Deterrence, disruption, and nonlinear price dynamics at energy chokepoints

This paper develops a tractable sequential game of strategic interaction at critical maritime energy chokepoints, where geographic asymmetries generate disproportionate effects on global oil prices. We model a sequential game between a challenger and an incumbent in which oil prices are determined endogenously by a nonlinear function of disruption and deterrence. The interaction between diminishing returns to deterrence and convex deterrence costs generates threshold equilibria with three possible outcomes: effective deterrence, active disruption, and an intermediate regime in which disruption persists despite positive deterrence. The intermediate equilibrium provides a theoretical explanation for sustained price pressure and incomplete stabilization during periods of geopolitical tension. More broadly, the framework helps explain nonlinear oil price responses to geopolitical shocks and provides a tractable theoretical foundation for future empirical research on energy market dynamics.