating an uncertain operating environment.