MacroVoices #542 Luke Gromen: As The Conflict Turns

In late March 2026, when the Strait of Hormuz first closed, the consensus view was that the crisis would last two or three weeks. Luke Groman, founder of Forest for the Trees, was ridiculed for suggesting it could stretch into July. By late July, he was proven right about the duration, but wrong about the price response. Crude oil had not exploded to $150 as he expected. The reason was China, which demonstrated a capacity to absorb geopolitical shocks that the West had not anticipated. Groman returned to MacroVoices to explain how China’s energy strategy, fiscal expansion, and mounting pressure on global bond markets may accelerate the shift toward financial repression, gold, and a more fragmented monetary system.

China’s Surprising Resilience and Strategic Leverage

The biggest surprise of the conflict was China’s ability to weather the Hormuz closure. In the first half of 2026 alone, China shifted 1.4 million barrels per day of oil demand to EVs and reduced overall oil demand by three to four million barrels per day, partly by running down its strategic petroleum reserves. Conventional wisdom held that China would be the worst-hit economy. Instead, its exports rose 27% year-over-year in May, and corporate profits were up 19-20% year-to-date.