the fear of living in 1973 again because of the war in Iran
Just enter the tracking platform Marine Traffic to understand the magnitude of the paralysis. Dozens of red dots, representing colossal merchant ships, crowd motionless off the coasts of Oman and the United Arab Emirates. The steel giants do not dare to cross a strip of water that, at its narrowest point, barely measures 33 kilometers. The Strait of Hormuz It is the main energy artery of the planet. A fifth of the world’s oil – some 20.9 million barrels per day – and a vital percentage of global liquefied natural gas (LNG) sail through its waters daily. Today, that step is de facto blocked. Half a century later, an atavistic terror has awakened in Western capitals: the fear of reliving the energy collapse and rampant inflation of 1973. The spark that set the markets on fire jumped after a war escalation unprecedented in the Middle East, triggered by the attacks by the United States and Israel that culminated in the assassination of the Iranian supreme leader, Ayatollah Ali Khamenei. Tehran’s response has not been long in coming: a rain of drones and missiles on American allies and trade routes that has caused a blockade de facto of the Strait of Hormuz. The crisis broke out after an unprecedented escalation of war in the Middle East. The offensive by the United States and Israel (named “Operation Epic Fury”), which culminated in the assassination of the Iranian supreme leader, Ayatollah Ali Khamenei, sparked a quick response from Tehran: a rain of drones and missiles on American allies and strategic infrastructure in the Gulf. The physical consequences have been immediate. An Iranian drone attack forced to paralyze the Ras Laffan facilities in Qatar, the largest LNG export plant in the world, and forced Saudi Arabia to temporarily close units of its gigantic Ras Tanura refinery. The violence has directly reached the water: the British agency UKMTO reported the attack on an oil tanker near Oman, leaving several injured, and the energy expert Javier Blas warned of the explosion of another ship anchored off the coast of Kuwait, causing an oil spill into the sea. Given this panorama, transport giants such as Maersk or MSC They have ordered their fleets seek refuge. The panic has rewritten logistics rates: the cost of leasing a supertanker (VLCC) has shot up by 600%, hovering around $200,000 a day, while insurers have increased war risk premiums by up to 50%, as Alex Longley warns in Bloomberg. The echoes of the past are terrifying. Saul Kavonic, head of energy research at MST Marquee, warns in Fortune that a prolonged closure of Hormuz could have an impact “three times the scale of the energy crisis we saw in the 1970s.” What could happen if the tanks overflow The problem with ships not sailing is not only that the oil does not reach its destination, it is that it accumulates at the point of origin. The industry is facing a logistical collapse due to lack of physical storage. Iraq has been the first major victim of this logistical collapse. As you have detailed OilPricethe country has had to begin to turn off the tap on gigantic fields such as Rumaila (the largest in the world), withdrawing about 1.5 million barrels a day from the market, a figure that could double if the crisis persists. According to sources from the commercial sector in Financial TimesIf the blockade continues, Kuwait will be the next to give up in a matter of days, followed by the United Arab Emirates. Saudi Arabia, thanks to its immense storage capacity, could last between two and four weeks before being forced to cut its extraction. Financial markets reflect absolute short-term stress. As analyst John Kemp’s charts illustrateBrent crude oil futures have entered a backwardation extreme, with a difference of almost 11 dollars per barrel between short- and long-term contracts, placing it in the 98th-99th percentile in history. This signals an acute and immediate shortage of barrels, especially for refiners in Asia, which have already begun to cut back on operations. If this funnel continues for three months, the unwritten rule of firms like Goldman Sachs suggests that crude oil could become more expensive by an additional $40, turning the barrier of $100 per barrel in the new normal. The differences with 1973 Despite the drama and the fact that a barrel quickly exceeded $80, the macroeconomic scenario is not a carbon copy of the Arab embargo. Global resilience has changed: The new oil sheriff: Today, the US economy depends much less on crude oil to generate wealth (barely 0.4% of GDP compared to 1.5% in 1979). Furthermore, the American country is now the world’s largest producer of oil, which protects it from supply shocks, as pointed out Fortune. The “Myopia of Hormuz”: Mukesh Sahdev, Chief Analyst at XAnalysts, points in Fortune that the market is overreacting. The main objective of the US (neutralizing the Iranian leadership) has already been met, and Donald Trump himself has suggested that the military campaign could be short, which would limit the long-term impact. Alternative routes to rescue: Saudi Arabia has a colossal lifeline. Your pipeline East-Westwhich connects the eastern fields with the Red Sea, has the capacity to pump about 7 million barrels per day, bypassing Hormuz. There are already signs that Riyadh is redirecting flows this way, as Blas explains. For its part, Iraq has managed to resume a modest flow of 50,000 barrels per day to Türkiye after a brief pause, as the analyst collects Bachar El-Halabi. Safety mattresses: Global onshore reserves reach 2 billion barrels, enough to weather the initial storm. For its part, the Trump Administration has tried to calm the markets by promising Navy naval escorts and state insurance of up to $1 billion per ship through the International Development Finance Corporation (DFC). However, this is not a magic solution. As they warn in the sectorcaptains are the ones who decide to set sail, and sailing surrounded by US military destroyers often makes them more attractive … Read more