The Global Economy and the Iran War

Today, I want to deal with the Iranian front of this global war. Then we can also look further at the Russian economy. The first is the lifeblood of the global economy, and the global shock is starting to be felt. This is, in some ways, the 1973 embargo run in another way. Instead of tankers not reaching the West because Arab governments, chiefly the Gulf states, decided to stop sending oil, we have a naval blockade on top of a naval blockade.

And if you think this is healthy for the global economy, it is not. So first we need to ask where the reserves are:

According to Goldman Sachs, global oil inventories are plummeting and approaching a historic low.

Since the beginning of the conflict, there has been a decrease of about 255 million barrels, with the cumulative decline approaching 474 million barrels.

Even if the flow through the Hormuz Strait recovers soon, inventories are expected to continue to be depleted and reach the lowest levels ever recorded.

So that is the big picture. How could this affect the global economy? Well, let’s be honest, even the US will be affected. The president may not understand this, among many other things, but our refineries are not set up to process the oil we extract from the ground. It is set to extract much heavier oils, and this is not academic.