A very lengthy and detailed article in the London Economist May 2, makes the same case made by others cited in this Briefing: Even with an immediate attenuation of the Iran war, as unlikely as that appears, the worst economic shocks from that war will come this Summer, over at least the next three months. The Economist article is full and overfull with country-specific detail which can be invaluable, but in typical British style, also runs to confusing and, at some points, self-contradictory length.
Beginning with very British lulling—” Against all odds, the world’s economy appears to be taking the biggest supply shock in the history of the oil market in its stride…. Markets always find equilibrium—the question is only at what level."—the piece then changes gear: “The world is just weeks away from a severe reckoning.”
Then it gets down to business. “Over March and April last year 18.3m b/d of crude and refined products exited the strait. Allow for a trickle still getting through, plus the extra oil that can be squeezed through two pipelines bypassing the strait—one in the United Arab Emirates and one in Saudi Arabia—and the net deficit narrows to around 13m b/d…. [with other calculations,] “The net shortfall over the past two months works out at 12.3m b/d—over 10% of global [crude oil] consumption.”
In a symptom of President Donald Trump’s real responsibility for this—because “we are giving attention to this matter”—the Economist notes “Russia could theoretically pump another 300,000 b/d, but with its oil infrastructure under sustained attack from Ukrainian drones, it is struggling to maintain its current output.” Trump, who was to “end that war in one day,” now openly relishes economic destruction, as the world’s living standards are cut down.
“Experts canvassed by The Economist estimate demand for crude and oil products ran 3m-5m b/d below forecast in April. Roughly 10-15% of that is borne by the Middle East, where war has hammered economic activity and airline traffic has fallen by two-thirds. Over half stems from Asia, where the petrochemical industry has swooned…. East Africa, which is heavily dependent on diesel, gasoline and kerosene from the Gulf, and Eastern Europe account for much of the remaining diminution of demand.
