Crisis in the Strait of Hormuz Plunges US Banks into Economic Distress

The sharp geopolitical situation around the Strait of Hormuz, considered the world's most important oil artery, and the blockage of cargo shipments have dealt a heavy blow to the global market. One.uz reports.

According to Bloomberg, the surge in fuel prices triggered inflation that caused a severe crisis in the US banking sector. Inflation and pressure on banks Problems in the financial chain accelerated due to the geopolitical conflict.

The sharp increase in energy transport costs caused a dramatic rise in global oil and gas prices due to the closure of the Strait of Hormuz. This directly intensified inflationary pressure on the US economy.

To curb the inflation rate, the US Federal Reserve System quickly raised the base rate to 4 percent. The persistence of high interest rates slowed economic growth and sharply increased loan repayment losses for commercial banks.

Decline in bank capitalization Major financial institutions faced unexpected financial losses. According to stock market closing data, Bank of America shares plummeted by 18 percent.

State Street securities fell by 14 percent, while Citigroup assets became 10 percent cheaper. The US banking system is undergoing one of the most serious tests in the last twenty years.

The KBW index, which reflects the status of the 24 largest US banks, has been declining continuously for six consecutive weeks. This was officially recorded as the longest decline series since the 2008 global financial crisis.

Compared to the peak levels observed last August, this index has decreased by nearly 13 percent in total. If the tensions in the Strait of Hormuz are not resolved, oil shortages and high interest rates may maintain long-term instability not only in the US banking system but also in global stock exchanges.

Bloomberg Intelligence analysts emphasize that these factors are collectively exerting strong pressure on the banking system.