---
title: "Why Middle East Oil Risks Now Exceed US-China Tensions"
description: "IIF Deputy Chief Economist Ashok Bhundia argues that dwindling oil and diesel inventories around the Strait of Hormuz present a more urgent global risk than US-China strategic competition. He warns that elevated crack spreads are driving cost-push inflation and could trigger a sudden market shock. (Source: Bloomberg)"
section: market-watch
published: 2026-09-30T04:07:09.744666+00:00
canonical: https://valorandventures.media/article/f68c5df4-129f-47f2-92a9-3cca47b32545
publisher: "Valor & Ventures Media"
source: "Bloomberg"
source_url: https://www.bloomberg.com/news/videos/2026-09-30/why-middle-east-oil-risks-now-exceed-us-china-tensions-video
access: free
---

# Why Middle East Oil Risks Now Exceed US-China Tensions

*IIF Deputy Chief Economist Ashok Bhundia argues that dwindling oil and diesel inventories around the Strait of Hormuz present a more urgent global risk than US-China strategic competition. He warns that elevated crack spreads are driving cost-push inflation and could trigger a sudden market shock. (Source: Bloomberg)*

## Executive Summary

A critical warning from a leading financial economist suggests that the global economy faces a more immediate threat from localized energy supply bottlenecks than from the long-term geopolitical rivalry between the United States and China. According to a Bloomberg report, Ashok Bhundia, the Deputy Chief Economist at the Institute of International Finance (IIF), argues that dwindling inventories of oil and diesel in the vicinity of the Strait of Hormuz represent an urgent danger to international markets. This perspective reframes the current risk landscape, suggesting that tangible operational vulnerabilities in vital shipping lanes present a more pressing hazard than the ongoing strategic competition between Washington and Beijing. The Strait of Hormuz has long been recognized as one of the world's most critical maritime chokepoints, serving as a primary transit route for global petroleum supplies. Bhundia points out that the current reduction in crude and diesel inventories around this critical corridor significantly reduces the market's safety margin. With stockpiles depleted, any unexpected disruption in the region could instantly reverberate through global supply chains. This fragility means that even minor logistical friction or localized geopolitical events could escalate rapidly, leaving energy-dependent economies highly vulnerable to sudden and severe disruptions. In addition to inventory concerns, the IIF economist highlights the role of elevated crack spreads in driving broader economic instability. Crack spreads, which measure the price differential between raw crude oil and refined petroleum products like diesel, have remained high, signaling tight refining capacity and rising production costs. The outlet reports that these elevated spreads are a primary catalyst for cost-push inflation, a phenomenon where rising input costs drive up prices across the entire economy. Bhundia warns that this inflationary pressure, combined with low inventories, creates a volatile environment ripe for a sudden market shock that could disrupt global commerce. For the executives, entrepreneurs, and civic leaders who read Valor & Ventures Media, this analysis underscores the importance of monitoring immediate operational bottlenecks alongside grand strategic trends. While the overarching competition between the U.S. and China defines long-term policy, the immediate viability of businesses depends on stable energy costs and predictable supply chains. Leaders must recognize that localized logistical pressures, such as inventory shortages in key geographic chokepoints, can trigger rapid inflationary shocks that require swift, adaptive management strategies to navigate successfully.

## Article

IIF Deputy Chief Economist Ashok Bhundia argues that dwindling oil and diesel inventories around the Strait of Hormuz present a more urgent global risk than US-China strategic competition. He warns that elevated crack spreads are driving cost-push inflation and could trigger a sudden market shock. (Source: Bloomberg)
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Bloomberg

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Originally published by Bloomberg: https://www.bloomberg.com/news/videos/2026-09-30/why-middle-east-oil-risks-now-exceed-us-china-tensions-video