The Week in Breakingviews: Running on fumes

Circle Internet

19/04/2026 23:45

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Peter Thal Larsen

LONDON, April 19 (Reuters Breakingviews) - Welcome back! I spent the past week in Hong Kong, talking to senior financiers, executives, and policymakers while revisiting old haunts in the city that was my home for four years. Bottom line: even if the Strait of Hormuz is reopening, the economic, financial and geopolitical damage from the seven-week conflict is immense. Let us know what you think. If this newsletter was forwarded to you, sign up here to get it in your inbox every weekend.

OPENING LINE

“For every problem, there’s a ready-made easy solution that is also just plain wrong. A ban on U.S. oil exports fits into the category.”

Read more: US oil export ban: a bad idea whose time is coming.

FIVE THINGS I LEARNED FROM BREAKINGVIEWS THIS WEEK

Taiwanese chip giant TSMC’s revenue is forecast to double by 2030. (Rivals are on the march)

        Hungary’s outgoing government used up almost half its target budget deficit in the first two months of the year. (Thank you, Viktor Orban)

        Just 6% of China’s crude oil imports from the Middle East last year were priced in renminbi. (Less petro-yuan, more petro-yawn)

        Goldman Sachs’s first-quarter revenue was within 3% of its 2021 peak. (But profit is lower)

        Oil giant Shell got its name from the shop where ⁠founder Marcus Samuel sold sea ornaments. (No need for a sneaker-to-AI pivot)

HARBOUR CROSSING

Hong Kong is an unreliable place to take the global economic temperature. Just as the Asian financial hub’s climate can swing from blazing sunshine to tropical thunderstorms in a few hours, its inhabitants are prone to exaggerated bouts of optimism and pessimism. Hong Kong’s weather this week was mostly glorious, and the city’s capital markets are humming. Yet meetings with bankers, business leaders and bureaucrats left a gloomier impression.

The impending energy crunch dominated conversations in hotels and offices overlooking Hong Kong’s famous harbour. Severe shortages of oil, gas, and related products are approaching Asian economies like a freight train. Elevated shipping rates and insurance costs have pushed prices much higher than global benchmarks suggest. Georges Elhedery, HSBC’s chief executive, told delegates attending the bank’s Global Investment Summit that the all-in cost of getting oil to Sri Lanka reached $286 a barrel – almost three times the going rate for Brent crude. The price of jet fuel in northwestern Europe has doubled since late February. Higher energy costs and a shortage of fertilizer will feed through into food: consumer goods groups are considering emergency price hikes. Central bankers think higher inflation is inevitable. Although Iran’s announcement on Friday that the Strait of Hormuz had reopened drove down oil and gas futures, prices look set to remain elevated.

The energy squeeze is also upending public finances. In countries like Malaysia, Indonesia and Thailand, governments are spending heavily to subsidise petrol and diesel to shield citizens from the worst of the pain. This cannot last: “Consumers need to learn there is a crisis,” one senior Asian official told me. Fiscal pressure may prompt policymakers to tap companies as a source of funds. The CEO of one Asian conglomerate is bracing for windfall taxes and other charges. Several Indian states this week hiked minimum wages.

Optimism about artificial intelligence partly offset the economic malaise. Bank executives are increasingly convinced that code-writing chatbots can quickly take over some tasks performed by workers, allowing financial institutions to shrink headcount or redeploy staff. AI is leeching into finance in other ways, too. Jeremy Allaire, the CEO of stablecoin operator Circle, sketched out a future where countless autonomous agents authorise and process payments without human input. Joseph Lubin, the CEO of Consensys, told me that the convergence of AI and finance is the latest front in the ongoing battle between controlled systems and the decentralised networks envisaged by cryptocurrency pioneers.

Trust, or the lack of it, was a recurring theme. Almost everyone I spoke to in Hong Kong had lost any confidence they might have had in the Trump administration’s ability to steer the global economy. One senior banker mused that, though a U.S. ban on oil exports would be a terrible idea, Donald Trump might still impose one. And while the crisis caused by the Iran conflict has underscored China’s relative economic resilience and enhanced its geopolitical clout, the People’s Republic is showing few signs of wanting to help. Even if the Iran war is ending, the scars from the past seven weeks will endure.

CHART OF THE WEEK

Iran says the Strait of Hormuz has reopened; others are digging in for the long haul. The painful blockade of the narrow waterway has prompted creative suggestions for relaxing Tehran’s toll chokehold on oil and gas exports from the Gulf. One suggestion is to build new pipelines. George Hay runs the numbers and concludes it’s worth the cost.

THE WEEK IN PODCASTS

If I had to pick one word to sum up the past year, it would be “chokepoint”. The use of economic and financial leverage over adversaries in the last twelve months includes Donald Trump’s tariffs, China’s restrictions on exports of critical minerals, and now Iran’s control over ships passing through the Strait of Hormuz. On The Big View this week I caught up with Edward Fishman, who literally wrote the book on chokepoints, to discuss the latest developments.

Central bankers and financiers gathering in Washington for the annual meetings of the World Bank and International Monetary Fund debated higher inflation and rising government spending. Jon Sindreu took the temperature in the U.S. capital and caught up with Aimee Donnellan and Jonathan Guilford in the Viewsroom.

PARTING SHOT

One of the many buzzwords in artificial intelligence today is “tokenomics”: the practice of measuring – and charging for – the technology based on its use of units of text or data. China has embraced the idea, with a government agency proposing an official Chinese term for “token” and Alibaba renaming its cloud computing unit to the Token Hub Business Group. Yet Robyn Mak argues that not all tokens are equal. Obsessing over their relative cost is a mistake.

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The best Strait of Hormuz plan B would also avoid a key Red Sea chokepoint https://www.reuters.com/graphics/BRV-BRV/klpylbkkjvg/chart.png

(Editing by Aimee Donnellan; Production by Oliver Taslic)

((For previous columns by the author, Reuters customers can click on LARSEN/peter.thal.larsen@thomsonreuters.com))