Date Compiled: 2026-04-16
Type: Person — Research Economist / Analyst
Related Questions: Q1 / Q2 / Q3
Role: Research Economist, Federal Reserve Bank of Dallas
Affiliation: Federal Reserve Bank of Dallas
Relevant Decisions: Co-authored the Dallas Fed's Hormuz Closure economic impact analysis (March 20, 2026); published research on near-zero short-run oil supply elasticity; developed three-scenario model for Hormuz closure duration and price impact
Quoted Statement: "What makes the closure of the Strait of Hormuz different from these earlier oil supply shortfalls is first and foremost its magnitude. For example, in 1973 and 1990 only a little more than 6 percent of global oil supplies was removed from the market and in 1979 and 1980 only about 4 percent. Today, we are concerned with a shortfall close to 20 percent, making this geopolitical event three to five times larger." — Lutz Kilian, Dallas Fed, March 20, 2026
Who They Are
Lutz Kilian is a research economist at the Federal Reserve Bank of Dallas. He is the co-author (with Michael Plante and Alexander W. Richter) of the Dallas Fed's March 20, 2026 analysis "What the Closure of the Strait of Hormuz Means for the Global Economy" — one of the foundational institutional research pieces in the KB. Kilian is also associated with the Dallas Fed's broader research program on oil price elasticity and the economic impact of oil supply disruptions, including work on near-zero short-run supply elasticity of crude oil. — Dallas Fed Hormuz Closure · Q1 Supply Destruction · Q2 Price Impact
Role in the Crisis
Three-Scenario Price and GDP Model: Kilian's central contribution is a formal model quantifying the economic impact of three Hormuz closure duration scenarios:
| Scenario | Peak WTI | Q2 GDP Impact | Q4/Q4 GDP vs. Baseline |
|---|---|---|---|
| 1-quarter closure (reopens Q3) | $98/b | −2.9% annualized | −0.2% |
| 2-quarter closure (reopens Q4) | $115/b | −2.9% annualized | −0.3% |
| 3-quarter closure (reopens Q1 2027) | $132/b | −2.9% annualized | −1.3% |
All scenarios produce the same −2.9% annualized Q2 GDP impact because the shock materializes identically in Q2 regardless of duration. The divergence emerges in Q3–Q4 as recovery paths diverge. — Dallas Fed Hormuz Closure · Q2 Price Impact · Synthesis
Near-Zero Supply Elasticity Research: Kilian's broader research (including the Dallas Fed WP2027 series referenced in Q2-PRICE-IMPACT) establishes that oil supply elasticity is near-zero at horizons under six months — meaning prices, not production increases, are the primary market-clearing mechanism in the near term. This finding underpins the KB's analytical framework that the current shock must clear through price-driven demand destruction, not supply response. — Q2 Price Impact · Dallas Fed Hormuz Closure
Historical Precedent Framework: The Dallas Fed analysis compares the current Hormuz closure to prior geopolitical oil shocks, finding it 3–5× larger than the Yom Kippur War (~6% global supply lost), Iranian Revolution (~4%), Iran-Iraq War (~4%), and Gulf War (~6%). This historical framing anchors Q1's characterization of the event as unprecedented. — Dallas Fed Hormuz Closure
Supply Reduction Modeling: The analysis documents that the Hormuz closure removes ~20% of global oil supplies — approximately 80% of which is shipped to Asia — and models how reducing the shortfall from 20% to 10% would damp the GDP impact from −2.9% to −1.6% annualized. — Dallas Fed Hormuz Closure
Key Facts
- Dallas Fed research economist — Dallas Fed Hormuz Closure
- Co-author (with Michael Plante and Alexander W. Richter) of Dallas Fed Hormuz Closure analysis, March 20, 2026 — Dallas Fed Hormuz Closure · Q1 Supply Destruction
- Hormuz closure removes ~20% of global oil supplies — 3–5× larger than 1973, 1979, 1980, 1990 shocks — Dallas Fed Hormuz Closure
- Three-scenario model: 1-quarter → WTI $98/b; 2-quarter → WTI $115/b; 3-quarter → WTI $132/b — Dallas Fed Hormuz Closure · Q2 Price Impact · Synthesis
- Q2 2026 global GDP impact: −2.9% annualized across all scenarios — Dallas Fed Hormuz Closure · Synthesis
- Published research on near-zero short-run supply elasticity: σ=0.13 capital-oil (referenced in Q2-PRICE-IMPACT) — Q2 Price Impact · Dallas Fed Hormuz Closure
- Historical precedent research: 1973 Yom Kippur War, 1979 Iranian Revolution, 1980 Iran-Iraq War, 1990 Gulf War — Dallas Fed Hormuz Closure
- 80% of Gulf oil shipped to Asia; alternative routing (Yanbu) could reduce shortfall from 20% to 10% — Dallas Fed Hormuz Closure
- Saudi East-West Pipeline (Petroline) practical capacity ~2.5 mbd; Red Sea within Iranian/Houthi missile range — Dallas Fed Hormuz Closure
- UAE Habshan-Fujairah bypass pipeline already under Iranian attack — Dallas Fed Hormuz Closure
Related Articles
- Dallas Fed Hormuz Closure (primary institutional source)
- Q1 Supply Destruction (20% supply removal, historical comparison, bypass capacity)
- Q2 Price Impact (near-zero supply elasticity, WTI scenario paths, GDP impact)
- Synthesis (institutional convergence on magnitude, GDP scenarios)
- Historical Parallels (historical shock comparison framework)
- Price Elasticity (oil supply elasticity research)
- Open Questions (duration scenarios, Q1.1 closure duration)