The blockade of the Strait of Hormuz has driven Middle Eastern oil prices close to $150 per barrel, redemption pressures in the private credit market have surged, warnings of a "Lehman-like moment" have been raised, the wave of AI investments reaching billions has started to cool, and consumption among low-income groups in the United States is on the verge of collapse – five crisis indicators are converging toward the same flashpoint. Meanwhile, the fiscal buffer space of the United States is nearing its limit, and the dominoes may fall at any moment.
The U.S. economy is at a crossroads of multiple risks. The blockade of the Strait of Hormuz has driven oil prices to soar, stress in the private credit market is escalating, and the AI investment boom shows signs of overheating. Coupled with diverging consumer confidence and narrowing fiscal buffers, any single point of failure could become the trigger for a systemic crisis.
Since Iran effectively blocked the Strait of Hormuz, global daily oil supplies have fallen by as much as 16 million barrels, with Brent crude briefly reaching $110 per barrel and Dubai crude breaking above $150 last week. The energy price shock has compressed available capital for Middle Eastern sovereign wealth funds, which are key funding sources for major private AI companies like OpenAI and Anthropic.
At the same time, warning signals such as rising redemption pressures and climbing loan default rates are emerging in the U.S. private credit market. Lloyd Blankfein, former CEO of Goldman Sachs, recently issued a public warning that unrealized assets accumulating in private markets are brewing systemic risks, stating, "At some point, there will inevitably be a triggering factor or moment of reckoning." Turmoil in the private credit market is spreading to broader financial markets through the banking system. Additionally, divergence among consumers is intensifying, with low-income groups already bearing the brunt of pressure.
These risks do not exist in isolation but are interconnected and mutually reinforcing, with multiple crisis threads converging toward the same tipping point.
Oil Prices: Moderate Pullback or Surge Toward $200
The blockade of the Strait of Hormuz represents the most immediate external shock. According to the Wall Street Journal, Michael Haigh, a commodities analyst at Societe Generale, estimates that if the strait were to be blocked for another two weeks, global inventories would drop to historically low levels.$Brent Last Day Financial Futures (JUN6) (BZmain.US)$This could reach the historical high of $146 per barrel set in 2008.
Most economists currently maintain a relatively optimistic baseline forecast. Jan Hatzius, chief economist at Goldman Sachs, estimates that if the Strait of Hormuz reopens by mid-April, the U.S. economy would contract by approximately 0.4% one year later compared to a scenario without a blockade—indicating slower growth but not a recession.
Supporting this assessment are several factors: after adjusting for inflation, $146 oil is about 33% lower than in 2008; the U.S. economy’s dependence on oil has significantly decreased; and futures markets indicate that Brent crude for delivery in April next year is priced at around $80 per barrel, reflecting expectations that oil prices will not remain elevated long-term.
However, tail risks cannot be ignored. Saudi Arabia is currently rerouting approximately 4.5 million barrels of crude oil per day through the Yanbu Port on the Red Sea. If Iran were to attack this port or its oil pipelines, or if Houthi forces backed by Iran were to strike vessels transiting the southern end of the Red Sea, the situation would deteriorate sharply. Michael Haigh warned that, in an extreme scenario,$Brent Last Day Financial Futures (JUN6) (BZmain.US)$Prices could surge to $200 per barrel. However, he also admitted, "I am only speculating...this is an unprecedented situation."
Private Credit: Localized Pressure or Systemic Crisis
The U.S. private credit market, with a scale of approximately USD 1.3 trillion, and the global market exceeding USD 2 trillion, are facing the most severe stress test since the expansion cycle.
According to the Wall Street Journal, investors are uneasy about their loan exposure in high-risk sectors such as software, with rising redemption demands; Michael Dimler, Senior Vice President of Private Corporate Credit at Morningstar DBRS, characterized the current pressure as a "normal credit downturn cycle," but acknowledged that loan performance is weakening.
Blackrock has frozen redemptions for some consumer loan funds, while Apollo executives publicly stated that recovering 20 cents on the dollar for certain loans would be considered fortunate. The transmission path is clear: Wall Street banks provide financing to private credit funds using their loan assets as collateral, and if default rates on underlying loans continue to rise, banks will face contagion pressures—recent declines in bank stocks are an early warning signal.
Christopher Whalen, Chairman of credit research firm Whalen Global Advisors, issued a more severe warning, expressing concerns about a "Lehman-like moment"—a scenario where lenders simultaneously withdraw capital, triggering a chain reaction collapse. Richard Farley, a leveraged finance lawyer, also noted, "What we really need to worry about is forced liquidation of loan portfolios, with everyone selling at the same time."
Lloyd Blankfein, former CEO of Goldman Sachs, used the metaphor of forest fires to warn that "the longer the interval between two fires, the more dry wood accumulates," implying that the longer it has been since the last major crisis, the larger the scale of the next potential explosion could be.
AI Boom: Economic Engine or the Next Bubble
Artificial intelligence has been a key pillar supporting the U.S. economy and stock market over the past year.
Tech giants$Alphabet-A (GOOGL.US)$、$Amazon (AMZN.US)$、$Meta Platforms (META.US)$、$Microsoft (MSFT.US)$and$Oracle (ORCL.US)$are projected to collectively spend over $2 trillion on capital expenditures in the next three years, primarily focused on data centers and chips. This wave of investment may still provide some economic cushion despite the impact of the energy crisis.
However, vulnerabilities in AI investments are becoming apparent. According to the Wall Street Journal, Todd Castagno, Head of Global Valuation, Accounting, and Tax at Morgan Stanley's research division, pointed out that energy and shipping restrictions triggered by the Iran war will increase the difficulty of constructing data centers; Middle Eastern sovereign wealth funds are significant capital sources for large private AI companies like OpenAI and Anthropic, and a blockade of the Strait of Hormuz disrupting petrodollar circulation could mean the withdrawal of hundreds of billions of dollars annually from the AI supply chain.
Meanwhile, financing for AI infrastructure has begun to cool, with investor concerns about capital scarcity rising. Castagno stated, "Capital constraints across the entire ecosystem are tighter than people realize." A significant portion of current AI investments relies on debt financing, and if data center construction stalls, a critical pillar supporting the economy could be undermined.
Consumers: How Long Can the High-Income Group Hold On
The divergence in U.S. consumer spending has persisted for some time, but a full-scale collapse has yet to occur.
Data from Breno Braga, an economist at the Urban Institute, shows that credit card delinquency rates for low- and middle-income borrowers have surpassed levels seen during the pre-pandemic economic peak. The key to sustaining overall consumption lies with high-income households—boosted by last year’s stock market rally, affluent families continue to exhibit strong spending intentions.
However, this support is not stable. The high-income group is less directly sensitive to high oil prices due to their vehicles having higher fuel efficiency and gasoline expenses accounting for a smaller proportion of their income; however, should the stock market experience a sharp decline, the reversal of the wealth effect will quickly ripple through to consumption. Meanwhile, the low-income group is already in a precarious state.
Matthias Kehrig, an economist at Duke University, estimates that a $1 increase in oil prices over the past month equates to a 2% loss of income for low-income commuters, "which inevitably means other expenditures will need to be sacrificed."
Fiscal Buffer: The Last Line of Defense or Risk Amplifier
During various economic shocks, the federal government typically plays the role of a 'shock absorber,' stabilizing fluctuations by increasing spending, cutting taxes, or bailing out the financial system. Last year's tax cut bill is currently injecting cash into households through higher refunds and reduced withholding taxes, objectively creating an unplanned buffer.
But the narrowing fiscal space is weakening this capacity. Annual interest payments in the U.S. are nearing 20% of fiscal revenue, while the debt-to-GDP ratio approaches historical peaks. The Social Security Trust Fund is projected to be depleted by 2032. Since the outbreak of the Iran war, the 10-year Treasury yield has risen from below 4% to 4.32%, and last week's Treasury auction also performed weaker than expected.
Mitch Daniels, former White House Budget Director under the George W. Bush administration, issued a warning: "There were people, institutions, and even countries who once believed 'this kind of thing won't happen to us'—and they were right, until the day they weren’t." The safety of U.S. fiscal policy depends on both mathematics and confidence, and reversals of confidence often come unexpectedly.
Editor/Melody