The situation in the Middle East has intensified — the Strait of Hormuz is effectively closed, and that concerns one-fifth of the world’s oil trade. Brent has already broken the $96 level and is moving toward one hundred. But this is not just an energy price spike. Here, a reverse yen carry trade mechanism is being triggered, one that could unravel global markets.

For context: the traditional carry trade worked like this — you borrow cheap yen at low interest rates in Japan, invest in income-generating American assets, stocks, bonds. Trillions flowed from Japan to the US, inflating bubbles across global markets. But when a shock happens — like a sharp increase in oil — everything turns upside down. Investors start closing positions: they sell American assets, buy up yen, and repay loans. Chaos.

Japan is especially vulnerable here. It imports 95% of its oil through Hormuz, with reserves of only 60 days. Europe is in a similar situation — less than 100 days of oil and LNG reserves. A critical threshold is somewhere around $120 per barrel in yen terms, and the system begins to fall apart. Japan raises interest rates in an attempt to protect the yen, but that only accelerates the reversal, triggering an instant sell-off of American assets.

If oil surges to $130-200, it will be worse than in the 1970s. We’re talking about a global margin call — trillions are being unwound, the yen jumps sharply, and stocks fall. For the US, this means a double hit: dollar inflation accelerates (, and each $10 rise in oil adds 0.2-0.3% to CPI and cuts GDP by 0.1%), while gasoline is higher $5 , squeezing consumer spending. The risk of stagflation is that the economy slows, prices soar, and the Fed can’t cut rates.

The dollar is in a contradictory position. On the one hand, it rises as a safe haven against dollar inflation and the weakening of other currencies. On the other hand, the carry trade reversal sells off American assets, lifts bond yields, and exposes an economy already harmed by tariffs. The Fed will have to turn on the printing presses to finance and rescue banks. What’s needed is a neutral settlement system to soften the blow.

Against this backdrop, it’s interesting to look at solutions for cross-border payments. When the dollar is under pressure, dollar inflation rises, and traditional channels work slowly; technologies like Ripple with XRP offer an alternative — instant, low-fee settlements, evasion of sanctions, and the release of frozen liquidity. If disruptions occur in oil trading, such tools can handle volatile flows and function as hedges against a systemic crisis.

This is not speculation — it’s the interlocking of real risks that are unfolding right now. Keep an eye on yen/oil dynamics, watch dollar inflation, and diversify into stable assets.