AI Boom Meets Energy Crisis! Global Supply Disruption Exceeds 1 Billion Barrels – PIMCO Warns of Three Critical Chokepoints, Taiwan Hit Hard

Global energy supply is facing a highly vulnerable moment, with the Persian Gulf, Red Sea, and Black Sea—three critical geographic nodes—simultaneously blocked. According to a new report by PIMCO (Pacific Investment Management Company), a leading fixed-income asset management firm, cumulative global oil supply losses have exceeded 1 billion barrels due to multiple geopolitical conflicts in the Middle East, Ukraine, and Russia—marking the largest net energy supply loss in history. As buffer mechanisms are gradually depleted, the global energy market's margin for error has dropped to zero, exposing the market to heightened risks of global economic recession and stagflationary supply shocks. PIMCO highlights that net energy-importing regions such as Europe, Japan, and Taiwan will be among the hardest hit.

PIMCO economists Tiffany Wilding and commodities portfolio manager Greg Sharenow analyze that current energy supply risks have expanded to three key geographic nodes: the Persian Gulf, Red Sea, and Black Sea. The Persian Gulf shipping route is again nearing a standstill, with the Strait of Hormuz disruption threatening nearly 20% of daily global oil supply. Attacks by Houthi forces on the Bab-el-Mandeb Strait in the Red Sea have disrupted Saudi Arabia’s lifeline rerouted through the Red Sea. Meanwhile, Ukraine’s attacks on Russian refining facilities and export ports have reduced Russia’s processing capacity to its lowest level in over two decades, further driving up price premiums for refined products.

Beyond crude oil, refined products such as gasoline, diesel, and aviation fuel, as well as liquefied natural gas (LNG), are also tightening. U.S. retail gasoline prices have risen above $4 per gallon, with diesel surpassing $5. PIMCO emphasizes that the world is currently experiencing an artificial intelligence (AI) boom, where explosive growth in computing power and data centers is driving up electricity and energy demand. Additionally, surging demand for high-energy-consuming industries such as memory and semiconductor manufacturing is further amplifying the imbalance in energy supply and demand.

More troubling is that the buffer mechanisms that previously mitigated market shocks are nearly exhausted. Global strategic petroleum reserves have released approximately 300 million barrels, reducing U.S. strategic reserves to their lowest level since 1983. Commercial inventories are also at multi-decade lows. At the same time, China, the world’s largest crude oil importer, has halved its procurement volume by drawing down inventories and reducing imports. Should China re-enter the market to replenish stocks, the supply shortage will become even more acute.

PIMCO warns this is a classic stagflationary supply shock. Rising real energy prices are equivalent to an additional tax burden on global consumers, broadly pushing up inflation and suppressing economic activity. Net energy-importing regions such as Europe, Japan, and Taiwan—key Asian economies—will be among the most severely affected. With central banks constrained by inflation and limited fiscal offset capacity, financial conditions are highly susceptible to rapid tightening. Investors should pay close attention to commodity hedging allocations to diversify risk.