📈 Global Oil Crisis: Strait of Hormuz Blockade Impacts Sri Lanka

The global economy faces severe instability as the Iran-Israel-US conflict leads to a blockade of the Strait of Hormuz, a chokepoint handling 20% of global oil demand. Despite technological shifts, the world remains heavily dependent on Middle Eastern oil, which still accounts for 31% of global production. • Energy Market Shocks: Global oil prices have surged to US$ 110-115 per barrel. If the blockade persists into May 2026, prices are projected to hit US$ 160-180, the highest since 2008. • Geopolitical Impact: The Bab-el-Mandeb strait (accounting for 10-12% of seaborne oil) is also under threat from Houthi rebel attacks, directly affecting Asian trade routes. • Financial Markets: Global equity markets have lost over US$ 12 Trillion in just 30 days. The US market cap, currently 50% of the global total, faces significant recessionary risks. • Sri Lanka Context: Based on provisional 2025/26 data, Sri Lanka is navigating this crisis with: - GDP growth of approx. 5% in 2025. - Foreign reserves sufficient for 4 months of imports. - Strategic energy negotiations underway with India and Russia. • Economic Pivot: To mitigate shocks, the focus must shift to the "MERIITSS" framework: Manufacturing, Exports, Remittances, Investments, Industrial Agriculture, Tourism, SMEs, and Services. These sectors represent 80% of national output and are critical for transitioning from "danger" to "opportunity."