{
  "id": "S09",
  "slug": "energy-supply-shock",
  "title": "Energy supply shock",
  "version": "0.2.0",
  "status": "active",
  "orientation": "downside",
  "family": "C",
  "short_title": "Energy supply shock",
  "thematics": [
    "climate-energy-resources",
    "economic-security-supply-chains"
  ],
  "likelihood_type": "systemic",
  "likelihood_note": null,
  "scores": {
    "likelihood_2y": {
      "band": 4,
      "rationale": "2022 and 2026 both produced shocks within the Standard Severe range on at least one fuel."
    },
    "likelihood_10y": {
      "band": 5,
      "rationale": ""
    },
    "impact_systemic": {
      "level": 4,
      "rationale": "On the 2022 output and fiscal costs."
    },
    "impact_national": {
      "level": 4,
      "rationale": ""
    },
    "confidence": {
      "level": "high",
      "reason": ""
    },
    "priority": 16,
    "tier": "I",
    "source": "ginc-desk-v0.2"
  },
  "scorecard": {
    "onset": "sudden",
    "duration": "1 year (price regime 18 months)",
    "warning": "days to months",
    "scope": "global",
    "origin": "adversarial (regional conflict) or accidental",
    "external_support": "partial",
    "policy_response": "current plans",
    "recovery_horizon": "years"
  },
  "summary": "Oil prices double and gas prices quadruple for 18 months after a Gulf conflict or a supply cut, with physical shortages for the most exposed importers. The Bank of England's 2025 stress scenario supplies the calibration (oil up more than 100 per cent, gas more than 300 per cent, inflation to 10 per cent, policy rates to 8 per cent). Distinct from S05: a chokepoint closure is one cause; pipeline cut-offs, sanctions and producer decisions are others, and the shock persists after the strait reopens.",
  "narrative": {
    "dateline": "January 2029",
    "text": "The strait reopened in the autumn and prices did not come down. Two producers had lost export capacity to strikes on their terminals; the insurers were pricing the next closure; and the gas market, which had tolerated one winter of rationing, would not tolerate a second without a premium. European industrial gas prices sit at four times their 2024 level and the fertiliser, glass and chemicals plants that survived 2022 close in a second wave. Central banks raise rates into a supply shock for the second time in a decade and governments spend 3 per cent of GDP on energy support they cannot afford. Coal plants scheduled for closure run flat out; emissions targets are suspended 'temporarily'. In South Asia, LNG cargoes are diverted to higher bidders and power cuts return to eight hours a day. In Africa, diesel for generators and water pumps costs more than the clinics' budgets. The countries with storage, interconnection and domestic renewables ride it out; the ones that had treated energy security as a price question find it was a capability question."
  },
  "anchors": [
    {
      "shock_id": "russian-gas-cut-off-2022",
      "date": "2022",
      "event": "Russian gas cut-off",
      "what_happened": "European gas (TTF) peaked near €340/MWh in August 2022, roughly ten times pre-crisis; demand destruction and fiscal support worth hundreds of billions",
      "calibrates": "gas multiple, fiscal cost"
    },
    {
      "shock_id": "hormuz-closure-2026",
      "date": "March 2026",
      "event": "Hormuz closure",
      "what_happened": "Crude up 28 to 35 per cent in ten days; Brent above US$92",
      "calibrates": "onset speed"
    },
    {
      "shock_id": "oil-embargo-1973",
      "date": "1973–1974",
      "event": "Oil embargo",
      "what_happened": "Prices quadrupled; rationing in importers",
      "calibrates": "Standard Extreme precedent"
    },
    {
      "shock_id": "bank-of-england-stress-test-2025",
      "date": "March 2025",
      "event": "Bank of England 2025 stress scenario",
      "what_happened": "Oil +100 per cent, gas +300 per cent; UK CPI 10 per cent; Bank Rate 8 per cent",
      "calibrates": "Standard Severe parameters"
    },
    {
      "shock_id": "iran-iraq-tanker-war-1984",
      "date": "1984–1988",
      "event": "Iran–Iraq tanker war",
      "what_happened": "Sustained attacks on Gulf shipping without full closure",
      "calibrates": "prolonged risk premium"
    }
  ],
  "parameters": {
    "common": {
      "severity": {
        "major": "major",
        "severe": "severe",
        "extreme": "extreme"
      },
      "duration": {
        "major": null,
        "severe": "1 year (price regime 18 months)",
        "extreme": null
      },
      "onset": {
        "major": null,
        "severe": "sudden",
        "extreme": null
      },
      "warning": {
        "major": null,
        "severe": "days to months",
        "extreme": null
      },
      "scope": {
        "major": null,
        "severe": "global",
        "extreme": null
      },
      "origin": {
        "major": null,
        "severe": "adversarial (regional conflict) or accidental",
        "extreme": null
      },
      "external_support": {
        "major": null,
        "severe": "partial",
        "extreme": null
      },
      "concurrency": {
        "major": null,
        "severe": "standalone",
        "extreme": null
      },
      "policy_response": {
        "major": null,
        "severe": "current plans",
        "extreme": null
      },
      "recovery_horizon": {
        "major": null,
        "severe": "years",
        "extreme": null
      }
    },
    "specific": [
      {
        "name": "Oil price multiple",
        "default": "×2",
        "range": "×1.5 to ×3",
        "unit": null,
        "note": null
      },
      {
        "name": "Gas price multiple",
        "default": "×4",
        "range": "×2 to ×6",
        "unit": null,
        "note": null
      },
      {
        "name": "Duration of price regime",
        "default": "18 months",
        "range": "6–36",
        "unit": "months",
        "note": null
      },
      {
        "name": "Physical supply loss",
        "default": "10 per cent of imports",
        "range": "0–25",
        "unit": "per cent of imports",
        "note": null
      },
      {
        "name": "Strategic stock coverage",
        "default": "90 days",
        "range": "30–180",
        "unit": "days",
        "note": null
      },
      {
        "name": "Policy rate response",
        "default": "hikes",
        "range": null,
        "unit": null,
        "note": "BoE regime"
      }
    ]
  },
  "transmission": [
    "Price spike and physical shortage.",
    "Inflation and rate rises.",
    "Industrial closures in energy-intensive sectors.",
    "Fiscal support and subsidy cost.",
    "Power rationing in import-dependent emerging economies.",
    "Climate policy reversal; coal and diesel substitution.",
    "Current-account and currency stress."
  ],
  "loading": [
    {
      "dimension": "Hard",
      "domain": "defence-security",
      "load": "Medium",
      "channel": "fuel for operations; budget compression"
    },
    {
      "dimension": "Hard",
      "domain": "strategic-infrastructure",
      "load": "High",
      "channel": "storage, interconnection, generation mix, grid stability"
    },
    {
      "dimension": "Hard",
      "domain": "critical-technology",
      "load": "Low",
      "channel": "energy-intensive compute and fabs"
    },
    {
      "dimension": "Soft",
      "domain": "government-effectiveness",
      "load": "High",
      "channel": "allocation, subsidies, monetary–fiscal coordination"
    },
    {
      "dimension": "Soft",
      "domain": "human-capital",
      "load": "Medium",
      "channel": "energy poverty; health effects"
    },
    {
      "dimension": "Soft",
      "domain": "influence-cohesion",
      "load": "Medium",
      "channel": "public tolerance; producer leverage"
    },
    {
      "dimension": "Economic",
      "domain": "macro-financial",
      "load": "High",
      "channel": "inflation, rates, fiscal cost, current account"
    },
    {
      "dimension": "Economic",
      "domain": "industry-trade-supply",
      "load": "High",
      "channel": "energy-intensive industry closures"
    },
    {
      "dimension": "Economic",
      "domain": "energy-resources",
      "load": "High",
      "channel": "supply security, mix, storage"
    }
  ],
  "stakeholders": {
    "government": {
      "exposure": "Storage days, interconnection, demand-response, fiscal headroom",
      "actions": [
        "Stress the budget on 18 months at ×2/×4",
        "Pre-design targeted rather than universal support",
        "Protect critical users"
      ],
      "watch": [
        "Storage fill",
        "Forward curves"
      ],
      "relevance": 4
    },
    "technology": {
      "exposure": "Data-centre power contracts",
      "actions": [
        "Long-term PPAs",
        "On-site generation",
        "Demand flexibility"
      ],
      "watch": [
        "Industrial tariff announcements"
      ],
      "relevance": 3
    },
    "investors": {
      "exposure": "Energy-intensive equities, utilities, inflation-linked assets",
      "actions": [
        "Run the BoE path"
      ],
      "watch": [
        "TTF and JKM forward curves",
        "OPEC spare capacity"
      ],
      "relevance": 5
    },
    "public": {
      "exposure": "Bills and heating",
      "actions": [],
      "watch": [
        "Price-cap announcements"
      ],
      "relevance": 3
    }
  },
  "regions": [
    {
      "region": "north-america",
      "exposure": "Low",
      "rationale": "Net exporter; price pass-through"
    },
    {
      "region": "europe",
      "exposure": "High",
      "rationale": "Gas import dependence"
    },
    {
      "region": "china",
      "exposure": "Medium",
      "rationale": "Coal buffer; crude imports"
    },
    {
      "region": "indo-pacific",
      "exposure": "High",
      "rationale": "Japan, Korea, Taiwan, Philippines"
    },
    {
      "region": "south-asia",
      "exposure": "High",
      "rationale": "LNG and crude imports; power cuts"
    },
    {
      "region": "gulf-middle-east",
      "exposure": "Low",
      "rationale": "Windfall; except conflict parties"
    },
    {
      "region": "africa",
      "exposure": "High",
      "rationale": "Diesel dependence, no fiscal space"
    },
    {
      "region": "latin-america",
      "exposure": "Medium",
      "rationale": "Mixed producers and importers"
    },
    {
      "region": "russia-eurasia",
      "exposure": "Low",
      "rationale": "Windfall"
    }
  ],
  "indicators": [
    {
      "name": "Brent, TTF, JKM spot and forward curves",
      "source": null,
      "threshold": null,
      "cadence": null
    },
    {
      "name": "OPEC spare capacity",
      "source": null,
      "threshold": null,
      "cadence": null
    },
    {
      "name": "Gas storage fill",
      "source": "AGSI",
      "threshold": null,
      "cadence": null
    },
    {
      "name": "Strategic petroleum reserve days",
      "source": "IEA",
      "threshold": null,
      "cadence": null
    },
    {
      "name": "Energy-intensive output indices",
      "source": null,
      "threshold": null,
      "cadence": null
    },
    {
      "name": "Energy subsidy announcements as share of GDP",
      "source": null,
      "threshold": null,
      "cadence": null
    },
    {
      "name": "Coal plant life-extension decisions",
      "source": null,
      "threshold": null,
      "cadence": null
    }
  ],
  "compounds": {
    "triggers": [
      {
        "id": "S03",
        "note": null
      },
      {
        "id": "S04",
        "note": null
      },
      {
        "id": "S07",
        "note": null
      },
      {
        "id": "S11",
        "note": "fertiliser"
      },
      {
        "id": "S12",
        "note": "grid stress"
      }
    ],
    "triggered_by": [
      {
        "id": "S05",
        "note": null
      },
      {
        "id": "S01",
        "note": null
      },
      {
        "id": "S06",
        "note": null
      }
    ],
    "amplified_by": [],
    "triggered_by_other": [],
    "amplifying_trends": [
      "under-investment in storage and interconnection",
      "import concentration",
      "electrification raising grid dependence"
    ]
  },
  "open_questions": [
    "Whether gas and oil shocks should be separate presets.",
    "How to treat exporters (windfall) in a capability frame.",
    "Whether the electricity-price channel deserves its own slider as electrification proceeds."
  ],
  "commentary": null,
  "overview": {
    "source": "ginc-desk-v0.2",
    "lenses": {
      "political": "**Producers gain leverage**. Public tolerance of a second winter of rationing is thin.",
      "economic": "Oil doubles and gas quadruples for **18 months**. Central banks raise rates into a supply shock; energy support costs 3 per cent of GDP.",
      "social": "**Energy poverty**. Power cuts return to eight hours a day and diesel costs more than the clinics' budgets.",
      "technological": "Energy-intensive compute and fabs are exposed; data centres seek long-term contracts and **on-site generation**.",
      "legal": "Emissions targets are suspended **'temporarily'**; price caps and allocation rules decide who is supplied.",
      "environmental": "**Coal plants** scheduled for closure run flat out. Storage, interconnection and domestic renewables decide who rides it out."
    },
    "regions": {
      "north-america": "Net exporter; **price pass-through** only.",
      "europe": "Gas import dependence. Fertiliser, glass and chemicals plants **close in a second wave**.",
      "china": "A **coal buffer**, with exposure through crude imports.",
      "indo-pacific": "**Japan, Korea, Taiwan and the Philippines** import their energy.",
      "south-asia": "LNG cargoes are **diverted to higher bidders** and power cuts return.",
      "gulf-middle-east": "**Windfall**, except for the parties to the conflict.",
      "africa": "**Diesel dependence** for generators and water pumps, with no fiscal space.",
      "latin-america": "A mix of **producers and importers**.",
      "russia-eurasia": "Low exposure: **windfall**."
    }
  },
  "history": [
    {
      "edition": 2027,
      "rank": 6,
      "L2y": 4,
      "L10y": 5,
      "impact_systemic": 4,
      "impact_national": 4,
      "confidence": "high"
    }
  ],
  "changelog": [
    {
      "version": "0.2.0",
      "date": "2026-10-02",
      "change": "Entered the Library at v0.2 with GINC desk scores."
    }
  ],
  "citation": "GINC (2027). Scenario S09 Energy supply shock, Scenario Library v0.2. scenarios.ginc.org/library/energy-supply-shock"
}