Treasury Secretary Scott Bessent has an optimistic long term forecast for the Persian Gulf.

The strait is never going back to the way it was because the Iranians have tried to use it as a choke point. What we are going to see over the next two years, the strait's going to become irrelevant. It is going to become just another body of water. And I would say that more than 50 or 70 percent of the energy that moves through the strait now is going to go through underground pipelines.

Bessent has a point. Already there are pipelines allowing Saudi Arabia and the United Arab Emirates to partially bypass the Strait of Hormuz. Iraq is looking at pipeline routes to the Mediterranean Sea. The higher the cost of oil and refined products the more economic incentive there is for the world to negate the Strait as a strategic choke point.

The challenge is getting through that two year transition. Diesel prices are up 60% from pre-war levels today. Bunker fuel rates for ocean transport are up 50% from pre-war levels today.

Those are impacts on transport and logistics costs for all goods. Those are real inflationary pressures being exerted on prices today, not two years from now.

What happens to the world's economies during Bessent's two-year transition window?