Category: Framework
Source: Wood Mackenzie Horizons Report (Peter Martin, Head of Economics; Massimo Di Odoardo, VP Gas & LNG Research), via gCaptain, May 21, 2026
Description
The most comprehensive analytical structure for the Hormuz crisis — three named scenarios with distinct price, economic, and energy-transition implications. The scenario tree provides decision-makers with a branching framework rather than a single forecast.
The Three Scenarios
Scenario 1: Quick Peace
- Strait reopens by June
- Global economy returns to pre-war trajectory by Q4
- Brent: ~$80/bbl by year-end, ~$65 in 2027
- Markets return to oversupply
Scenario 2: Summer Settlement
- Strait largely closed until September
- Oil and LNG shortages persist through Q3
- Brent: $120-150/bbl range
- Shallow global recession in H2 2026
Scenario 3: Extended Disruption
- Strait remains largely closed through year-end
- Brent approaches $200/bbl by end-2026
- Despite global oil demand falling 6 mb/d YoY in H2
- Diesel and jet fuel: $300/bbl in major refining centers
- Global GDP contracts 0.4% in 2026 (third global recession this century)
- Middle East GDP: -10.7%
- EU GDP: -1.5%
- US growth: <1% in both 2026 and 2027
LNG Dimension (Unique to WoodMac)
Even in quick-peace case, LNG markets remain tight through summer 2027. In extended disruption:
- Some of Gulf's 85 mt/yr existing LNG capacity could be permanently lost
- ~75 mt/yr of projects under construction could face multi-year delays
- Would accelerate diversification away from imported LNG
- Supports coal resilience and faster growth in renewables/electrification
Significance
The scenario tree provides the most structured analytical lens for the Hormuz crisis. The $200 worst-case is grounded in supply/demand math (6 mb/d demand destruction still insufficient to offset supply loss). The LNG dimension is unique — no other source has quantified the 80 mt/yr LNG gap and its structural implications for global energy transition.
Relationship to Other Concepts
- Extends "Race Against Time" (Morgan Stanley) by adding the LNG dimension and permanent capacity loss
- Provides the most granular price tiering ($80 / $120-150 / $200)
- The "permanently lost" LNG capacity is a structural long-term claim unique to this source