Source: Fortune.com
Summary
The US-Israeli war on Iran has led to a global energy crisis, with the Strait of Hormuz effectively closed and top oil producers cutting output. Crude prices have soared 36% in the past week, and LNG markets have suffered a shock. Iraq, Kuwait, and the UAE have reduced production, while Qatar has throttled LNG production. Experts warn of a potential severe damage to infrastructure and a lengthy closure of the strait, fueling fears of longer-term supply shortfalls.
Our Reading
The numbers tell one story.
Oil prices are up 36% in a week, and LNG spot prices in Asia have almost doubled. Iraq has cut output by 60%, and Qatar has throttled production. The US and Iran show no signs of backing down, and Wall Street is not convinced that Trump can restore ship traffic in the Strait of Hormuz. The US Navy’s plan to escort tankers through the strait is seen as a massive logistical undertaking. The situation is a nightmare scenario for the oil market, with the biggest disruption in oil production in history.
The war is turning into a game of economic attrition.
Author: Evan Null
