The global financial markets are currently living through what could be termed a Wile E. Coyote moment, a reference to the classic Warner Bros. "Road Runner" cartoons. In this series, a coyote chases a fast bird and inevitably runs off the edge of a cliff, remains suspended in mid-air for a moment, and then looks down only to plummet sharply.

This analogy is relevant because, last week, we witnessed the first public admission that fear is beginning to creep into the minds of monetary policymakers due to the conflict in Iran. The United Arab Emirates requested that the United States open a currency swap line, which is essentially a dollar loan against collateral in its local currency.

I believe this event could be the start of a wave of financial panic that will spread through the global financial system in the coming weeksa wave that will bring various markets back into alignment with physical reality. This physical reality consists of a serious and persistent energy shortage and devastated supply chains that continue to worsen as Iran prevents the exit of vital energy and chemical supplies through the Strait of Hormuz, except for those that serve its own interests.

The UAE government asserts that its need for this line is not a sign of financial distress but merely a precautionary measure. In reality, however, this reflects that the pressures are genuine and perhaps worsening in other Gulf states without being publicly announced at this time. The UAE government and its companies are receiving far fewer dollars today because the war with Iran has disrupted oil exports and weakened tourism and foreign labor flows; yet, there are still debts and expenses that must be paid, many of which must be settled in dollars. It is likely that the same pressures exist in the rest of the Gulf, even if they have not yet requested assistance.

We are told (repeatedly) by President Donald Trump that the conflict with Iran will end very soon. But this soon has turned into weeks and then months. To explain why this conflict is so difficult to resolve, one could refer to lengthy analyses, but the bottom line is that we are facing what resembles a three-body problem in physics, where the conflicting parties have opposing demands that cannot be reconciled in practice.

The three main partiesthe United States, Israel, and Iranare not close to any agreement. Although the United States and Israel are supposedly in the same camp, there are differences in vision between them. Then there are the other Gulf states, along with major powers like Russia and China. The three-body problem in physics is unsolvable. Similarly, this multilateral geopolitical problem appears unsolvable as well. As long as there is no agreement, it is likely that Iran will continue to control the Strait of Hormuz, severely restricting the flow of energy and essential materials from the Gulf.

Global financial market participants seem to be in deep denial of this reality. They should look at the UAE's request for a currency swap line as a warning signal. In fact, some consider this line a financial bailout because, given the rapid deterioration of the UAE economy, it is not certain that the value of the dirham provided as collateral against the dollar will be equal upon future re-exchange, as is customary in these operations.

Governments have the ability to create money and help each other when there is a malfunction in the global distribution of currencies. But companies must get their money from customers, and when they cannot sell their productssuch as oil and gasbecause they are not being delivered at all, they do not receive revenue.

As is well known, it is not just about energy; Gulf exports also include huge quantities of fertilizers, petrochemicals, and helium. Helium is an essential element in the semiconductor industry and in the operation of MRI machines in hospitals. I have calculated that the current decrease in oil and gas supplies is equivalent to a loss of about 4.5% of total global energy, which means, given the economy's total dependence on energy, a loss of nearly 4% of global economic activity. For comparison, the U.S. economy contracted by 4.3% from the start of the Great Recession to its trough.

However, major disruptions in the supply of energy and essential materials mean much broader impacts extending across global supply chains, turning rising prices into actual shortages of goods. This suggests that economic activity may be suffering (or is already suffering) more damage than just the loss of energy, and perhaps greater than the impact of the Great Recession itself.

If this multilateral geopolitical problem I described is not resolved, I expect markets to move much more sharply in the coming weeks than they have so far: oil will rise strongly and stocks will fall sharply, as the fear felt by some central banks in the Gulf now transfers to global investors. This would be an unwelcome outcome if it occurs, but it would merely be a resetting of financial prices to align with the ongoing physical reality.

I assume that comprehensive solutions may soon be reached between the parties, and the Strait of Hormuz reopened to all shipping traffic. Indeed, the financial media is now full of talk about investors looking past this crisis in the Gulf. But I think most new financial journalists probably haven't watched Road Runner cartoons and therefore don't realize that what they are looking past might actually be the edge of a cliff.

Note: If the Strait of Hormuz remains closed and financial markets stay high without impact, it will convince me that markets have become completely and permanently disconnected from physical reality. Does this seem like a possible scenario?