Energy Price Shock Erodes $241 Billion from US Debt

A recent study published in the International Journal of Financial Studies analyzed the impact of the 2026 Strait of Hormuz disruption on US debt. The researchers found that a sudden rise in energy prices led to an estimated $241 billion erosion of Treasury liabilities in the first year.

The study, titled 'Energy Supply Shocks and the Inflationary Erosion of Sovereign Debt: Scenario Analysis and Ex-Post Evidence from the 2026 Hormuz LNG Disruption', examined how the disruption affected consumer prices and ultimately the sovereign balance sheet. The researchers found that energy contributed 83% to the acceleration of US headline inflation, which rose from 2.43% in February to 4.17% in May.

However, the study also revealed that the apparent $400 billion debt windfall shrinks under scrutiny when accounting for intragovernmental obligations, inflation-protected securities, and short-term borrowing. The researchers estimated that around 40% of the calculated erosion was due to overestimation.