Thanks for this angle on events. It has so much more validity than the wall to wall coverage of some of the political input which becomes tedious and infuriating.
The 'price elasticity of demand' for oil is about 0.1. About 20% of global oil is shipped through Hormuz. So a simple calculation is that stopping all shipments through Hormuz causes the price of oil to go up by 0.2/0.1, or in plain speech, the price of oil will triple.
Serious question: Does Saudi Arabia deserve its oil? Would it be immoral to take it from them? They did not discover it or know how to make it useful to mankind. The House of Saud merely did a good job defeating their rival Arab chiefs and then lucked out.
If anything, I've found it surprising how resilient gas markets have been in the first week of the conflict, at least in Europe. The FT published a good graph showing how minimal benchmark price rises have been compared to 2022; though the 2022 spike appears to be in the autumn so maybe that's a problem we'll have to look forward to later this year. https://www.ft.com/content/d48f6a08-0b7d-4a01-a84f-b0fbecf03915
Thanks for this angle on events. It has so much more validity than the wall to wall coverage of some of the political input which becomes tedious and infuriating.
Excellent explainer. Thanks.
The 'price elasticity of demand' for oil is about 0.1. About 20% of global oil is shipped through Hormuz. So a simple calculation is that stopping all shipments through Hormuz causes the price of oil to go up by 0.2/0.1, or in plain speech, the price of oil will triple.
Two of my favourite writers aligning on highlighting the "price of reality". Would be a shame not to introduce one to the other: https://polemicpaine.substack.com/p/the-bill-in-a-gulf-war-envelope?utm_source=share&utm_medium=android&r=nloua
Thanks for this. I knew nothing about those two terminals. Closed.
Serious question: Does Saudi Arabia deserve its oil? Would it be immoral to take it from them? They did not discover it or know how to make it useful to mankind. The House of Saud merely did a good job defeating their rival Arab chiefs and then lucked out.
If anything, I've found it surprising how resilient gas markets have been in the first week of the conflict, at least in Europe. The FT published a good graph showing how minimal benchmark price rises have been compared to 2022; though the 2022 spike appears to be in the autumn so maybe that's a problem we'll have to look forward to later this year. https://www.ft.com/content/d48f6a08-0b7d-4a01-a84f-b0fbecf03915