Wars Have Consequences
Oil prices are sharply up.
Who could have known that starting a major military operation in the Persian Gulf could lead to broader global economic consequences?
Well, NBC News reports: U.S. crude oil sees largest weekly price jump on record.
U.S. crude oil recorded its biggest weekly gain on record, dating back to the inception of the West Texas Intermediate oil contract in March 1983, as the escalating Iran war threatens global energy supplies.
On Friday alone, U.S. crude oil spiked more than 12% to more than $91 per barrel, its highest price since late 2022.
Since the start of the year, the price of U.S. crude has risen nearly 60%.
Brent, the international oil benchmark, broke $94 per barrel as it jumped more than 9% to its highest level since late 2023.
This has direct consequences at the pump:
Gee, I wonder what happened right before that March 2 spike?
More from CNBC: Oil surges 35% this week for biggest gain in futures trading history dating back to 1983.
Here’s a nice map of relevance:
But, seriously, are people supposed to know this stuff?
I mean, the Bro of War assures us all that our warfighting warriors and their lethally kinetic lethality is all you need to know about these kinds of action.
Geostrategy is the kind of wokeness one might learn at one of those pointy-headed elite schools. Who needs to fret about such things?
(I snark in mental self-defense.)
Iraq has shut down 1.5 million barrels per day of production, two Iraqi officials told Reuters Tuesday. Kuwait has also started cutting production after running out of storage space, people familiar with the matter told The Wall Street Journal on Friday.
“The market is shifting from pricing pure geopolitical risk to grappling with tangible operational disruption,” Natasha Kaneva, head of global commodities research at JPMorgan, told clients in a Friday note.
Production cuts could approach 6 million bpd by the end of next week if the Strait is not open to traffic, Kaneva said. JPMorgan expects the United Arab Emirates to show supply constraints next week.
Heckuva job, Trumpie (although I am sure a bunch of admin-connected folks are doing great with oil stocks and betting markets, so what am I complaining about?)
I am quite certain the Trump University economists know what they are doing and inflation will NOT be affected.
Funny thing is that Iran has not even closed the strait. The other funny thing is that the USN does not have enough ships to escort all the tankers, if by ‘escort’ they mean provide anti-missile defenses. One mine, or one anti-ship missile, one burning tanker, and it gets so much worse.
I suppose the silver lining is that China suffers most and is, therefore, rather unlikely to help Iran pull off a successful attack. But Russia? Very different incentives there.