Strait of Hormuz Closure Triggers Global Supply Chain Collapse, Validates Researcher's Prediction

Macro researcher Luke Grimes said the closure of the Strait of Hormuz has triggered critical supply chain disruptions, validating his prediction that breakdowns would become acute by mid-April 2026. Grimes, founder of FTD LLC (Forest for the Trees) macrothematic investment research, argued the situation involves nonlinear breakdowns due to global dependencies on oil, gas, sulfuric acid, critical minerals, and fertilizer that transit the strategic waterway. He contended that closing the strait would cause a systemic failure because these critical commodities are not easily rerouted or replaced.

The closure has exposed critical dependencies on commodities that flow almost exclusively through the strait. Grimes argued that the global supply chain relies on a steady flow of oil, gas, sulfuric acid for industrial processes, critical minerals for technology, and fertilizer for agriculture. He said the mid-April 2026 timeline for acute breakdowns has proven accurate.

"We're looking at very serious, very, very serious disruption best case at this point," Grimes said. He argued that even if the Strait of Hormuz reopened immediately, serious supply chain disruption would continue due to physical constraints and restart timelines for industrial plants.

Grimes said the United States Department of the Treasury unsanctioned Russian and Iranian oil in recent weeks despite being at war with Iran. He claimed this move was an attempt to contain oil prices that threatened Treasury market functioning. Grimes also pointed to indications of politically-connected entities front-running oil markets ahead of key announcements about the Iran conflict.

According to Grimes, China holds significant leverage over the US through its control of rare earths, pharmaceutical ingredients, electrical equipment, and critical manufacturing components. He argued this dependency gives China a powerful strategic advantage in the current global supply chain crisis.

Grimes contended that China stopped recycling dollars into US Treasuries around 2013-2014. He said China instead began buying hard assets globally after perceiving US quantitative easing as a financial attack. This shift has fundamentally altered global capital flows and reserve management strategies.

The crisis has accelerated a major shift in global finance. "Gold just supplanted treasuries as the biggest reserve asset of global central banks," Grimes said, marking a significant departure from the post-World War II financial order.

China has been building alternative financial infrastructure to reduce dependence on Western systems. Grimes said China established the China International Payment System and offshore yuan clearing banks in major financial hubs, creating parallel systems outside traditional Western financial networks.

"The number one export of the United States has been for four of the past 5 months: non-monetary gold," Grimes said, adding that this gold primarily flows to China, Hong Kong, and Switzerland. This gold outflow represents a fundamental shift in the structure of US international trade and financial relationships.