What if a policy shock strands fossil assets and pops the carbon bubble?
A stranding policy shock is a demand-side hit to crude and energy equity: Brent leads lower on its Gulf/global weighting, dragging the energy complex and integrated majors, with a downside breakeven pull-through. Closest rhyme is the 2020 oil demand collapse (negative WTI) more than a credit event; using Lehman as the analogue overstates the financial channel. Forward angle: a credible carbon repricing strands reserves gradually, so the credit-spread widening is real but second-order to the equity de-rating.
Every number ships with its receipt — the odds, the range, the precedents, and a public grade at Reality Check. The statistical machinery that produces it is proprietary.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (electric blue) over time vs the market's (Polymarket, amber), from the past toward the 3–10 years horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. Loading the probability audit trail…
What it would mean
If this plays out, it is a mixed shock. A policy shock strands fossil assets, repricing the carbon bubble. The trigger decomposes into signed root‑shocks — Oil supply risk ▼ · Credit spreads ▲ — which propagate through our causal graph to the markets below.