Ken Griffin warns Strait of Hormuz closure risks global recession

Billionaire investor Ken Griffin has warned that a prolonged shutdown of the Strait of Hormuz could push the global economy into a recession, underscoring the risks tied to ongoing tensions in the Middle East.

Speaking at the Semafor World Economy Forum, the founder and CEO of Citadel described the situation as a critical inflection point for global markets, particularly due to the region’s central role in energy supply.

“This really is a very, very treacherous moment for the world economy,” Griffin said. “From a macroeconomic perspective around the world...the key criteria is the resumption of the continued flow of energy products from the Middle ⁠East without tolls, without harassment.”

Energy flows at the heart of recession risks

Griffin emphasized that the uninterrupted flow of oil and energy products through the Strait remains essential for global economic stability. A disruption lasting several months could have severe consequences.

“Let’s assume [the Strait is] shut down for the next six to 12 months — the world’s going to end up in a recession. There’s no way to avoid that,” he said.

Oil prices have already reacted to the geopolitical uncertainty, hovering around $100 a barrel—well above pre-conflict levels of just under $70.

While prices have eased from their peak during the conflict, they remain elevated, posing risks to consumption and growth, particularly in energy-dependent economies across Asia.

Markets rebound, but risks remain underpriced

Despite the geopolitical tensions, equity markets have shown resilience. Stocks have largely rebounded to levels seen before the United States first launched strikes on Iran earlier this year.

However, Griffin cautioned that investor optimism may be fragile and heavily dependent on how the conflict evolves.

The current market sentiment, he noted, assumes that tensions will not escalate significantly or disrupt energy flows for an extended period. Many investors, however, believe that the risk of further escalation between the US and Iran is not fully reflected in asset prices.

This disconnect raises concerns that markets could react sharply if the situation deteriorates or if supply disruptions intensify.

War impact and shift toward alternative energy

Griffin also struck a nuanced tone on the broader geopolitical context, including the decision by Donald Trump to authorize strikes on Iran. He noted that many observers had underestimated the resilience of Iran’s military capabilities.

“We have effectively destroyed every single target you can strike from the sky,” he said, while adding that the Iranian military “is still very much intact.”

At the same time, Griffin suggested that delaying military action could have led to even more severe consequences, particularly given advances in Iran’s missile technology.

“Despite what we're seeing today, if it had ⁠happened later, it could actually be much worse,” he said, adding that Trump made a “very difficult decision about what to do right here, ⁠right now. The history has been forever changed.”

Looking ahead, Griffin pointed to a potential long-term shift in global energy strategy. A prolonged disruption in Middle Eastern oil supply could accelerate investment in alternative energy sources such as wind, solar, and nuclear power, as countries seek to reduce dependence on volatile supply routes.