Oil producers play chicken with war, but keep the tankers moving
Markets adapt to a ‘forever conflict’ without letting the oil stop flowing.
The story
Oil flows in the Persian Gulf remain above prewar levels despite ongoing conflict, with producers avoiding actions that could trigger a larger war.
Source: fortune.com
Our reading
The Persian Gulf’s oil producers are playing a high-stakes game of chicken with the threat of war, but they’ve learned to keep the tankers moving and the prices from skyrocketing. It’s not that they’re avoiding conflict—it’s that they’re avoiding the kind of conflict that would actually stop the flow of oil. The real trick is knowing which red lines to cross and which to leave untouched, like a kid who’s learned to walk the tightrope without falling. Even Iran, for all its posturing, seems to understand that blowing up the oil terminals would be a bad idea—because then no one gets to sell oil, and that’s not good for anyone, not even them. The market, meanwhile, is betting on a ‘forever conflict’ but still wants the oil to keep flowing, like a kid who’s been told they can’t have candy but still gets a lollipop every day.
