Monday, April 20, 2026

20: Iran

The Harm from Hormuz Why we should still fear a global slump from Trump’s Iran debacle ............... Another week, another false all-clear. ............... The Strait of Hormuz remains closed. It appears increasingly obvious that the 20 percent of world oil supply that normally flows through it to world markets won’t be restored to normal anytime in the near future — quite possibly for many months. What will this disruption do to the world economy? ...................

a full-on global recession is more likely than not if the Strait remains closed for, say, another three months, which seems all too possible.

.................... there is a wide range of price scenarios, from $99/bbl to

$372/bbl

............. One way or another, the world will have to burn significantly less oil in the near future than it would have if this war had been avoided. In the jargon of energy analysts, there will have to be large “demand destruction.” But how can oil demand be destroyed? ................... People can just do less overall — consume less, produce less. That is, we can reduce oil consumption by having a global slump. And demand destruction through a global slump can happen quickly. ...............

The closest parallel I know to the Hormuz crisis is the oil shock that followed the 1973 Yom Kippur War.

............. A comparable slowdown now would mean zero or negative world growth over the next two years, compared with the current IMF forecast of 3 percent. This would be a true global disaster. ............... First and foremost is the likelihood that a deal to reopen the Strait will in fact be struck. Basically, the U.S. can get the Strait reopened by loudly proclaiming victory while quietly accepting de facto defeat. All this will take is for Trump to accept reality, admittedly a hard climb. ..................

Given time — even a year or two — the world could make major shifts to other energy sources.

View on Threads
View on Threads
View on Threads
View on Threads
View on Threads
View on Threads
View on Threads
View on Threads
at
Labels:

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)