The war in Iran was supposed to blow up the world economy. However, as analyst Max Fisher points out in his recent explanatory videoIf we look out the window today, we do not see an apocalyptic landscape worthy of Mad Max. What we see is, simply, a somewhat battered economy. Were the catastrophic forecasts wrong? At all. The light we see through the window is “a mirage.”
The war detonated like a distant bomb: we have seen the flash, but the shock wave has not yet reached us. To understand the reason for this delay, you have to look at the sea. A supertanker is a steel giant that measures four football fields long, carries millions of barrels and weighs more than a skyscraper. Due to its colossal dimensions, it travels at about 10 or 15 knots. That is, at the speed of a bicycle.
Our global supply lines travel at the pace of a cycling peloton. When the conflict broke out and the tap was turned off in the Persian Gulf, There was still a huge amount of crude oil pedaling slowly and silently across the oceans towards Europe, Asia and America. This logistical inertia is what has created the false sense of normality that we experience today.
A monumental traffic jam
According to data from Bloombergthere are more than 800 vessels stuck in the Gulf, 70% of them loaded with crude oil and fuel. Guardian raises the number to 2,000 if we add freighters and cruise ships, with some 20,000 sailors on board trapped for almost a month and a half.
The real impact on the numbers is scary. An investigation of Al Jazeera based on data from Kpler reveals that in just 40 days of conflict 206 million barrels have disappeared from the market. To give us an idea, that amount would fill 103 supertankers (VLCC), marine beasts that, when standing, would equal the height of the Eiffel Tower. Exports from Iraq have plummeted by 82%, and those from Kuwait and Qatar by more than 70%.
So why are there no massive blackouts in the West? As Max Fisher explainsWestern governments, through the International Energy Agency (IEA)have released millions of barrels from their emergency reserves. This, added to financial speculators betting on peace, has kept prices artificially low. But these measures are “punctual tricks”, patches that will run out just when the last ships that left before the war reach their destinations.
The ceasefire deception
The announcement of a “two-week ceasefire” has given a small respite to the markets, but the reality is rather stubborn. In statements to Reutersthe director of the IEA, Fatih Birol, was blunt: the current crisis is “more serious than those of 1973, 1979 and 2022 combined.” Analysts agree that it is not enough to sign a piece of paper to get the machinery back on track. The column lex of Financial Times warns that the world has lost about 600 million barrels. Even producing an extra million barrels a day, it will take almost two years to recover pre-conflict inventories.
Added to this is physical destruction. Iran and its adversaries have damaged vital infrastructure. As we have explained in XatakaQatar has lost 17% of its liquefied natural gas (LNG) capacity and could take three to five years to repair. The imminent result will be what economists call “demand destruction”which Fisher starkly illustrates: things won’t disappear, but there will be a lot fewer of them. We will see airlines canceling flights due to the prohibitive price of fuel, less fertilizers (which will make food more expensive), factories stopped and construction materials through the roof.
Great collateral damage: debt
This crisis does not only affect gasoline pumps. An analysis of Foreign Affairs alert of an invisible global threat: the debt. With energy prices rising, inflation will skyrocket, forcing the United States to raise interest rates. This could trigger a wave of massive defaults in developing countries, a tragic echo of the debt crisis of the 1980s.
Unlike past crises, today rich countries also have no lifeline. Ruchir Sharma, in his opinion column for Financial Timespoints out that G7 governments carry debt levels greater than 100% of their GDP. They have literally “run out of political ammunition” to subsidize fuel for their citizens.
So why not extract oil from somewhere else? Because, as the geologist interviewed by explains The Conversationthe Persian Gulf is a unique whim of nature. It concentrates half of the world’s oil and 40% of the gas in just 3% of the earth’s surface. It is irreplaceable in the short term.
The Tehran toll: the lesser evil
Faced with this impasse, a proposal that is as controversial as it is pragmatic has emerged: that Iran control the Strait and charge a toll of about 2 million dollars per ship. According to a report from think tank European BruegelAlthough this violates international law, it would make economic sense. The study shows that 85% of this toll would be absorbed by the Gulf producing countries themselves. For the average European or Asian consumer, it would only mean a few cents more per barrel. A lesser evil compared to a total blockade that enriches Russia with the rise in crude oil.
The spring mirage in which we live has an expiration date. During these hot months, Europe and Asia should be filling their strategic reserves in the face of the cold. Instead, they are emptying them. As Max Fisher warns, when hundreds of millions of people turn on the heat in December and January, the real oil crisis will hit with full force.
In the long term, we can see only one real way out: avoiding oil altogether. This war will make it clear to world leaders that depending on such a volatile region is an unaffordable risk, forcing a drastic acceleration towards electric vehicles and renewable energy. In the meantime, we will continue waiting. Because the hyperconnected and technological economy of the 21st century has just discovered, the hard way, that its heart continues to beat to the rhythm of ships that cross the ocean at the speed of a bicycle. And when that bike brakes, the whole world loses its balance.
GIPHY App Key not set. Please check settings