Dallas Federal Reserve President Lorie Logan said the world may need to reduce oil and gas consumption if the Strait of Hormuz remains closed due to the U.S.-Israeli war on Iran.
Iran has restricted shipping through the strait during the three-month conflict, raising energy, food, and fertilizer prices. Before the war, about a fifth of the world's oil and liquefied natural gas passed through the narrow waterway.
"With supplies highly constrained, if shipping through the strait does not soon return to prewar levels, world oil and natural gas consumption could need to fall more meaningfully than it has so far," Logan said.
She noted that the economic consequences would depend on how much end users can switch to other energy sources or use energy more efficiently.
