A tale of two shocks
By Professor Dato Dr Ahmad Ibrahim
We have lived through two global disruptions: a world in crisis, grappling with supply chains, inflation, and the sudden reordering of daily life. But to lump the COVID-19 pandemic and the Gulf War together is to miss a critical distinction. They are not the same storm; they are two entirely different weather systems that happen to be flooding the same basement. The pandemic was a demand shock—a violent, external freeze on human interaction. The war is a supply shock—a structural rupture in the flow of the world’s most essential resources. Understanding the difference is key to understanding why our recovery feels so much more treacherous this time around.
In the early days of COVID-19, the world didn’t just slow down; it pressed pause. The demand for energy cratered. With offices, airports, and factories shuttered, the price of oil briefly went negative—a surreal moment in economic history where producers were paying buyers to take the stuff away. Transportation of people and goods was reduced to the bare essentials: medicine, food, and little else. Tourism, the lifeblood of entire economies, vanished overnight. The disruption was terrifying in its suddenness, but it was fundamentally a crisis of velocity. Money stopped moving, people stopped circulating, and the economy went into a medically induced coma.
Out of that coma came adaptation. The great innovation of the pandemic was the normalization of working from home. It was a necessity born of lockdowns, designed to reduce the spread of the virus. It worked. And for a brief moment, we celebrated the environmental silver lining: fewer commuters, cleaner air, a decoupling of economic output from transport emissions.
Now, fast forward to the current crisis spurred by war. The disruption is inverted. This isn’t a crisis of falling demand; it is a crisis of spiking costs. Oil prices aren’t crashing; they are soaring, sending shockwaves through every corner of the global economy. Unlike the pandemic, where we tried to freeze the economy to save lives, this disruption is defined by the fact that the economy must keep moving, but the fuel that moves it has become a luxury.
This changes the calculus of everything—especially the habits we adopted during the pandemic. Take working from home. During COVID, it was a public health measure. Today, it is a strategy to reduce energy consumption. In an era of $100-plus oil, the logic of keeping millions of cars off the road is no longer just about work-life balance; it is about national economic resilience. Businesses are now realizing that remote work is a hedge against volatile transport costs. It is a fascinating irony: what started as a temporary fix for a virus is now a permanent tool for energy security.
But the similarities end there. While the pandemic crushed the tourism industry globally, the war is fragmenting it. Travel to conflict regions has rightly stopped, but unlike the blanket travel bans of COVID, tourism elsewhere is facing a different hurdle: affordability. The era of cheap flights, built on the back of cheap jet fuel, is under threat. The recovery we hoped for in the hospitality sector is now being throttled not by fear of infection, but by the sheer cost of getting there.
During the pandemic, food supply chains were strained by labor shortages and logistical logjams at ports. It was a problem of movement. Now, the problem is cost. The war has spiked the price of fertilizer. When transport costs rise, imported food becomes a luxury. The pandemic disruption was temporary in its structural impact. Governments could step in with stimulus checks, prop up demand, and assume that once the virus receded, the old mechanisms would whir back to life. The war disruption is rewriting the rules of engagement. It is forcing a permanent restructuring of energy markets, a rethinking of globalization, and a painful acceptance that energy independence is not just an environmental slogan but a geopolitical necessity.
The pandemic taught us we can survive by standing still. But the war is teaching us that standing still is no longer an option. We are moving from a world of demand-side management—where we simply needed to wait for the consumer to return—to a world of supply-side reality, where the cost of the basics dictates the terms. The solution to a demand shock is stimulus. The solution to a supply shock is diversification and efficiency. Working from home is a good start, but it is a bandage on a wound. We need to invest in energy sources that are immune to the geopolitics of the Gulf. We need to rebuild supply chains that prioritize stability over just-in-time efficiency.
The author is affiliated with the Tan Sri Omar Centre for STI Policy Studies at UCSI University and is an Adjunct Professor at the Ungku Aziz Centre for Development Studies, Universiti Malaya. He can be reached at ahmadibrahim@ucsiuniversity.edu.my.