Recent events highlight a shift in how energy shocks should be understood. They are no longer simply commodity price fluctuations. Increasingly, they are disruptions to critical infrastructure.
The following perspective comes from Dr Paul Hayman, founder of Hayman Advisory, a firm specialising in geopolitical trajectory analysis for family offices and institutional investors. Although based in the UK, Dr Hayman’s analysis has global relevance.
When tensions escalate around the Strait of Hormuz, family offices with international portfolios often respond by modelling oil price movements, stress-testing equity exposure, and waiting for markets to settle. While this approach has merit, it captures only part of the risk.
Roughly 20% of the world’s oil supply passes through the Strait each day. Any sustained disruption, therefore, affects far more than energy prices. It influences inflation expectations, monetary policy decisions, emerging market debt conditions, and operating costs across many sectors. These transmission effects are well understood. What is less widely recognised is that current tensions are not an isolated incident but part of a longer geopolitical trend. For this reason, analysing trajectories of escalation or change may provide more useful guidance than traditional scenario planning.
Two types of chokepoint risk
To understand the situation, it is helpful to distinguish between two forms of chokepoint risk.
The first is accidental disruption. Military activity, operational mistakes, or insurance withdrawals may interrupt shipping routes as a by-product of conflict.
The second is strategic leverage. In this case, threats to a transit route are used deliberately as negotiating tools within broader geopolitical bargaining.
These risks behave differently and evolve along different paths.
Past periods of tension in the Strait of Hormuz, such as in 1984, 1987 and 2019, largely reflected the first type. They were resolved relatively quickly because the United States’ security commitment to Gulf shipping routes was widely regarded as credible. Challenging that guarantee carried a significant military risk.
Today, that assumption is less certain. The United States has been shifting its strategic focus, reassessing regional commitments, and confronting Iran directly. As a result, regional actors may now calculate that applying pressure through chokepoint threats could deliver leverage without triggering a decisive Western military response. That change in perception transforms the current disruption from a temporary event into part of a broader geopolitical pattern. Even if tensions ease, the underlying baseline may not fully return to previous levels.
The hidden assumptions in energy exposure
Most family office analysis of energy exposure begins with commodity prices. The central question tends to be how oil price movements affect portfolio valuations, which sectors benefit or suffer, and what hedging strategies might apply.
These questions are valid, but they often rely on an unspoken assumption: that the global system transporting energy — shipping routes, supplier relationships, and settlement mechanisms — remains broadly stable while prices fluctuate.
In recent years, that assumption has weakened.
The Russia–Ukraine war showed how quickly a major supplier could be removed from Western markets, far faster than many models anticipated. The current Middle East tensions introduce an additional dimension. The physical infrastructure that moves energy has itself become uncertain.
Chokepoint risk, once considered a remote possibility, is increasingly a recurring structural feature of the global energy system.
For family offices, this matters because energy stability assumptions are embedded throughout portfolios, often indirectly. Property markets in energy-intensive economies, private equity investments in manufacturing, and exposure to emerging market debt in oil-importing countries all implicitly rely on stable supply chains.
The question is not simply whether these assumptions are correct today. It is whether they were ever consciously evaluated and whether they remain appropriate given the evolving geopolitical environment.
Trajectory analysis: three possible paths
Trajectory analysis focuses less on predicting events and more on anticipating the next layer of escalation or resolution.
In the case of Hormuz, the key issue is not whether disruption exists — it already does to varying degrees. The important question is how the situation may evolve.
Three potential developments are particularly relevant.
Managed disruption with rerouting
Disruptions continue, but the Strait does not close completely. Insurance costs rise sharply, and some tankers divert around the Cape of Good Hope, increasing travel time and costs. Oil prices settle at higher levels but remain manageable. Inflation pressures persist, particularly influencing interest rate decisions in energy-sensitive economies.
Escalation to partial closure
Through military action, mining activity, or insurance market withdrawal, the Strait’s capacity is significantly reduced. This creates a supply availability shock rather than just a price increase. Strategic oil reserves may be deployed, and diplomatic interventions accelerate. Portfolios connected to Asian manufacturing supply chains, European energy-dependent companies, and emerging market debt could experience simultaneous declines that diversification alone cannot offset.
De-escalation with lasting consequences
Tensions ease through negotiation or military stabilisation. However, the event permanently changes the behaviour of key actors whose decisions affect shipping through the Strait.
Insurers may revise risk assessments and increase baseline premiums. Tanker operators may shift fleet strategies. Regional states may recognise the strategic leverage chokepoints provide. In this scenario the Strait remains open but becomes more expensive and less predictable to operate. The risk does not disappear. Instead, it becomes permanently repriced.
Implications for investment committees
Three practical steps follow from this perspective.
Review implicit energy assumptions before running stress tests
Standard stress tests examine how portfolios react to oil price changes. A more useful first step may be identifying investments that implicitly assume reliable global energy infrastructure. If chokepoint risk becomes persistent rather than occasional, these investments may behave differently than expected.
Treat de-escalation as a repositioning opportunity
If markets rally after a ceasefire or diplomatic breakthrough, prices may adjust faster than the underlying structural risks disappear. For family offices with longer investment horizons, such rallies in energy-sensitive sectors could represent exit opportunities rather than signals to increase exposure.
Focus on early indicators rather than headline oil prices
Signals from tanker insurance premiums, war-risk surcharges, and decisions by maritime insurers such as those in the Lloyd’s market often provide earlier warnings than oil price movements. Changes in shipping behaviour or insurance availability frequently precede visible market shocks.
From price risk to infrastructure risk
Trajectory analysis ultimately highlights a broader shift in how energy risk should be understood.
For much of the post-Cold War era, energy risk for diversified portfolios was largely about price volatility. Commodity markets fluctuated, but the physical infrastructure that moved energy remained dependable.
That balance is changing.
The Russia–Ukraine war exposed infrastructure risk within European energy markets. The current tensions around Hormuz extend this reality to global oil supply routes. These events represent not isolated crises but successive signals pointing to a world where energy transit routes themselves have become strategic variables.
For investment committees, this raises a critical question: which assets in the portfolio implicitly depend on stable global energy corridors?
If the answer is uncertain, the portfolio may carry more geopolitical exposure than conventional models suggest.
Commodity price analysis remains essential, but it is no longer enough. The committees best prepared for this environment will be those that examine the geopolitical assumptions embedded in their portfolios.
What this means for family offices
For family office investment committees, the takeaway is clear. Portfolios built on the assumption that global energy flows move without friction may carry hidden geopolitical risks. Identifying those assumptions early provides strategic decision windows that traditional price-based models often fail to detect.
