We have yet to feel the full force of the unfolding crisis in the Middle East, writes Ambrose Evans-Pritchard, International Business Editor, The Telegraph.

Citing Jeff Currie, the Carlyle Group’s leading energy strategist, Evans-Pritchard notes that the current situation echoes the unsettling complacency seen in the early stages of the COVID-19 pandemic.

Initially, the shock was contained to China as its economy shut down, and the rest of the world largely shrugged it off. Then the disruption spread — to South Korea, Iran, and Italy — yet global equity markets continued to climb.

It took roughly six weeks before reality set in.

Wall Street abruptly buckled, plunging 35%, accompanied by severe dysfunction in the U.S. Treasury market.

Currie warns that a similar delayed reckoning may now be underway.

The real economic impact will hit once physical oil supplies begin to dry up — when shipments fail to arrive and replacement barrels cannot be secured at any price.

That critical inflection point is expected by late April, when the world’s usable buffer of roughly 800 million barrels is depleted.

Carlyle's energy guru also cautions that recent gains in the S&P 500 appear detached from underlying fundamentals, driven in part by sentiment rather than substance.

U.S. oil and gas companies account for just 3% of the index’s total market capitalization. The remaining 97% is exposed to the adverse effects of what is effectively a major energy shock — one that could ripple across the broader economy.

If Currie is correct, markets may once again be underestimating the scale and speed of the disruption ahead.