The Market Shrugs Off the Mother of All Oil Shocks
A worst-case scenario
Israel strikes the Iranian oil export terminal of Kharg Island, from where the Islamic Republic ships 90% of its production;
Tehran, in turn, retaliates by bombing oilfields in Saudi Arabia, Kuwait and the United Arab Emirates, affecting a large chunk of global output.
Immediately, an all-out regional war has broken out, closing the Strait of Hormuz, the shipping lane for most Middle Eastern oil.
That’s worth a lot more than a 10% price jump.
The US is the world’s largest oil producer, and thus its dependence on Middle Eastern petroleum has collapsed.
Back in July 2006, the country pumped 6.8 million barrels a day of total oil.
Today, it pumps more than 20.1 million barrels.
In 2006, US net petroleum imports ran at an all-time high of 12.5 million barrels;
America is now a net exporter to the tune of 1.5 million barrels.
Javier Blas Bloomberg 9 October 2024
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