The Sea Is Receding: The Coming Crisis - Part 1

How the US-Iran war's energy shock will cascade through your job, retirement, and lifestyle over the next 12 months

Mar 21, 2026

I keep looking at the mainstream media and waiting for them to scream the warnings from the rooftops.

But all I see in the headlines are political controversies, the latest sports news, celebrity scandals, with scattered commentary on Trump and Netanyahu’s Iran war.

‘Do they know what we are heading for?’ I wonder.

They will publish a story about Justin Timberlake’s DUI arrest, but nothing about what we are facing in the coming months - and even years - as a result of the unprecedented energy supply chain disruptions.

The Strait of Hormuz has been functionally closed (at least for the US and allies) for three weeks now. Twenty percent of the global oil supply is now offline. Every additional day of closure will create ripple effects that will extend the crisis by weeks and months.

I liken this moment to the awful footage of the 2004 Indian Ocean Tsunami. Holiday goers standing on the beaches on a beautiful sunny day, as the tide receded rapidly, exposing the seabed. You know the outcome of this horror movie. You’ve already seen how it ends.

“RUN!”, you want to scream at them. “HEAD FOR THE HILLS!” They are so oblivious, so normal. But every minute they stand there, watching this curious phenomenon, they are losing their chance to get out of the way of the coming catastrophe.

Some locals begin shouting their warnings. The onlookers don’t heed them. Why are those crazy people yelling? There are no sirens. No loudspeakers. No signs. Just the sounds of happy, tanned people vacationing in paradise.

We are at that moment right now in our economy. The earthquake has already occurred. The sea is still receding. We are standing by in a dream-like stupor, wondering what comes next.

We’ve seen supply shocks before. For those old enough to remember, the 1970s oil crisis brought gas lines, stagflation, and a recession, but it was regional and eventually resolved through diplomacy.

COVID also created supply chain chaos and inflation, but energy kept flowing, and the disruption proved temporary. This was a demand problem more than a supply problem. Too much money chasing too few goods. Regardless, the inflation rate has remained elevated for years after 2020.

This new crisis is another beast. We’re experiencing both problems simultaneously - energy disruption AND supply chain breakdown - while global markets sit on structural fragility that didn’t exist in the 1970s.

Household debt is at record levels. Passive investing has created a $20 trillion index fund bubble dependent on steady pension contributions. Western economies have spent 18 years papering over problems of the last financial crisis with cheap money, and the bill is about to come due.

I don’t want to scaremonger. This is intended as a realistic assessment of cascading vulnerabilities that the mainstream media isn’t even discussing, much less providing information on how to prepare. I want to consider the possible scenarios that we, as ordinary people, will face as a result of this new crisis.

If the war were to halt completely tomorrow, and the straits opened to all ships, the shocks from the past three weeks would continue to reverberate through the economy for months to come.

It’s not a tap that can be turned back on as quickly as it was shut off. And as a rapid resolution seems unlikely at this point, we are facing very serious disruptions that will take us into 2027, at least.

Therefore, in part 1 of this article, I will outline some of the issues that I see ordinary people potentially facing in the coming months and into next year. So much current news focuses on the effects on these abstract ‘markets’, but it doesn’t tell us much about what it really means for our day-to-day lives.

In part 2, the purpose is to help you conduct a kind of self-audit, so that you can understand what this could mean for you at a personal level. What are your specific geographic vulnerabilities? Your financial exposure? What is your level of dependency on systems that are about to break? And critically, what can you actually control?

This isn’t an article about bunker building, arming yourself to the teeth, or prepping for end times. That would be something you started years ago, not after the shock has already occurred.

In any case, there are plenty of doomsday peppers that can help with that aspect of things far better than I. This is about practical steps you can consider taking in the narrow window that remains.

Let’s start with what might be coming, broken down into a timeline over the next 12 months.

The Cascade Timeline: What Happens as the Strait Stays Closed

Understanding the timeline matters because the impacts compound. Each day, week, and month the Strait remains closed, the damage multiplies exponentially.

Please keep in mind that these aren’t intended to be predictions. They are a collection of possibilities you might consider when imagining ways to reduce your current exposure or mitigate some of the most undesirable effects.

Every region, household, and individual will have a different set of vulnerabilities, so I have tried to split it out as best I can for my readers.

🗓️ One Month Out (Mid-April/May 2026):

Fuel prices are already climbing sharply from current levels. Europe will see diesel at €2.50-3.00 per liter and petrol at €2.20-2.80 per liter. The UK hits £2.00-2.40 per liter. The US reaches $6-7 per gallon as the Strategic Petroleum Reserve releases slowly, but doesn’t prevent the surge.

Australia faces a crisis at AUD $3.00-3.50 per liter with actual supply shortages beginning as tankers get rerouted to higher bidders. New Zealand, the smallest market with zero bargaining power, sees NZD $4.00-4.50 per liter when fuel is available at all.

Airlines are cutting 30-40% of routes as jet fuel prices go sky-high. Panic buying creates artificial shortages globally. Your commuting costs just became noticeably painful.

Financial markets are down 12-18% from February peaks, with Australian markets hit harder at 15-20% due to mining and energy sector exposure. The first cracks appear in passive flows as nervous investors pause or reduce 401 (k) and pension contributions.

Energy sector layoffs hit airlines, logistics, and oil services-these workers were reliable index fund buyers every paycheck. Now they’re gone.

Credit spreads widen by 150-200 basis points as recession fears build. Markets are still pricing in a “temporary disruption” with diplomatic solutions expected. The optimism won’t last.

Food prices are up 8-15% from pre-war baseline, but this is existing inventory masking what’s coming. Futures markets are already pricing in 30-50% increases ahead. Fertilizer costs are climbing sharply because many are derived from petrochemicals.

Employment statistics still look normal because layoffs lag economic shocks by 4-8 weeks. Hiring freezes are spreading across energy-intensive industries. The travel and hospitality sectors are beginning cuts.

Your lifestyle shifts start here. Commuting costs force carpooling to return, or public transport where possible. International travel becomes prohibitively expensive for middle-class families. The first belt-tightening begins: streaming services are cancelled, and dining out is reduced.

🗓️ Three Months Out (June/July 2026):

Fuel reaches crisis levels. Europe sees €3.50-4.50 per liter with rationing discussions in parliaments. The UK hits £3.00-3.50 per liter with government considering coupon systems. The US reaches $8-10 per gallon as the SPR approaches depletion with only 30 days remaining.

Australia faces AUD $4.50-5.50 per liter with actual multi-day shortages at stations. Government emergency measures are announced but can’t conjure fuel that doesn’t exist. New Zealand implements formal rationing at NZD $6.00-7.00 per liter, prioritizing emergency services and freight.

Airlines operate skeleton schedules with 60% of routes cut. Home heating costs are up 50-70%. Employers implement work-from-home policies to reduce commuting. Public transit is overcrowded and insufficient.

Markets deteriorate sharply. The S&P 500 falls 28-38% from peak. Australian markets are down 35-45%, worse than the US due to mining sector collapse. European and UK markets fall 30-38%. New Zealand drops 32-40%.

The passive flow reversal accelerates dramatically. Unemployment climbs to 6-7% globally. Millions reduce or stop 401k, superannuation, and pension contributions. Airlines, logistics, manufacturing, and retail workers - a massive cohort of index fund buyers -are now unemployed.

The first significant wave of hardship withdrawals hits as people pull retirement funds early to pay medical bills, mortgages, and energy costs. Net outflows from equity index funds begin. Pension and super funds require increased contributions from employers who are already struggling.

Regional bank failures begin. In the US, banks with energy loan exposure in Texas and Oklahoma start going under. In Australia, banks with mining loans face similar stress. Corporate bond yields spike. The first major defaults hit airlines and retailers. Credit spreads reach 400-500 basis points.

The psychological shift completes. Retail investors realize this is not a temporary situation.

Food prices climb 30-45% from pre-war baseline. Wheat, rice, and cooking oil see severe increases. Meat prices surge 40-60% due to feed costs. Fresh produce becomes limited as transport costs turn prohibitive. Food banks are overwhelmed, with middle-class families appearing for the first time.

Unemployment hits 6-7% across Western economies. Travel and hospitality experience 30-40% job losses. Retail cuts staff aggressively. Manufacturing moves to reduced shifts due to energy costs. In Australia, mining sector layoffs begin as fuel costs make extraction marginal.

Your lifestyle contracts sharply. Grocery shopping becomes strategic - buying bulk, eating more cheap proteins, switching to discount stores. Private vehicle use drops 25-30%.

Non-essentials like gym memberships, food delivery services, streaming services, Uber and Airbnb get cancelled en masse. Families postpone or cancel summer vacations. Multi-generational households increase as cost-sharing becomes necessary.

A $1 million retirement portfolio is now worth $620-720k.

🗓️ Six Months Out (September 2026):

Fuel availability collapses. Europe implements formal rationing at €5-6 per liter using digital coupons and priority allocation. The UK follows suit, charging £4-5 per liter and implementing a government rationing scheme. The US hits $12-15 per gallon with the SPR completely depleted.

Australia reaches AUD $7-9 per liter under strict rationing with regular multi-week shortages in regional areas. New Zealand implements severe rationing via digital allocation at NZD $9-11 per liter. Rural communities face isolation and depopulation pressures.

Rolling blackouts hit the UK and Europe as gas power plants can’t secure fuel. Industrial production falls 25-35%. Australian outback communities are effectively stranded with fuel deliveries weeks apart. Domestic flights are severely curtailed. Private car ownership becomes a luxury item for the middle class.

Financial markets crater. The S&P 500 drops 45-55% from peak, exceeding 2008 levels. Australian markets fall 55-65%, catastrophic for super funds. UK markets decline 48-58%. New Zealand drops 50-60%.

The index fund death spiral hits full force. Unemployment reaches 8-10%, meaning millions of former contributors are now drawing unemployment benefits. Early retirement withdrawals surge as penalties get waived in some jurisdictions. Net outflows from passive funds occur every single week.

Selling is indiscriminate, punishing quality companies and junk equally. No fundamental buyers step in because nobody wants to catch a falling knife. Algorithms detect outflow patterns and accelerate selling. Index rebalancing becomes a volatility event rather than a stabilizer.

The pension crisis arrives. Funded ratios collapse, with many falling below 50%. Required contributions spike just as employers struggle to survive. Australian super funds are down 55-65%, condemning millions to retirement poverty. New Zealand KiwiSaver accounts are gutted. UK defined benefit schemes require massive employer contributions. US public pensions in Illinois, New Jersey, and Connecticut are effectively insolvent.

Multiple bank failures occur - regional banks in the US and Australia, building societies in the UK. Credit markets effectively freeze. Companies can’t roll debt. A default wave begins. High-yield spreads reach 2008 levels. Hedge funds blow up from leverage combined with volatility.

Currency crisis hits Australia and New Zealand. Both currencies, already weakened, fall another 25-35% against the USD because they need to pay premiums for fuel denominated in dollars.

Food prices climb 55-75% from the pre-war baseline. Basic staples like bread, rice, and pasta become significant budget items. Meat consumption in middle-class households drops 50-60%.

In Australia and New Zealand specifically, despite being food exporters, domestic prices approach export parity. They need export income to pay for fuel imports. Government food assistance programs are overwhelmed. Food deserts appear in regional areas where delivery costs become prohibitive.

Unemployment hits 8-10% across Western economies. The Australian mining sector is decimated as fuel costs exceed the extraction value for marginal operations. Tourism collapses globally, hitting Australia and New Zealand particularly hard, as it accounts for 10-15% of GDP in both countries. Retail faces an apocalypse as online delivery becomes uneconomical and foot traffic drops. Construction halts because materials transport costs are prohibitive.

Your standard of living is measurably lower than in 2025. Private vehicle use is reserved for essential trips only. Air travel has essentially ended for the middle class. Vacations mean staycations only. Home heating gets reduced to minimum levels, leading to elderly deaths from hypothermia.

Remote work becomes mandatory for office workers. Bicycle infrastructure is hastily expanded but overwhelmed. Urban gardens and home food production return. Credit card defaults surge.

A $1 million retirement portfolio is now worth $450-550k. Gen X faces a retirement crisis in real time, as the retirement age extends by 5-10 years. Boomers who retired in 2024-2025 consider returning to the workforce. Millennials who started investing between 2020-2024 see immediate 50% losses.

🗓️ One Year Out (March/April 2027):

Fuel rationing becomes the permanent new normal. Europe rations at €6-8 per liter where available using strict digital coupons. The UK implements comprehensive rationing at £5-7 per liter. The US sees $15-20 per gallon in free market areas with rationing in some states.

Australia reaches AUD $10-12 per liter with private vehicle use essentially ended for the middle class. Priority allocation goes to freight and emergency services only. New Zealand hits NZD $12-15 per liter with most private vehicles permanently off roads. Public transit is overwhelmed in cities.

Permanent demand destruction sets in. Remote work becomes standard for 75%+ of office workers. Air travel is down 65% from 2025 levels. Personal vehicle miles driven drop 45-50%. Public transit is packed beyond capacity.

Blackouts become routine in Europe during peak demand. Some industrial capacity shuts permanently because operations are uneconomical at these energy costs.

The Australia-New Zealand isolation factor becomes critical. Regional Australian communities are depopulating as people move to cities for access to fuel. New Zealand rural areas face similar exodus.

Both countries pay 40-60% premiums for any tanker capacity they can secure. Unlike Europe, which can potentially truck fuel from North Africa or Eastern Europe, Australia and New Zealand have no alternatives to shipped fuel.

Financial markets potentially form a bottom. The S&P 500 is down 52-62% from peak. Australian markets fall by 60-70% due to the resource sector's dependence and geographic isolation. UK markets decline 55-65%. New Zealand drops 58-68%.

The structural market transformation is complete. The passive investing era is over with flows permanently negative. Active management makes a comeback as stock-picking matters again. Massive bifurcation occurs between quality companies and zombies. Index funds are no longer the price discovery mechanism. Participation rates in 401k, super, and pension plans drop permanently.

The retirement apocalypse crystallizes. The median Gen X portfolio goes from $1 million to $380-480k. The retirement age extends by 7-12 years for the median Gen X worker. Boomers who retired in 2024-2025 return to the workforce, competing with younger workers. Millennials and Gen Z see immediate 50-60% losses, creating generational scarring and destroying faith in the system.

The Australian super system enters crisis. The entire retirement model was based on equity returns that no longer exist. New Zealand KiwiSaver faces a similar crisis.

The pension system collapses. US public pensions require federal bailouts that are politically impossible. Australian super funds merge and consolidate after failures. UK defined benefit schemes terminate en masse. Private multi-employer plans fail. The PBGC is overwhelmed.

Multiple bank failures occur, including the possibility of a major institution creating a systemic crisis. Central banks - the Fed, RBA, RBNZ, and Bank of England - cut to zero with QE to infinity. Credit markets are facing an ongoing wave of defaults. Zombie companies die. Private equity is trapped in positions. Commercial real estate experiences a wipeout.

Governments consider mandatory 401 (k) and superannuation Treasury purchases under the banner of “economic patriotism.” Brokerage consolidation occurs after failures.

Food prices stabilize 65-85% above pre-war levels as the new normal. Permanent dietary changes set in. Middle-class families eat meat 2-3 times per week, at most, rather than daily. Grain-heavy diets dominate. Home cooking becomes mandatory as restaurants become a luxury. Food insecurity affects 20-25% of the middle class in some regions. Urban and suburban gardens become standard.

In Australia and New Zealand, farm mechanization reduces as operations revert to less fuel-intensive methods, affecting productivity.

Unemployment stabilizes at 9-12% as the structural new normal. GDP sits 12-18% below 2025 peak. Stagflation takes hold with high inflation at 6-8% despite deep recession.

Australia and New Zealand face particularly severe conditions. Mining sectors shrink by 40-50% due to rising fuel costs and a global demand collapse. Tourism industries contract by 70%, devastating economies that rely on tourism for 10-15% of GDP. Geographic isolation means neither country can benefit from regional recovery. Both economies are in depression, not recession.

Lifestyle changes become permanent. The median household's standard of living drops by 25-35% below 2025 levels. Private car ownership splits into luxury for the wealthy versus necessity for rural essential workers. Air travel is reserved for the wealthy or essential business. International tourism essentially ends for the middle class.

Multi-generational households are becoming the norm, representing 30-40% of all households. Retirement age expectations have been reset completely. Working to 70-75 becomes the norm. Streaming and subscription models collapse as people can’t afford them. Home heating is reduced to 16-18°C in winter, with significant elderly deaths from hypothermia. Political upheaval sweeps every Western democracy in anti-incumbent waves.

I know all of this sounds overwhelmingly grim. But we cannot tackle a crisis by sticking our heads in the sand and pretending everything is business as usual. Reality will come rolling in like a tsunami wave, whether you are prepared or not.

And the government can’t save you from the energy shortages. Sure, they can provide temporary relief measures, but they cannot fix the underlying problem.

That’s why in part two, I have created a guide for my readers that incorporates checkpoints for personal vulnerability audits, goods that will be affected by broken supply chains, how Bitcoin will provide a lifeline in the resulting financial turmoil, and practical actions that you can take, above and beyond owning Bitcoin, that will help you build resilience.

In Part 2 of this series, I will cover:

Geographic vulnerability audit - Specific risks for US/Canada, Europe/UK, Australia/NZ, and the Netherlands/Germany, including why Australia and New Zealand face potentially catastrophic fuel isolation
Personal vulnerability assessment framework - Employment risk, debt exposure calculations, retirement account stress testing, commute sustainability, medication dependencies, and food/energy self-reliance metrics
Consumer goods supply chain breakdown - Which products disappear first, and what to buy now before shipping costs make them unaffordable
Bitcoin-specific solutions - How self-custody solves currency debasement, financial system fragility, capital controls, and retirement account collapse, plus the “Bitcoin ETF Trojan horse” thesis vindication.
Self-custody imperative - Why “not your keys, not your coins” gets tested in real-time, infrastructure resilience during blackouts, and hardware wallet essentials.
Practical actions beyond Bitcoin - Emergency fund positioning, debt reduction priorities, employment preparation, lifestyle adjustments, and what NOT to do.

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