Bloomberg has published an impressively detailed article, The $108 Oil War: Can the Middle East Crash the World Economy? It has the heft of an analyst’s report and the range of its discussion adds to the seeming validity of its headline finding. It’s also noteworthy that the usual top oil forecaster, the commodities trading heavyweight Goldman, had not yet put out a projection about the impact of an Iran War on oil prices, although this Bloomberg piece may rouse them to do so.
Those of you who follow YouTube commentary may be surprised at the Bloomberg take, given that military experts and those in the region, like Alastair Crooke, forecast much higher oil price levels if Iran were to close the Strait of Hormuz for a more than a short period of time. So who has the better grip on what might unfold?
An examination of the Bloomberg story indicates that it anticipates a less ferocious response by Iran than it has promised and the prominent independent media commentators like Lawrence Wilkerson and Douglas Macgregor deem possible.1 We also believe that it underestimates the vulnerability of the global economy to an oil supply/price shock in a world of extended supply chains. Note that exposure does not necessarily translate into higher oil and energy prices but bigger economic and real world knock-on effects.
Note that despite considerable speculation that Netanyahu would succeed in his meeting on Wednesday in browbeating or even blackmailing Trump into greenlighting an attack on Iran, that does not appear to be imminent:
Following his 3 hour meeting with Israeli Prime Minister Netanyahu, US President Trump says there was nothing definitive reached.
Follow Press TV on Telegram: https://t.co/LWoNSpkJSh pic.twitter.com/UW6yxf8UI0
— Press TV đź”» (@PressTV) February 11, 2026
But this of course could also be continued deception as the US gets more of its military assets in place. However, it may also be that the US is up against the reality that its not-so-hot-to-begin-with air defenses are now too clearly depleted to risk a confrontation with Iran. From Responsible Statecraft:
For weeks the question animating the Washington D.C. commentariat has been this: When will President Donald Trump make good on his threat and launch a second round of airstrikes on Iran? So far at least, the answer is “not yet.”
Many explanations for Trump’s surprising (but very welcome) restraint have emerged. Among the most troubling, however, is that it is a lack of the necessary munitions, and in particular air defense interceptors, that is giving Trump second thoughts. “The missile defense cupboard is bare,” one report concludes based on interviews with current and former U.S. defense officials.
Even those who hope Trump chooses to avoid military action in Iran altogether should be taken aback to hear that eight months after the last extended U.S. military campaign ended (the defense of Israel during the 12-day war and Operation Midnight Hammer), American missile defense arsenals could still be in such rough shape…
But eight months should be sufficient to return stocks of some types of defense interceptors to less critical levels. If the missile defense cupboard is truly still bare, however, something else must be going on.
That something else, it turns out, is Ukraine.
Although President Trump and his advisers are quick to argue that the United States is no longer paying for the military aid supporting Ukraine’s ongoing war, this is only one piece of a larger story. In fact, the United States is still sending billions in weapons to Ukraine, often diverting new weapons intended for the U.S. military directly to Ukraine instead. The implications of this reality are far-reaching — for U.S. military readiness, the Pentagon’s ability to respond in case of a real threat to U.S. interests, and diplomatic efforts to end the war.
Thus US overextension may stay any operation against Iran for quite some time. We had stated that the US-Israel window to subjugate Iran might have passed permanently. But it is still possible that the determined hawks in Israel will regroup and attempt a re-run of the 12 Day War, attacking Iran on their own and forcing the US to run to Israel’s aid. So we’ll work thought the “what happens if an Iran war erupts” scenario, since it is not off the table.
Now to the Bloomberg report. It devotes comparatively little space on the discussion of the potential economic fallout of Iranian retaliation. And those who have followed Iran’s public statements, including its description of its likely responses if attacked, may find the Bloomberg characterization as the most dire scenario to be the most likely one. Keep in mind that as Daniel Davis has stressed, the nature of the US-Israel threat to Iran has changed. The fact that they are now explicitly seeking regime change (and for Israel, the breakup on the nation) means Iran has now recognized that it is under an existential threat, and thus has no reason to be moderate in its response.
Some have argued that Iran would not close the Strait of Hormuz because that would harm its own exports. But some YouTubers (perhaps Crooke?) have claimed that Iran had put as much as it possibly can in transit, somewhat buffering the effect of any interruption. And again, when faced with possible loss of nationhood, Iranians as Shia who can take remarkable levels of sacrifice are culturally more able to weather costs than soft Americans. My guess is that a Hormuz closure is highly likely due to the ease of implementation and the lack of permanent physical damage (unlike say striking oil fields or pipelines in the region). The other most obvious retaliatory moves would be bombing US bases, particularly in countries that assisted in an attack, and Israel.
In the most extreme case, an escalation that hits energy infrastructure or key choke points would drive sustained price increases, reviving inflation risks and putting pressure on central banks to adopt a hawkish stance….
• A major regional escalation that targets energy infrastructure, such as that in Saudi Arabia or Iraq, or critical choke points, such as the Strait of Hormuz, would break the market’s assumption that oil keeps flowing.
• Oil prices could surge as much as 80%. As of early 2026 that would mean a climb from $60 to as high as $108. For the global economy that would mean slower growth, higher inflation and more hawkish monetary policy.
The reasoning behind this price level:
In a worst-case scenario, closing Hormuz removes roughly one-fifth of global oil supply. Such a sudden shortage would overwhelm buffers, forcing prices sharply higher. Our estimates from history and other studies imply an 80% surge in crude. From $60 in early 2026, that shock would drive crude toward $108 per barrel.
The economic damage from $100-plus oil is likely to be smaller than during past oil shocks, for two reasons. First, economies are less oil-intensive than in the past. In the US, the amount of oil needed to produce one unit of GDP has fallen by about a quarter since 2011. Second, inflation means $100 oil today buys fewer goods and services than $100 oil a decade or two ago. But it’s still a shock, and different parts of the world will feel it differently….
We mine past disruptions, academic studies and prediction markets to pin it down. Our conclusion: A 1% supply loss lifts prices by 2% to 6%, with a midpoint of 4%…
• The attack on Saudi oil facilities in 2019: On Sept. 14 a Houthi drone struck Saudi Arabia’s oil infrastructure and knocked 5.7 million barrels per day offline instantly, equating to about 5% of global oil supply. As a result, oil prices jumped by about $9 per barrel to $69, or roughly 15%. That implies a price multiple of around 3 times the size of the disruption.
• The Trump-mediated Saudi-Russia deal in 2020: On April 2, in the middle of the pandemic, President Trump mediated between Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman to curb oil supplies as prices fell to $25 per barrel. OPEC+ ended up reducing output by 10 million barrels per day, about 10% of global supply. Oil prices rallied to $34 per barrel, a 36% jump. That implies a price multiple of 3.6 times the size of the cuts.
• OPEC+ cuts in 2022: Less than three months after then-US President Joe Biden visited Saudi Arabia to ask for higher output in the aftermath of the Russia-Ukraine war, the kingdom and its OPEC+ allies delivered the opposite of what he requested. On Oct. 5, OPEC+ agreed to reduce output by 2 million barrels per day. Markets had expected cuts of about 0.5 million barrels per day. The surprise was therefore 1.5 million barrels per day, roughly 1.5% of global supply. Prices rose by $6 per barrel to $94, a gain of 6.8%. That suggests a price multiple of 4.5 times the size of the cuts.
In addition, I question the simple-minded view that the economies of many nations are less oil-intensive. We live in a world of extensive domestic and international supply chains. That can easily produce “for the want of a nail, the shoe was lost” knock on impacts.
The Trump tariffs have already harmed many US small businesses, leading to cutbacks and closures. US optimism is at record lows. In the US, food, particularly produce, is often shipped, either from California or from abroad. Consumers are already up in arms about an affordability crisis. Again it is not hard to think that another turn of the cost screw will have disproportionate effects.
I welcome reader input, but the reason for my skepticism is simple. The model appears to make linear assumptions about the impact of supply cutbacks on prices. At the level of 20%, particularly if sustained, it’s not hard to think that price impacts start to become greater. This take is admittedly not based on 2026 price and supply conditions, but not-that-long-ago expert takes came up with higher price levels. For instance:
Iran doesn't have nukes, but does have the geopolitical equivalent of the nuclear option:
If the US/Israel attempt a war, Iran could close the Strait of Hormuz, the world's most important chokepoint. Oil prices would likely double to $150+, grinding the global economy to a halt.… pic.twitter.com/ZcWEOsPX9Q
— Ben Norton (@BenjaminNorton) October 5, 2024
More current estimates are similarly more pessimistic than Bloomberg:
A Strait of Hormuz closure could be devastating for China. We would expect oil to rise to $140 level and an all out war it could even reach $240. They are trying to avoid sea, and build a railroad but it is not a full substitute.
— Martin A. Armstrong (@ArmstrongEcon) February 9, 2026
Iran (one might say ‘natch) thinks the damage would be considerable:
⚡️BREAKING
Iran has calculated that by closing the Strait of Hormuz, oil prices could rise from $70 to $200
The calculation does not take into account the closure of the Bab Al-Mandab Strait pic.twitter.com/fmOuouf85h
— Iran Observer (@IranObserver0) February 3, 2026
Having said that, a new CNBC piece is even more relaxed than Bloomberg and predicts a price jump even with a closure of the Strait of Hormuz of at most $20 a barrel:
In an extreme escalation scenario, where tankers are unable to pass or energy infrastructure is damaged, oil prices could surge by double digits, said analysts.
“The fear of a closure will cause the price of oil to rise a few dollars per barrel, but it is the complete closure of the Strait that can result in a $10 to $20 per barrel spike,” said Andy Lipow, president of Lipow Oil Associates.
Kavonic sees an “immediate oil price spike” in the wake of any U.S. attack on Iran, but that will soften on any sign of the disruption being temporary.
More from the Bloomberg analysis:
Feeding $108 oil into Bloomberg’s SHOK model suggests US inflation could climb toward 4%. Central banks would normally look through such shocks, but the risk of unanchored expectations could force a more hawkish stance. A new Federal Reserve chair would face that trade-off as Trump may exert pressure for lower rates.
The US may absorb higher energy prices through inflation, without paying in growth. Other major economies are less fortunate.
That applies to China, the world’s largest crude importer. Beijing is the biggest buyer of Middle Eastern oil, the largest purchaser of discounted Iranian oil and the most dependent on energy transiting through the Strait of Hormuz. Plugging $108 oil into our SHOK model for China flags a hit to growth in the year ahead of about 0.5 percentage point in 2026 and a boost to inflation of also about 0.5 percentage point.It also applies to the euro area. Using SHOK we find that $108 oil would send inflation above 3% and drag 2026 growth by about 0.5 percentage point. That would leave the European Central Bank facing a difficult choice: lower rates to support growth or raise them to tame inflation.
For developing economies, how oil shocks hit currencies is of first-order importance. Exchange rates shape inflation, growth paths and consumer confidence. A rally in oil prices benefits producing countries—like Colombia, Nigeria and Russia—at the expense of importing nations, such as India, Indonesia and South Korea.
While this does not impact the economic part of the report, the failure to mention Russia’s or China’s military support for Iran is a credibility-denting lapse. It creates the impression of the authors being a bit too steeped in mainstream views.
Hopefully Trump will keep playing Penelope with Netanyahu, finding ongoing excuses to keep putting off a strike on Iran. It would be much better for all of us if there was no real world test of the Bloomberg forecast.
____
.1 We are aware of the risk of groupthink among this comparatively small group of independent media commentators, particularly since they clearly watch each other and the hosts often ask them to comment on the statements made by each other. Alastair Crooke’s views are regularly taken as gospel, for instance. However, as we are seeing vividly with the war in Ukraine and particularly, the continued denialism about Russia’s progress and military dominance, any groupthink seems to be even stronger among those aligned with the establishment. Add to that prejudice against non-Europeans and an inability to grasp that countries that have accepted repeated violations of red lines, as Russia did with NATO expansion, might finally have been pushed too far and strike back decisively.
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I have the impression after reading this post that the thinking is that the closure of the Strait of Hormuz would only be a short term thing and perhaps they are thinking of the last war lasting only 12 days. But the Iranians have said that if they shut it down, it will be for three months. What effect will that have on the price of oil when that sinks in? This time around the Iranians know that they have nothing to lose so will not hold back. One guy was saying that a Strait of Hormuz closure could be devastating for China but what happens if the Iranians give Chinese bound oil tankers a free pass? Seeing those oil tankers sail to China would cause a lot of teeth-grinding in the west. Will Trump try to seize them in a fit of rage? In any case I can see the Chinese lean heavily on the US to stop this war if it does start and they will not be shy to use their financial muscle to do so.
> Seeing those oil tankers sail to China would cause a lot of teeth-grinding in the west. Will Trump try to seize them in a fit of rage?
Almost certainly. What happens then is hard to predict. If they are registered in China, then I suspect you will see an expansion of the Chinese navy in the region to protect them – which will have unpredictable long term consequences. Otherwise I suspect China will not do much. Like Russia, they tend to be quite cautious.
If the Iranians, as they are stating they will (but the Iranians have a long history of making these kinds of claims, and then not following up), attack all US assets in the region, then the result would be US humiliation. Waning military empires do not deal well with these kinds of humiliation, and the results are likely to be unpredictable. Would Trump nuke Iran. I wouldn’t bet against him trying.
The point about Bab El-Mandeb is key. Houthis have shown they can make a blockade stick. US won’t be able to suppress them anymore than before, quite the opposite.
Also, US shale producers can’t easily compensate by ramping up production like they could a decade ago. They won’t invest for a price spike of a few months.
Also, we’re assuming Iran doesn’t try to tighten the noose further and knock out production in gulf states. They can easily pull off that trick, too.
> Also, we’re assuming Iran doesn’t try to tighten the noose further and knock out production in gulf states.
They can, but I suspect that they won’t unless those countries allow themselves to be used as a staging base by the US (which so far they are saying they won’t).
Everyone in the region saw those missiles hit Israel, and the Gulf states know they are far more vulnerable than Tel Aviv.
If the Gulf Monarchies really show that they have sovereignty and refuse to participate, that’s huge. It shows the US bases there are pointless. The bases aren’t there for defense of the monarchies, they’re there to exert control over the region and to project power. Opting out of war with Iran is opting out of power projection of US hegemony.
I suspect they will be strong-armed into participating, even if in a somewhat limited fashion.
“The power to destroy a thing is the absolute control over it” – everyone’s favorite quote from Dune.
If Iran has the power to destroy the Gulf Monarchies, then the US has ALREADY lost control of the region before a shot has been fired, that’s a lasting legacy of the 12-day war from last summer.
Perhaps we should view this upcoming war as an attempt to REASSERT the control that was already lost?
Well the US bases are pointless against Iran, as Iran can hit them quite easily and the US is unable to protect them. Whether Trump realises that is a different matter.
> If Iran has the power to destroy the Gulf Monarchies, then the US has ALREADY lost control of the region before a shot has been fired, that’s a lasting legacy of the 12-day war from last summer.
I don’t think it has the power to destroy them, but it certainly has the ability to do 10s, or even 100s of billions of damage to their cities and economies. Which the Gulf states are aware of. On the other hand their ability to resist the US is limited.
Azerbaijan – a key source for crude needed for diesel will, and probably the UAE, and as for others, the US may ignore their declarations and use their territory anyway (Does Trump care about their opinions? Hah!). And that is all that is needed for Iran to add them to the target list.
To avoid, the arab statelets would need to kick the US out if their stated (possibly a lie) denial of their airspace is to be followed.
Azerbaijan can do what it wants, and is more influenced by Israel and Turkey. Conversely, Iran has a much freer hand to hit Azerbaijan if they choose to.
I’d assume that, while cumbersome and extremely disruptive, China could withstand the impact of 100% rise in crude—-they have strategic reserves and public transport.
whereas even with no supply disruption, the US economy would not be able to withstand a 50% rise in gasoline prices without severe pain. Normies literally won’t be able to afford to go to work. and increased gasoline spending would cascade into decreased consumer spending across all sectors
my recollection is that the $140/bbl oil back in the late 2000’s was in large part due to commodity trader speculation
why would that not be the case today, all the more strongly, with everyone and her cousin betting on everything under the sun?
It was also due to big Chinese stockpiling of diesel before the Olympics. But good point, the speculation was the big driver.
And then what? I fear the opposite; sure you get a price spike for a very short time, but with economies in the west as tightly coupled as they are, and increasingly showing signs of fragility, even $100/bbl oil seems unsustainable for a New York minute. Look for rapid crashes as private debts go unpaid, companies fold, and the dominoes topple. $40/bbl oil might follow, with nobody able to afford it.
Probably a global recession if it lasted for any period of time. More likely the financial pain would put pressure on the US and Israel to do something.
Oil corporates buy a lot of commodity derivatives to hedge themselves against lower oil prices since they’re structurally long in the business. These are all uncollateralized. Why? The banks selling them these derivatives expect right-way risk to risk manage their positions. That is, as oil prices spike the short positions of the oil producers (not traders) go out of the money but very in the money for the banks, thus the banks’ derivative exposures are increasing at the same time that (it’s assumed) the credit risk or probability of default of the oil producers decreases. And should they default, they’ll have claims on physical assets of the defaulted producer in a state with high oil prices. In theory.
For commodity traders and speculators, they do not get the benefit of uncollateralized derivative trading vis-a-vis the big bank dealers.
As for the price impact of shutting off 20% of global daily petroleum trade (both oil and gas!), the economic literature is a bit all over the place in estimating the price elasticities of oil with respect to supply and demand. There is consensus, however, that the duration of the supply or demand shock is key. But since it’s never been done before, who knows how long the strait could/would actually be closed. i suspect it’s not a brief exercise as the means of closure seems to be underwater mines.
Doncha love how the MSM are always coming up with glass half full excuses for starting a war? We still remember Judy Miller. As Brian Williams said, the beauty of the cruise missiles leaving their tubes gives him a thrill up the leg–or something like that. Williams of course eventually had to step down due to his overactive fantasy life.
Trump too is a creature of the media with a deluded fantasy life so that’s always a worry. But one does suspect that deep down this pampered bully knows he can only get away with so much. It’s best to pick victims who are helpless and unable to object.
> While this does not impact the economic part of the report, the failure to mention Russia’s or China’s military support for Iran is a credibility-denting lapse. It creates the impression of the authors being a bit too steeped in mainstream views.
I don’t think there’s much verifiable information about what, if any, military support either country has given Iran. In the past there have been a lot of claims from the usual breathless BRICs types, that turned out to be bullshit.
I think what we’re seeing currently is the push and pull between the reality based community (the military in Israel and USA) with the delusion based community (Trump and Netanyahu). The latter clearly consume their own propaganda, the former are grappling with the reality of Iranian offensive capabilities and the limitations of US military power. If the former win then the attack will either be delayed, or won’t happen at all. If the latter win (as seems likely), the attack will occur soon and will be inadequate due to a lack of resources in the region.
It’s been quite funny watching what was a clear push to start an attack on Iran, followed by a rapid pullback when the Pentagon obviously pointed out that it would take a few weeks to get an aircraft carrier in place (and that it might disrupt operations elsewhere). But I suspect once an aircraft carrier is in place, the pressure for an attack will mount again.
I’d be very surprised if an attack doesn’t occur – the question is how quickly it will come. The quicker the attack, the more half-baked it will probably be. If Iran, as they are signalling, do not hold back – then the results will be brutal for Israel, and humiliating for the US. I’m not convinced that Iran will go all in, but I was wrong about Russia invading Ukraine. And certainly this feels like an existential moment for the Iranian regime.
I suggest you use a search engine. Your “verified” is an unreasonable standard and you ought to know that. You act as if Iran or China or Russia should give press briefings and disclose what they are planning.
China deployed a destroyer near Oman which is a top-tier vessel and believe to have advanced monitoring capabilities:
https://www.youtube.com/watch?v=iFo0AIKE1Ys
And from Modern Diplomacy:
https://moderndiplomacy.eu/2026/02/10/how-iran-gained-the-ability-to-track-stealth-aircraft-china-deal-and-the-ylc-8b-system/
As for Russia:
Iran steps up missile upgrades with Russian help amid strike fears Jerusalem Post
https://www.jpost.com/middle-east/iran-news/article-886047
There have been MANY reports of big military transport planes making runs from Russia and China. China has also started real-time open publication of satellite data (but not over Iran) which is clearly to assist Iran. Russia also made an earlier, large shipments of currency to Iran.
Yes I’ve seen these and other people make similar claims. Equally I’ve seen other people, often quite credible, push back on these. In the last confrontation between the US and Iran we saw similar claims of military cooperation, which turned out to be completely bogus. Historically the relationship between Iran and Russia/China has been a fairly tense one, and both countries have other relationships in the region that are at least as important to them as Iran.
Over the last few months I’ve seen a lot of claims made about US and Chinese/Russian actions that turned out to be fabricated. So while I think its possible that this time things are different, I think its equally possible that they may not be.
> There have been MANY reports of big military transport planes making runs from Russia and China.
Many of which have turned out to be bogus. It requires a lot of trips to transport anything substantial, so what flights there have been may have just been to replace hardware lost in the last war. We have limited information, and I suspect a lot of people are excitedly reading what they want to be true into the limited data available.
You don’t provide any evidence. You double down. This is broken record, as in bad faith argumentation, and a violation of our written site Policies. I DID provide evidence, as in the China publication satellite images of US air bases in the theater and the Jerusalem Post finding. You tried to talk over it.
Alexander Mercoursis at the top of his show on Tuesday presented details of information provided him by a reliable source who conveys information from briefings to the Duma. This source has been highly reliable in the past. He confirms that the Russians have provided Iran with more intelligence data, have moved 5,000 troops closer to Iran, and also provided helicopter gunships. He also regards the many reports that Russia has provided advanced jamming equipment as accurate. https://www.youtube.com/watch?v=qB6KSQWNlNQ
A key question in this is how long any disruption will take. Most of the main oil users are either more or less self sufficient (US, Russia), have very large stocks (both China and Japan have at least 6+months supply in storage) or, in the case of Europe, have a reasonable diversification of supply along with a few months storage. So while the nominal price of traded oil would certainly shoot up, its not clear that there would be much short to medium term disruption – apart from to the poorest countries of course. Plus a lot of oil and gas may be hedged in the near term (or is on pre-agreed supply costs). Iran faces the dilemma that while closing the Straits will seriously damage the US and Israel, it will also make a deep enemy of Iraq and the Gulf States, who will be upset to see very high prices while being unable to sell any oil. They will not take that passively.
US gas retailers reprice at the pump VERY quickly in response to changes in oil indexes. No joke, within days. And I can’t recall a President ever trying to jawbone them about it, although Trump could.
The US may produce 100% of the refined petroleum products it consumes, but about 40% of the crude oil for that refined product comes from Canada, Mexico and SA.
I thought Joke Biden sold off most of the strategic reserve and it has not been refilled.
“As of early February 2026, the U.S. Strategic Petroleum Reserve (SPR) holds approximately 415 million barrels of crude oil
, up from the 40-year lows of 2023 but still significantly below its maximum capacity of over 700 million barrels. ”
So about half full. Not as bad as I thought.
Thank you, and perhaps Bloomberg for maybe putting a level of caution into Fearless Leader’s machinations.
However, after reading your article regarding a possible very strong El Nino, perhaps a global economic collapse would might make this rock a little more survivable.
Stay healthy and safe!
Good point, that even though $108 looks low compared to other estimates, it is probably enough to alarm Trump.
I would expect that war with Iran will serve to strengthen the ties between Russia and China and move them towards a military alliance. It may also put further pressure on India and China to mend fences. If Iran survives this will potentially encourage others to challenge western dominance. Knock on effects could go anywhere.
I look at the predictions on what this could mean for China, and I wonder – am I missing something?
“Plugging $108 oil into our SHOK model for China flags a hit to growth in the year ahead of about 0.5 percentage point in 2026 and a boost to inflation of also about 0.5 percentage point.”
Is the oil coming from Russia going to be sold for $108 or is there a fixed price? What percentage of China’s total oil is coming from Russia and at what price?
I would like to pose the argument that perhaps Iran doesn’t need to close the straits of Hormuz, that it would be more advantageous to them to keep that threat looming, and disrupt the oil market by only attacking Saudi infrastructure, specifically the terminals at Ras Tanura, Juaymah, Jubail, the Yanbu pipeline, and other choke points such as Abqaiq. This way they get the shock to the global oil system and still allow some flow through Hormuz, with the continued threat of closure. It also has the benefit of only one new enemy rather than everyone in the gulf. If the Iranians view an attack by the U.S and/or Israel as an existential threat, they would hardly care about the Saudi’s, who are joined at the hip to the U.S. in any event.
I agree your reasoning is plausible. My assumption, which may be proven wrong, is that Iran does not want to damage or destroy civilian infrastructure, ex Israel, where Iran said that Israel has now put them on the menu
I’m inclined to agree with you, and was just pondering other possibilities due to the hyper focus on Hormuz in the media.
In the film Dr Zhivago there is a scene in which one of the characters responds to the question “What does it mean”, after the death of the Tsar and his family with the reply, “It means there is no going back”. It seems to me that the closing of the straits of Hormuz for any meaningful length of time by Iran would be a situation where there could be no going back, the West would be forced into trying to make sure it couldn’t happen again.
As an aside, I think this is what Hamas meant with the Oct. 7 attacks – There is no going back
They won’t attack Saudi oil fields. They have a non-aggression agreement that the Chinese worked very hard on, and I can’t see them violating that. The UAE oil fields are a more likely target, as everyone hates them – but I suspect things would have to get quite bad for them to do that.
Second, inflation means $100 oil today buys fewer goods and services than $100 oil a decade or two ago. But it’s still a shock, and different parts of the world will feel it differently….
ISTM that $100/bbl oil a decade ago is $200/bbl oil today and I expect something more like that.
Then…
The US may absorb higher energy prices through inflation, without paying in growth.
The same idiots who created the gig economy are now going to say those people who have suffered the tender ministrations of neoliberalism and don’t have money now are going to have more? Why? Because they assumed a can opener? A comment yesterday from Jason Boxman I believe pointed to all US hiring being in healthcare…not a healthy economy, pardon the pun…
Military keynseism vs insurance industry keynseism. Someone rob Peter, because Paul has to get paid or he won’t even bother to do it anymore…(tegnost sez “promises, promises”…)
I’m not sure on the logistics and methods of closing the strait but is it possible they close it selectively to tankers going to the West and allow for China-destined oil to proceed?
I had seen suggestions like that but not sure how well informed they were. Maybe a shipping savvy reader can opine?
I’m sadly not a shipping-savvy reader, but I have seen discussion argued that the simplest and most reliable way to block the straits is to mine them. Takes very few grunts, quick work and is reliable. In that case perhaps the offer would be to escort tankers with a demining ship or a destroyer or something like that? or leaving a small part clear which can be more readily controlled by Iran. Nonetheless, with or without a safety guarantee I can only imagine insurance premiums going to the moon.
Trump, imo, does not want war with Iran and he has his eye on the mid-terms. Especially a war that serves Israel’s interest with no upside for US interests, results in $108+ oil, inflation, no clear victory, and possibly American deaths, will wreck his presidency.
Moreover, unlike previous presidents, Trump is willing to publicly treat allies with contempt. And, imo, Israel is not exempt because I also think Trump detests Netanyahu.
Trump told the Europeans to start paying for their own defense. If he sends the same message to Israel, throws Netanyahu and Israel under the bus and makes a comprehensive agreement with Iran and other ME countries, he will unite his base and crush the mid-terms.
Trump is too narcissistic. If he has to choose between Zionists and himself, he’ll always choice himself.
IMO this is the takeaway from this post.
The global economy is definitely a chaotic system, and not something where measured changes in input produce predictable changes in output. A chaotic system is by definition the exact opposite of this.
Bloomberg and others can have their fun making predictions about what major world events will do; the only thing wrong with such predictions would be believing them.
Yeah, once I saw that passage it became clear that the study was very limited in its implications. Nonlinear is king (the simple fact of increasing or diminishing returns is nonlinear) especially in regards to such a complicated world economy. Most economic models are linear, since those are decently tractable, especially through algebraic means; complicated nonlinear differential equations often aren’t solvable, and must be computed step by step, which is often harder work and more uncertain.
If Iran closes the Strait of Hormuz or attacks oil assets, I assume they have an intention for that action. If an action in existential war fails to have the desired effect on the enemy, what would restrain Iran from upping their ante? I think it makes more sense to regard Iran’s threats not as promises they are bound to keep so much as threats to give pause to a sensible attacker. If attacked, I believe Iran will do what it can to assure its continued existence. I cannot imagine the range of options they could choose from. An increase in the price of oil could be the least of u.s. and Israeli worries.
you have to understand who is the monkey and who is the organ grinder in this relationship. trumpo is the world’s no.1 shabbos goy and wailing wall hugger. he has just been down on his knees in the oval office kissing mileikowsky’s butt (yet again.) he sold his soul to (((these people))) years ago and will do whatever they order him to, without even considering the epstein paedo kompromat.
in the event of an all-out war, Iran will need to first take care of the US flotilla stationed within strike distance. Sink as many of the vessels as they can. They will also need to neutralise the strategic bomber base in Diego Garcia. In addition to hurting the US economy by closing the straight of Hormuz, Iran will need to exact a high cost in ships, personnel and aircraft. The potential for nuclear weapons use is very high in a post-international law world, and Iran should suspect their launch at all times.
Once the Navy assets are scattered, they can then shift focus on other permanent US assets in the middle east. Destroy the UAE, help the slaves take over. Then refocus on Israel, where the bulk of the air defenses will be deployed.