DR-WALPURGIS-RES: Analysis of Global Resource Shocks After a DDC Executive Summary: The Tri-Crisis Cascade and Strategic Risk Matrix This report analyzes the chained shocks to the global resource supply network caused by designated Deep Disruption Crisis (DDC) events. In conclusion, DDCs cause structural disconnection in the globalisation system rather than a cyclical recession. This develops into a cascade of self-enhancing shocks in energy, food and industrial supply networks.
The main scenarios presented by this analysis are as follows: First, in the energy market, crude oil prices temporarily slumped to $45 per barrel, then surged to over $150 due to structural damage to supply. Second, in the food market, protectionist measures from major exporters are chained together, with international prices for wheat and rice rising by 80% to over 150%. Third, industrial supply networks are broken down by malfunctions of key nodes such as semiconductors and rare earths.
The effects of these shocks are significantly asymmetrical in each region. While developed countries are hit by severe stagflation (simultaneous progression of high inflation and economic stagnation), many countries in the Global South face a survival crisis of famine, collapse of state functions, and a de facto disconnect from the global economy.
The results of the analysis of this report are summarized in the following strategic risk matrix: This guides senior-level decision makers to identify the most critical threats and allocate strategic resources in highly uncertain circumstances following the DDC.
Table 1: Strategic risk matrix (environment after DDC occurrence)
Risk Event Details Probability of occurrence after DDC Impact level (1-5) Estimates and key indicators Famine and national collapse in MENA/African regions Countries dependent on food imports face double suffering: 1) loss of purchasing power due to currency crashes, and 2) disruption of supply due to export bans. Wide range of hunger leads to social unrest and ruins the government's ability to govern. High 5 (catastrophic) Rationale: Section III. Key indicators: India's rice and wheat export policy, MENA region's dependence on grain imports (over 40%), and liquidity in trade finance markets.
Malignant stagflation in developed countries: The rise in energy prices to over $150 and the surge in grocery prices lead to uncontrollable inflation. At the same time, breaking supply chains paralyze production activities and lead to a serious economic recession. High 4th (serious) Reasons: Sections II, III. Key indicators: Brent crude oil prices, major grain futures prices, producer price index (PPI). Complete suspension of semiconductor supply chains The Taiwan Strait is being blocked against the backdrop of rising geopolitical tensions caused by DDCs. This will physically halt the supply of world's leading semiconductors (TSMC shares over 90%). 5th (catastrophic) Reason: Section IV. Key indicators: TSMC operation status, military activity level around Taiwan, and output of the global automotive and electronics industry (revenue loss risk of $1.6 trillion per year).
"Super volatility" in energy prices There are repeated prices ($45/barrel) due to collapse in demand and prices ($150/barrel) due to a lack of supply due to geopolitical production cuts and investment freezes. The rising prices make economic planning impossible. High 4th (serious) Reason: Section II. Key indicators: OPEC+ production limits, global upstream investment amounts, and remaining levels of strategic oil reserves (SPR). Rare Earths into a supply weapon In retaliation for financial sanctions by Western countries after the DDC, China bans exports of rare earths (a share of over 80% during the processing and refining stages). The Western defense and green energy industries are paralyzed. 3rd year junior high school (significant) Evidence: Section IV. Key indicators: China's list of export-controlled items, rare earth oxide prices, and inventory levels of Western defense and EV manufacturers. I. The Initial Shock: A World After the DDC Event 1.1. Anatomy of Collapse The event that triggers the Deep Disruption Crisis (DDC) that is analyzed in this report is not a technical market accident, but a fundamental crisis of confidence in US Treasury, rooted in US political dysfunction. The idea of a "household account book" that equates national finances with the finances of individual households is adopted as a governing ideology, making political conflicts over debt caps a norm. This brink-based policy contradicts its role as a global currency issuing country, and gradually undermines the status of US Treasury bonds as a "risk-free" asset. This political environment will structurally reduce the demand for US bonds from foreign investors (central banks and government funds), creating a state where upcoming government bond bids will fail.
Ultimately, the crisis ignites when the US Treasury bid on September 30, 2025 technically fails. This is defined as multiple important indicators simultaneously break through the threshold, such as a bid ratio below 2.0 and an abnormal level of tail (the difference between the highest winning bid yield and the expected market yield) reaching an abnormal level (8-12bp). This phenomenon means that the US has completely lost its trust in its "will" to repay its debts in its own currency and the predictability of the "institutional framework" that underpins its decision-making.
1.2. Cascade of Amplification The mechanism by which limited bid failures are amplified into a systemic collapse is ironically incorporated into the very regulatory framework introduced after the 2008 financial crisis.
The first amplifier is the complementary leverage ratio (SLR). This regulation makes it capital difficult for primary dealers (the major U.S. Treasury underwriters) to put a large amount of low-risk U.S. Treasury bonds on the balance sheet. If a dealer is forced to unintentionally underwrite a large amount of government bonds due to a failure to bid, their SLRs will violate the regulatory cap. The result would force dealers to sell more assets in the declining market to reduce their balance sheet, rather than absorbing the market shock. In this way, regulations aimed at the soundness of individual banks take away the shock absorbing capabilities of the entire system and transform dealers into shock amplifiers.
The second and more powerful amplifier is a procyclical feedback loop through the central clearing agency (CCP). The sharp decline in government bond prices and volatility have led to a massive, simultaneous margin calls from CCPs. This margin model is designed to require more margin as the market volatility increases. This mechanism has the fatal side effect of sucking up liquidity from the system at the very moment when liquidity is at its most tight. To secure cash to pay margin, market participants are forced to sell their most liquid assets: US Treasury. This throw-off seller further pushes down government bond prices, which induces further margin demand. This self-enhancing feedback is the true nature of the "liquidity death spiral" and the engine that transforms manageable shocks into uncontrollable collapses.
1.3. Geopolitical Disruption DDCs are not just financial events. It is a geopolitical disconnect that marks the crucial end of the post-World War II dollar-based international financial order due to the failure of the US's governing capabilities. The collapse of US credibility effectively destroys the framework of international cooperation. Rather than pursuing the common interest of global system stability, countries are moving towards a zero-sum mode of action that prioritizes their own interests. It is this geopolitical vacuum that underlie the subsequent resource shocks that will be developed as intentional national policies rather than market panic. Energy and food are economic goods and at the same time transforming their properties into geopolitical weapons.
1.4. Freezing Global Trade The most immediate and physical consequence of DDCs is the collapse of trade financial markets. Counterparty risk (credit risk of counterparty) has skyrocketed throughout the financial system, forcing banks to undergo large-scale deleverage (asset reduction), and credit provision that lubricates international trade is completely halted. This will result in malfunctioning the financial infrastructure that connects buyers and sellers of physical goods. This paralyzes the global flow of things itself before the supply and demand shock of specific products becomes apparent. Container ships remain at ports and cargo stays in warehouses. Global supply chains are halted when the financial system, which is at its heart, goes down before supply and demand problems arise at its end.
II. The Energy Cascade: From Financial Collapse to Fuel Crisis 2.1. Price Scenarios and Timelines DDCs create an "supercycle" of extreme price fluctuations, rather than a single directional shock in the energy market. This cycle is driven by the interaction of financial, geopolitics and structural factors.
Immediate (within a month): Dominance of demand shocks The DDC immediately causes the global economy to fall into a serious recession, causing a catastrophic collapse of oil demand. This dynamic is similar to the phenomenon observed during the 2008 financial crisis. At the time, crude oil prices fell more than 70% from a peak of about $150 per barrel in July 2008 to below $40 in less than six months. In this scenario, we assume that a similar collapse in demand is achieved,
It is predicted that the price of Brent crude oil will plummet from its pre-crisis baseline of $100/barrel to $45/barrel. This early stage is characterized by strong deflationary pressures that cover the entire financial system.
Short term (within six months): Geopolitical lower price limits However, in the post-DDC world, price breaks are not acceptable. OPEC+ (particularly Saudi Arabia and Russia) sees the crisis as an opportunity to weaken the Western-led financial order and maximize its own geopolitical influence. Their actions no longer contribute to global economic stability, but will focus entirely on the financial survival and ensuring their own country's interests. As demand evaporates, OPEC+ will work together to implement large-scale and rapid production cuts. The goal is not to balance the market, but to set a decisive lower limit on prices. Despite the sluggish demand due to this geopolitical intervention,
Brent crude prices remain stable in the range of $60 to $70 per barrel.
Medium (1-2 years): Structural scarcity and superspikes The credit contraction caused by the DDC completely freezes new investments in the upstream sector (exploration and production) of the global oil and gas industry. The project will be cancelled and future supply capacity will be structurally damaged. Even if the global economy shows even a slight sign of recovery and a slight increase in demand occurs, the demand conflicts with its unreliable supply capacity. As supply becomes more inelastic with prices, a slight tightness in supply and demand will lead to violent rises in prices. At this stage, Brent crude prices skyrocket to over $150/barrel, bringing a huge wave of inflation to the global economy, completely killing the only-starting recovery.
2.2. Regional Impact Analysis Developed Countries (OECD): Initial price crashes increase deflationary pressures, while price rises to over $150 over the medium term causes uncontrollable inflation, i.e., severe stagflation, while wages do not rise. This is a major spark for widespread social unrest and political turmoil.
Emerging countries (net importing countries): DDCs cause their own currency to plummet against the dollar. This makes it more expensive, even if the price of crude oil is "cheap" $60, the closer it is possible to import in local currency to it. Fuel distribution systems and planned power outages have become a norm, causing transportation and industrial activities to be paralyzed. These countries are effectively separated from the global economy.
Oil-producing countries (OPEC+, Russia): It suffers from a catastrophic revenue shock in the short term, but has since grown dramatically in geopolitical influence. In a collapsed global economy, oil traded at high prices becomes one of the few hard currency (international settlement currency), and has enormous negotiating power against consumer countries.
2.3. Limitations of strategic stockpile The coordinated release of strategic oil stockpile (SPR) by International Energy Agency (IEA) member states, centered around the United States, is powerless against this structural crisis. First, the magnitude of the structural supply shortage is far greater than the available stockpile. Second, in a geopolitical divide, stockpile release is not considered a market stabilization measure. Oil-producing countries interpret this as a hostile economic action to steal their own revenues and are likely to counter it with a retaliatory additional production cut. As a result, SPR is consumed without a lasting price suppression effect, only to further accelerate the politicization and division of the energy market. (See Table 1 for related risks)
III. The Hunger Cascade: From Market Panic to Global Famine 3.1. Trigger and Contagion: Domino Effect 2.0 The post-DDC food crisis is caused by a chain of completely artificial, political decisions, rather than a natural phenomenon such as bad weather or poor cropping.
Immediate (within one month): India's Solitary Action In response to global financial and economic disruption, the Indian government has made domestic food security and inflation control the top priority. In response to pressure from domestic public opinion and concerns over food stockpiling, the government is suddenly making a complete ban on the export of non-basmati rice and wheat. This single action will completely disappear from international markets, the largest supplier, accounting for around 40% of the global rice export market.
Short term (within six months): Cascade of export restrictions India's export ban is a strong signal for other major food exporters to follow suit. This is not a market panic, but a rational self-interest by governments. Other exporting countries such as Vietnam, Pakistan and Russia also fear rising prices and shortages within their homes, introducing export restrictions and export bans, like defeating dominoes. This mechanism is a reenactment of the phenomenon observed during the global food price crisis between 2007 and 2008. At the time, it was analyzed that most of the price rise was caused by a chain of export bans rather than speculation or supply-demand fundamentals. This chain reaction effectively puts the global grain market, which is responsible for price formation and supply and demand adjustments, effectively halting its function.
3.2. Price scenario As key sources are retreating from the market one after another, demand from importing countries with still available purchases is flooded with demand. This will completely separate prices from the fundamentals of supply and demand, and will rise to astronomical levels. During the 2007-08 crisis, international prices for rice rose 224%. Based on this precedent, in this scenario
It is predicted that international rice indicator prices (5% Thai rice crushed rice) will rise by 150% to 200%, while wheat prices will rise by 80% to 100%.
3.3. Regional impact analysis Developed countries: Severe food inflation hits. Coupled with rising energy prices, the cost-of-living crisis has become extremely serious, and social unrest is spreading, especially among low-income people, and is a major factor in political instability.
Import-dependent countries (MENA, Sub-Saharan Africa): It will become the epicenter of a global famine. These regions rely on imports for much of their grain demand (40% of food demand imports in the MENA region). The DDCs destroy their ability to pay (foreign currency), and the export ban destroys the very supply they have access to. This fatal combination leads to acute food shortages, widespread hunger, and ultimately a collapse of state power and a humanitarian crisis. International organizations such as the Food and Agriculture Organization of the United Nations (FAO) are also unable to provide effective support as supplier countries are closing their markets.
Food exporter: Achieve the supreme proposition of domestic price stability and food security. However, while losing its major sources of export revenue, "weaponization of food" will create serious geopolitical frictions with its former trading partners.
This crisis reveals that, while global food markets act as efficient allocation mechanisms in peacetime, they were illusions in the face of serious systemic shocks. Markets will be replaced by the more primitive logic of survival: "food nationalism." As a result, food allocations are determined not by prices but by geopolitical power relations and bilateral trade, resulting in poor and low strategic value countries being completely abandoned from this new order. (See Table 1 for related risks)
IV. The System Fracture: Supply Chain Disintegration DDC simultaneously destroys globally integrated manufacturing supply chains from both production sites (nodes) and logistics pathways (edges), causing system-wide malfunction. This is no longer a "supply chain disruption" but a "disruption of the supply system."
4.1. Node Dysfunction: Technology Chokepoints The global economy relies on production nodes that are highly concentrated in a particular region, revealing their vulnerability.
Semiconductor Node Analysis: Taiwan, particularly TSMC, the largest foundry (contract semiconductor manufacturing company), is the ultimate single point of failure, which is an unsubstituted, ultimate single point of failure. TSMC produces more than 90% of advanced logic semiconductors (less than 10 nanometers), holding a 61% share of the foundry market.
Blockade Effect: The DDC will disrupt the US international trust and provide a great geopolitical environment in which China will put military pressure on Taiwan. China's blockade of the Taiwan Strait will completely halt production and shipment from TSMC. This will mark the global technology industry as a "tech winter." The direct economic losses suffered by downstream industries relying on TSMC's semiconductors, such as automobiles, electronics and cloud computing, are estimated to reach $1.6 trillion per year. This will paralyze the US and EU automotive and electronics industries, and will also seriously hit emerging Southeast Asia countries, which rely on Taiwan-made semiconductors in the downstream assembly process.
Rare Earth Node Analysis: China also has the advantage in the mining stage of rare earths, but its control is crucial during the separation and purification stages, where the ore is processed into products. China holds over 80% of the mid-stream processes of this supply chain, effectively monopolizing it.
Blockade Effect: If Western countries impose financial sanctions on China following the DDC and Taiwan blockade, China will ban the export of rare earths as a retaliation measure. This "weaponization of resources" paralyzes the production of cutting-edge Western defense systems, such as fighter jets and missile guidance systems, as well as parts essential for the green energy transition, such as electric vehicles (EVs) motors and wind turbines. This will cause strategic sectors such as US and EU defense and green energy to be dysfunctional, while emerging countries face pressure to take either side in this resource conflict, facing the risk of hampering their country's industrial development.
4.2. Dysfunction of the Edge (Logistics Path): Paralysis of Global Logistics Even if the production node is functioning, if the logistics edge connecting it is cut off, the supply chain will collapse.
Edge analysis: The world's leading maritime routes, the Taiwan Strait, the Strait of Malacca, the Suez Canal, and the Panama Canal, are subject to geopolitical risks and economic disruption.
Blockade Effect: The Taiwan Strait blockade physically blocks routes through which 21% of the world's maritime trade passes. This forces the remaining trade to be diverted to alternative routes. The volume of navigation in the Suez Canal and Panama Canal has also plummeted due to concerns about geopolitical risks and a sharp decline in global trade volume. Cargoes that absolutely need to be transported, such as energy, will have to choose longer, more costly routes, such as via the Cape of Good Hope. This detour greatly increases transportation costs and time. For example, on a voyage from the Far East to Europe,
Under the European Union's Emissions Trading Scheme (ETS), an additional emissions cost of $400,000 per voyage will be incurred. Global container ship demand must also increase by 12% just to maintain the status quo, further increasing transportation costs.
4.3. Combined Effects: Systemic Disintegration The following table summarizes the specific effects of dysfunction at key chokepoints. The dysfunction of critical production nodes and logistics edges simultaneously lead to global manufacturing systems being broken in a chain, causing a vicious cycle in which parts shortages can't be made possible to produce finished products. (See Tables 1 and 2 for related risks)
Table 2: Supply Chain Chokepoint Dysfunction Analysis
Chokepoint Type Name Market Share/Flow Control Rate Blocking Mechanism (After DDC) Quantified Economic Impact (Blocking Effect) Node TSMC (Temporary Semiconductors) <92% of 10nm Chip
Military Blockade: Downstream Industrial Revenue Loss per year $1.6 trillion
Node China (rare earth processing) More than 80% of the separation and purification process
Retaliatory export ban: production halts in Western defense and green energy industry Edge Taiwan Strait 21% of global maritime trade
Military blockade: Paralysis of global maritime logistics, increased costs due to detours Edge Suez/Panamana Canal Major East-West routes: Dispute risk and trade volume reductions dramatically Detour Cape of Good Hope: Transport days +10-15 days, increased costs (e.g. emissions costs +$400,000/voyage)
V. Integrated Risk Analysis and Strategic Outlook 5.1. Cascade Diagram The three energy, food and supply chain crises analyzed in this report are not independent events, but integrated systems crises that interact and amplify each other. This negative feedback loop places the post-DDC world in a permanent state of crisis. The interaction can be organized as follows:
Energy Crisis → Food Crisis & Supply Chain Crack
Impact on food: Surge in energy prices directly drives fertilizer production (from natural gas), fuel for agricultural machinery, and food transportation costs, further increasing the food crisis.
Supply chain impact: High fuel prices and supply insecurity increase global logistics costs and undermine the economic viability of the supply chain.
Food Crisis → Energy Crisis & Geopolitical Risks
Energy Impact: Social unrest and national collapse caused by the food crisis threaten the stability of energy-producing regions (e.g. parts of the Middle East and Africa) and important transport routes like the Suez Canal, pose additional risks to energy supply.
Impact on geopolitics: Wide range of hunger intensifies conflicts between nations, encourages "food nationalism" and makes international cooperation impossible.
Supply chain rupture → Energy crisis & food crisis
Impact on both crises: A breakage of the supply chain will halt the supply of spare parts necessary to maintain energy infrastructure and machinery and parts that support agricultural productivity. This physically reduces both energy and food production capacity.
5.2. Detailed explanation of the risk matrix The risk matrix presented in the Executive Summary summarizes the conclusions of this integrated analysis.
"Famine and the collapse of the nation in MENA Africa"was evaluated as the highest risk (high probability/impact 5) because its causal chain is the most direct and inevitable. These countries lose both their ability to pay and sources at the same time. Humanitarian catastrophes are almost certainly occurring as there is no alternative and there is no hope of intervention from the international community.
"Malignant stagflation in developed countries" and "Complete suspension of semiconductor supply chains"is the next major risk. Stagflation is a chronic disease that erodes the entire economic system, and halting semiconductor supply is an acute shock that cuts off the nervous system of modern economies. In particular, although the latter is evaluated as "medium", once it occurs, its effects are devastating, and it shakes the very foundation of modern civilization.
"Super volatility in energy prices" and "The supply weaponization of rare earths"is an important factor that destabilizes the entire system. In particular, fluctuations in energy prices make it impossible to calculate the price, which is the premise of any economic activity, paralyzing investment and production.
5.3. Strategic Perspectives in a Post-DDC World DDC is not just a financial crisis, but a structural disconnect that forces a paradigm shift in the global political and economic system. In order to adapt to this new environment, a fundamental shift in thinking is required.
End of efficiency, rise of resilience: The pursuit of "just-in-time" efficiency, which was the basis of the global economy up until now, has exposed its vulnerability. In the future, ensuring the resilience of the "just-in-case" will be the number one priority. This means building a redundant supply chain, retrieving production sites domestically (onshoring) and transferring to allies (friendshoring), suggesting a shift to an economic regime that contains structurally high costs and inflation.
Monitoring the Cascade: The risk monitoring framework also needs to change. Traditional economic indicators (GDP, unemployment rate, etc.) are merely lagging indicators in this type of crisis. Going forward, we need to closely monitor leading indicators of the cascade, namely political stability in key nodes (US, Taiwan, China), statements on food export policies in major countries, and liquidity in trade and financial markets.
A world of blocking: The DDC will crucially accelerate the movement of the world fragmenting into competing economic and security blocs. Each block will attempt to create a self-sufficient supply chain for critical resources (energy, food, semiconductors). An era of frictionless globalization begins, and a new era begins when managed, strategic, and sometimes hostile trade relations become normalized. This adaptation to this new paradigm will be the key factor that separates success and failure in the coming decades.