We're in an oil crisis, with oil and gas supplies from Russia not available because of sanctions related to the war in Ukraine, The Strait of Hormuz, through which oil and gas from the Persian Gulf region must pass, effectively closed (no matter what the propaganda says,) and the conflict between Saudi Arabia and the Yemeni Houthis threatening to deny oil shipped from the Saudi's Red Sea oil ports to western markets. The Houthis control the Bab al Mandab strait at the entrance to The Red Sea.
We have reported on Ukraine's sabotage of Russia's Nordstream pipeline, Iran's closure of the Strait of Hormuz and the Houthis before but what if the global it is about to get much, much worse?
We are not talking about another $10 per barrel rise in the cost of crude oil but a genuine global energy emergency, where oil reaches $150 or even $200 a barrel, physical shortages begin shutting down meaningful portions of the global economy, and central banks find themselves confronting an inflationary recession.
Global crude oil consumption is roughly 100 million barrels per day. That oil powers cars, trucks, trains, agricultural equipment, factories, and enormous portions of the world’s air, and marine transport and industrial infrastructure. It also provides the raw materials for plastics, chemicals, packaging, and countless manufactured products. And Natural Gas is the main fuel for electricity generating plant in many of the largest economies.
Under normal circumstances, this gigantic system operates almost invisibly. Oil is pumped out of the ground, loaded onto tankers or moved through pipelines, delivered to refineries, and transformed into the fuels and materials that keep the global economy functioning.
If oil cannot be transported from Saudi Arabia or the Gulf States via The Red Sea or Hormuz to a refinery in Europe or Asia, or if a refinery cannot obtain the particular crude it needs, that supply effectively disappears from the market until the problem is resolved.
The Saudi authorities said they intercepted two missiles targeting Riyadh, a day after they said Houthi strikes on airports in the kingdom killed three people.
Oil prices rose sharply on Thursday (October 8), with Brent crude, the global benchmark, up more than 5 percent as explosions were reported in the Saudi capital of Riyadh on Thursday as the Iran-backed Houthi militia in Yemen claimed to have attacked the city’s international airport for the second time this week.
The targeting of Riyadh has raised pressure on Crown Prince Mohammed bin Salman, the kingdom’s de facto leader, to resolve the escalating conflict as the fighting threatens his plans to turn the country into a business and tourism hub. Riyadh is set to host several international events in the coming weeks, including an annual investment summit hosted by Prince Mohammed that is typically attended by world leaders, billionaires and top global executives.
The situation in all major markets os volatile, only yestrday (Wednesday,) oil pricesfell President Trump just issued a new Truth Social Post Thursday just after noon time (eastern), wherein he declared "we will not be attacking Iran at any time prior to the Midterm Elections" in November. This is quite bizarre as oil trades are not based on stocks of extracted oil, but contracts to buy oil that will not be extracted for months.
Now should Trump restart his campaign against Iran and the Irainians show the kind of resilience they have to date not only will oil prices soar, supplies will be hit hard. And others may take advantage of the chaos to pursue their own agendas. Turkey waiting ready and willing to fight Houthis. That brings in NATO. Trump say he will not attack Iran before midterms but that was before the Houthis attack on the Saudi capital.
And so the local wars become a regional war and may even escalate beyond that.
There certainly are plenty of signs of significant US escalations in Ukraine, in West Asia, and in Iran, possibly all three concurrently. There cannot be many additional sanctions or economic warfare tactics left for Trump and NATO to use and those already applied have mostly backfired, with China and Inia having been the main beneficiaries as the sanctions have hit hardest on the nations that applied them. But mostly the US / NATO plans have not done well. The Ruble was supposed to be rubble by now and Russia was supposed to be out of men and missiles. Iran was supposed to be a colony of Israel by now. Even Palestine is still around.
It look like being a blesk midwinter for many of us.
FROM THE ARCHIVE:
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