Ian Welsh

The horizon is not so far as we can see, but as far as we can imagine

Category: Oil Page 1 of 8

Oilpocalypse Incoming

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On July 25, 2026

28 Comments

So, it seems that Ansar-Allah (the Houthis) struck an oil refinery in Jizan, Saudi Arabia. They also took a shot at a refinery in Yanbu, apparently intercepted by a battery the Greeks had there (what?)

Anyway, this is getting real. Between the Ukrainian strikes on Russian refineries, which have been very successful, Iranians hits, and now the Houthis, I don’t see how we avoid serious shortages. It’s the refineries that matter most: crude is worthless without refineries and they’re expensive, take a long time to build and aren’t always easy to repair, depending on what exactly got hit.

I also don’t see how we avoid massive famines and increased food prices in places that don’t have a formal famine. A lot of fertilizer runs from oil thru refineries.

The irony here (conspiracy theorists of elite intentions to depopulate the world, here you go) that Trump confirmed he OK’d the Saudi strike on the Houthi airport which set Ansar-Allah off. They’ve closed the strait and they’re going right for the jugular vein with these refinery strikes. If they keep shooting, the missiles will get thru. The defenders have to be lucky every time, they only have to be lucky on occasion.

Beans and rice. If you need distillates like diesel or motor oil, stock up now. It’s hard to stock up on medicine, but a lot also used petrochemicals, so do what you can: even simple things like aspirin are included.

Anyway, I don’t think Trump is together enough to have a diabolical super villain plan. To the extent he can plan at all, it’s about his next corrupt scam or bribe. But it amounts to the same thing in the end.

It’s hard to overstate how much this will destroy all goodwill for America in the globe. I mean all of it. Everyone knows the US started the war and refuses to stop it, whatever their reasons are. And when people can’t eat, the hatred will be immense. Iran will catch some backlash, but most people get that they’re defending themselves.

Empires end ugly and stupid. The rule of incompetence in late Imperial rulership maintains its record. I expected stupid, but it’s still flabbergasting to witness late Imperial Roman levels of moronitude.

Amazing.

Amazing is not a synonym for good.

 

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Manipulating Numbers Rather Than Logistics (Oil Version)

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On July 16, 2026

32 Comments

If you’ve been following oil prices since the Iran war started you’ve probably been surprised at how low prices have often been. I certainly was, at first.

The issue is fairly simple: most governments are worried about the price of oil, and not the supply of oil. So they’ve taken various measures to keep prices low. Some of those have been manipulative financial and some of them have been massive releases of oil from reserves.

IEA chief Fatih Birol told Bloomberg that a historic 400-million-barrel emergency release, equal to roughly 2.5 million barrels a day, helped push oil prices down by $20.

The price of oil, though, isn’t really the issue. One part of it is refinery capacity. A fair bit went off line in the Middle East, but ironically, even more in Russia. Why is Russia systematically destroying ever gas station in Ukraine? It’s retaliation for constant hits on Russian refineries.

Marathon Petroleum’s own management flagged on the Q1 earnings call that roughly 6 million barrels per day of global refining capacity is offline, about 6% of the world total. Ukraine’s drone campaign against Russian refineries is the largest single piece, but Middle Eastern facilities inside the Persian Gulf export corridor, and Chinese refiners voluntarily throttling to preserve inventory, add to the shortfall.

As a result Russia is no longer exporting diesel. And even though oil prices are low, gasoline prices are not as low as one would expect, because short refinery capacity means this:

Amusingly the Europeans and Americans have been encouraging Ukraine to hit refineries.

Now you may think “but America is an excess oil producer.”

Yeah, but it doesn’t matter. What matters is refineries and the type of crude oil involved. We aren’t just talking about gasoline, diesel, jet fuel and bunker fuel (ships), we’re talking about fertilizers, sulfuric acid (used for amazing amounts of processes) and so on. This cascades out into medicine (your aspirin for example), packaging, semiconductor production (hey, even higher prices) and whatnot.

But with rare exceptions (hello, China, again) most governments have not managed the actual supply situation.

In a rational economy prices and supply of crucial goods would be managed. For example farmers would get fertilizer and diesel at subsidized prices. Truckers shipping important goods would get subsidized diesel. Drug manufacturers would get guarnteed supplies (though not subsidized in most cases, they make tons of profits, just force them not raise prices.)

Rational governments would say “OK, what parts of the economy are actualy important (food, medicine, transport)?” and act to protect those parts of the economy, and would ration and subsidize those goods.

Instead our elites manipulate the price numbers and make the actual physical situation worse as they do so, by not allowing high prices to lower use and by not allocating key parts of the economy what they need at reasonable prices. Oh, and by releasing absurd amounts from the reserve to manipulate prices rather than using the reserve for actual necessities. They’re so used to an economy where just manipulating prices seems like all you need to do because there’s a global market with surplus. They don’t know how to handle an economy with actual, genuine shortages.

Anyway, as best I can tell if the Strait stays closed we are now weeks to about two months away from actual physical shortages in the first world. (They’ve already hit in the developing world.)

Then the fall harvest comes in and we get terrible numbers from that, and food prices surge.

This is the stupidest war of my entire lifetime and I’m old enough that this includes Vietnam, which was stupid beyond belief, but not one-tenth as moronic as the Iran war. A war of complete choice which the US has lost, won’t admit it has lost and is in danger of running the world into a decade long depression.

If it stops now or soon, it will suck, but we’ll get thru. But if Trump dismantles Iranian infrastructure like he’s threatened (by no means sure, this is Trump, but also not impossible, this is Trump) the Iranians have said they will respond by dismantling Gulf infrastructure: that means refineries that will take years and years to rebuild. Oil fields. Facilities producing helium. A decade of not enough fertilizer.

There is a real goddamn economy and if this happens, a lot of people will DIE due to famines and fuel shortages. Tens of millions. Maybe much more. You can’t just take 20 to 30% of the world’s supply of key resources offline and think “it’ll all be OK, the market will sort it out.”

I mean, the market will, sort of. But along the way will be a LOT of deaths and suffering

If the US had an even remotely operational governing system Trump would be impeached and removed in record time. He’s a fiasco, and he’s one itchy trigger finger away from being a catastrophe.

 

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Israel’s Support Is Eroding In the US

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On June 19, 2026

14 Comments

A friend pointed out to me that Israel’s support is eroding hard. The elite consensus is shifting. Point in case:

The hard core Zionists will keep opposing this deal, of course, but there are two groups that are shiftable. The first is the one that Tapper belongs to: he’s an authority follower. He’s been hardcore pro-Israel and loathes Muslims, but his first instinct is to follow the leader. Trump’s made a clear turn, and Jake is following.

The second group are those who need administrative favor. Their livelihood or plans depend on the levers the President controls favoring them. They were for Iraq, for Ukraine, etc… but they have no strong ideological commitment, only self-interest.

Trump made a mistake letting hard core Zionists roll up media and social media, but there’s still enough run by self-interested or follow the leader types that if Trump stays solid, the American elite zeitgeist will shift towards his stance. Israel is an ideological commitment, it’s not, for most elites and courtiers, all that involved with making lots of money or being part of the in-group. If the window shifts, they’ll shift with it.

At a fundamental level what happened is that America got itself involved in a war which it couldn’t just walk away from. Losing in Vietnam was embarrassing but really, who cares? Just walk away. Losing in Afghanistan, likewise.

But the Iranians have the West’s balls in a vise and the vise was slowly tightening. Key reserves were way down. Oil at Cushing OK is near historic lows. Distillates are getting scarce. Market manipulation of the price of oil was very successful, but actual physical shortages were on the way, starting in a month or so. (Ironically, price manipulation meant that oil reserves drew down faster than if actual price discovery had been allowed.)

There is a real world, and a real economy and Iran had control of it. The econo-morons talking about how the effect of this has been less than the oil shocks are right when looking at market numbers, but it wasn’t going to stay less and even Trump figured that out.

So the neocons and the hard Zionists will attack, but if Trump had the least concern for the actual economy, he had to make a choice.

Meanwhile Israel is still fighting in Lebanon and the first real battle of the Lebanese invasion is taking place.

Both Hezbollah and Israel are concerned there’ll be a new, actually real ceasefire and Israel is seeking to create facts on the ground. Ali Taher hill is an important strategic objective, giving whoever controls it sight lines for miles around. This is the first large engagement I’m aware of in this invasion where Hezbollah has chosen to stand and fight, instead hitting and fading. (That’s not a criticism. Guerilla warfare makes sense for them.)

And so far they’re doing well, because the Israeli ground forces are actually crap.

The Iranians have not gone to Geneva for the signing or negotiations. They are holding firm on Lebanon. And that means Trump can either rein in the Israelis or the vise starts tightening around America’s balls again.

America cannot win this war. It is impossible. Even using nukes probably wouldn’t work fast enough. That’s why they agreed to a deal that is very pro-Iranian.

That has not changed. They can rein in Israel or cut it loose now, or they can do it in two months when the US is in much more pain, or in 4 months when there are food riots.

There’s a real world. America lost a war that matters. There’s going to be a price for that. If America is smart and not completely controlled by Israel, they’ll pay that price now and if necessary cut Israel lose, because the price will go up every day if the MOU fails.

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America Exports Record 6.4 Million Barrels of Crude

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On May 5, 2026

8 Comments

Today’s headline news chronicles our triumphant, record-breaking petroleum exports: 6.4 million barrels a day. The highest weekly figure ever recorded. On the surface, it appears America may just make up in exports what the closure of the Straits of Hormuz prevents.

On the surface.

The reality of our domestic petroleum situation is more dire. The same week America exported record amounts of crude it quietly drew down its strategic reserve to the tune of 7.1 million barrels a day same week ending April 24. This represents the largest drawdown since 2022.

Let’s do some simmple arithmetic: drawdown strategic reserves by 7.1 mln and export 6.4 mln. Subtract and you get a net loss of 700,000 barrels a week. That’s the burn rate of crude oil. Not slack. Vanishing.

Adding insult to injury, Morgan Stanley reports that gasoline inventories are at their lowest level since well, ever. Yes, ever. By August gasoline reserves will freefall to 198 million barrels. 

In reality, America is facing an unsustainable crude oil burn rate coupled with a completely unsustainable draw down in gasoline reserves. These drawdowns are occurring in the face of perilously high petroleum prices, including gasoline.

But domestic petroleum production, and refining capacity will make up the difference!

What part of unsustainable did you not understand?

For example, the oil refinery on Corpus Christi Bay here in South Texas is effectively off-line because it has no water source. Lake Corpus Christi is dry. No water, no refinery, no gasoline.

To make matters worse, domestic crude production is trending flat to down, even as WTI spot prices are in the $102 range.

Permian Basin rig counts, a leading indicator of what future crude production will look like, are down 15.33% YoY. Oklahoma rig counts are down from 55 last April to 43 today. That’s a -21% decline YoY. New Mexico dropped 3 rigs and Wyoming dumped 1. What about Eagle Ford shale oil you ask? At $102 a barrel shale has to be profitable. True, but there hasn’t been a drilling permit issued in the Eagle Ford basin in three years. None have been filed with the state since the crisis with Iran began. There’s a reason for this. WTI spot prices are $102 a barrel, as I previously noted. Those are spot prices for oil deliverable right this minute. If you go 12 months out on the contract curve to May 2027, the price of WTI Falls to $73 a barrel. At that price shale oil isn’t in the sweet spot. 

Moreover, what the prices in May 2027 are telling policy makers, factory owners, grocery store managers, freight shippers and the like in bright red flashing lights are that a deflationary spiral is a very real possibility.

Here’s where the rubber hits the road: the petroleum and gasoline burn rate will force the Fed’s hand and compel a rate increase to prevent a massive inflationary spike.

But what is the Fed to do six months to a year from now when the looming credit crisis, and housing collapse reach critical mass and unravel, popping the AI bubble the blowoff?

We’re literally exporting our seed corn.

You can’t reap what you don’t sow.

Shockwaves From The Second Iranian American War

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On March 24, 2026

30 Comments

Some of the issues from the Iranian war are obvious: everyone’s talking about oil and natural gas, for example. Many have mentioned fertilizer. But I think it’s worth going into in a bit more depth.

First is that in addition to gasoline, oil is used to make bunker fuel (98% of freighters and tankers), jet fuel, and diesel (heavy machinery, large trucks.) The prices for all three are rising faster than gasoline prices and there will be a worldwide shortage. Production of semiconductors, phones and so on will shut down some time after that, depending on how the small reserves available are shared out. Taiwan is particularly vulnerable and production can be expected shut down in a couple weeks.

The chart below is from six days ago:

Don’t take the above chart too seriously, I’ve heard different numbers from different sources, and the type of oil in reserve matters a LOT.

This will, of course, hit the AI Bros hard. They have significant stockpiles of some of what they need, but not everything. Worried about that data center coming to where you live? If you’re lucky, Iran has just saved you from an AI driven spike in your energy prices, but not an oil shortage spike!

Airlines are already reducing flights. Expect prices for travel to spike significantly. If you don’t already have tickets for a trip get them now. Even so, it wouldn’t surprise me if many already booked flights are cancelled without recourse, citing forece majeur. Diesel and bunker oil shortages will mean supply line disruptions, and primary processing disruptions. Fertilizer shortages are already changing planting decisions, farmers in Australia are planning on planting much less wheat, for example.

Oil goes into a lot of things. Here are a couple of graphics showing some of them:

And,

To oversimplify, pretty much everything has some oil in it. For example I’m stocking up on NSAIDs and Tylenol 2s (legal in Canada.) I saw one person saying they went out and bought about a year’s supply of pretty much everything which can be stored. One side benefit may be that insane levels of plastic packaging might, at least, be reduced.

China’s bunkering up. No refined oil products are being allowed for export. Fortunately for China, they, unlike apparently almost every other nation in the world, are not run by retards, so they have massive petroleum reserves and they bought about 50% of the world’s grain production for the last four years and stored much of it. But this goes far beyond petrochem: they produce, for example, almost all of the world’s tungsten, and no more exports of that.

Stockpiles in the the West are essentially at zero, right now, and yes, most advanced weapons cannot be made without Tungsten.

There’s been a crash in silver prices recently. You may have read about it. But here’s the thing, there’s an actual physical shortage of it because it’s used in essentially all electronics, including semiconductors and even more importantly, solar panels. Everyone’s going to want solar panels now.

China, not being fools, are no longer allowing export of silver because they know it’s the physical shortage that matters, not the paper price on paper exchanges where delivery isn’t expected to happen.

I spent years railing that just-in-time logistics was sheer fucking insanity and should be outlawed. In addition every country who isn’t a net producer should have at least year’s stockpile of fuel and even net producers should have three years of food stored (because things like droughts and fertilizer shortages happen.) Medication and key medical goods should also be stockpiled. A lot of people are going to suffer and die when key drugs hit shortage and many cancer drugs, for example, are produced in India and on top of the factories not being able to operate without energy, many drugs use petrochemical derivatives directly.

This war should never have happened. Even if it ended now there would be serious shortages for about four to five months, and it would be three to four years before full production could be resumed, if it can be. (Shutting down oil and gas well production often damages the underlying fields.)

Oh, and which major nations will suffer the least? Russia and China. It is to laugh.

I know this is the second article on this subject in a few days, but the impacts of the war are important for you to understand.

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America’s Economic Future: Imminent Pain and Dislocation Not Seen Since the ’30s

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On March 23, 2026

20 Comments

~by Sean Paul Kelley

The end of this credit cycle is going to include the following macro events: a credit crisis, a housing crisis, an energy shock, with the potential for massive failed deliveries necessary to third world nations creating famine on a biblical scale, at least one Too Big To Fail failing, as Lehman Bros and AIG did in 2008, and the AI bubble bust. All of these will happen. Locked in. Fixed. No way out.

In a previous post I outlined the order in which the financial catastrophe barreling down on us like oncoming freight will occur. I’ve simply included one new variable: the energy shock.

Here’s how it’ll go down.

First, there is an expansion. Stocks rise. At some point the rise becomes divorced from realistic earnings expectations. This is when intense speculation drives equities into bubble territory. After all, Nvidia’s market cap is just shy of ($4.2trillion) the annual GDP of India ($4.4trillion) as of Monday March 23, 2026. Simultaneously, US Treasury buyers, ‘prudent’ investors, qualified investors (people with more than $5 million in net worth), pension funds, insurance and re-insurance companies and good old orphans and widows, as they always do, got a bit jealous and so reached for yield. They wanted safety with high returns. But in this world you can have safe or you can have high returns. You’re a fool to think you can get both at the same time; alas we have a superabundance of fools these days.

So just like in 2007-08, the shadow banking system, ie. the issuers of supposedly safe and high yielding assets, called subprime loans, experienced serious losses, that lead to the unwinding phase of the financial crisis. The 2008 fin crisis started on a lovely summer day in NYC, June 22 2007—I think the Yankees won that day—when two Bear Stearns subprime hedge funs went belly up. This was 2008’s canary in the coal mine.

This time around it isn’t subprime that has precipitated the unwind but the dominance of private equity/private credit shadow banks, such as Blue Owl, Blackstone, Blackrock, and others.

As previously noted, the current crisis’ canary in the coal mine was Blue Owl. Their very rude wake up call arrived in the form of $1.4 bn in redemption demands, which forced Blue Owl to sell assets to meet redemption needs. It was a catastrophe for Blue Owl, in every way a fire sale in which every Wall Street trader exacted his pound of flesh. It also led to a very ugly unravelling of contracts with Oracle. Oracle’ stock plummeted.

Many others have followed in the weeks since Blue Owl burped up a massive fur ball. The specifics can be found in this post and are beyond the scope of this discussion. They are pertinent, but listing them would make this a Tolstoyian endeavor. The upshot is this: normally, an enormous amount of credit destruction (read, debt) has to happen until we get to phase three of the credit cycle. One counterintuitive effect: a stronger dollar. We’re already seeing this versus the other major fiat currencies.

Moving on to one of the other developments I outlined in the first paragraph: a housing crisis. Home building has long been the foundation of the American economy. It’s in serious stress right now. As I mentioned before, last month saw a full -17.6% collapse in the purchase of new homes. In the Northeast it was an epic cow patty catastrophe: -44%. In my hometown, sellers outstrip buyers buy a full 114%. This in the heart of the ‘Texas miracle.’ I honestly don’t know how a collapse in homebuilding will effect this economy coupled with the headwinds it’s facing. I know it won’t be salutary and will exacerbate already dangerous liquidity and solvency issues caused by the private credit/private debt unwind. What else? “Cannot say. Saying, I would know. Do not know, so cannot say.” Five bucks to whoever gets that reference.

Will the Fed be able to contain both? FuckifIknow?

Adding to fierce headwinds, Trump’s war against Iran has had a similar effect on the global economy as Odysseus ill-timed opening of Aeolus’s wind bag: it’s blown us on a completely fucktarded vector, beyond any rational goal, that will take five years-at a minimum-to recover from if we stop now. Plenty of us predicted this but we’re just dipshits sitting in the basement wearing our jammies. If the Israeli’s continue their wanton destruction of everything, there is no telling how Iran will respond. And I’m not even pondering nukes here.

The effects the closure of the Straits of Hormuz are and will continue to have on the global economy, rather the effects faced by the Rules Based Order the West imposed on much of the globe will be make the European energy crisis look like a night out with Sidney Sweeney.

One effect: potential famine in those third world countries-on a biblical scale-unable to import desperately needed fertilizer from the Persian Gulf at reasonable prices.

Second, no helium. Helium is a gas essential to modern industrial life, everywhere.

Third, my best friend in Denmark joked, “hell, we might soon be back on bikes eating only porridge for dinner.” He also rued the demise of Nordstream and said, unequivocally that Danish renewables won’t be enough. This from the one European nation with the largest sector of renewables. Imagine the second order effects cascading out across the globe?

And what about the cost of transport? Not just everywhere, but especially here in the US? Anyone given any thought to just how super human stupid just in time delivery looks now? I’ve always warned about this. You know: chickens, roosting; shit like that.

Fuck it. I’ve got more than ten years of Wall Street experience so what the hell do I know?

Well, I know this as I know the sun rises in the East and sets in the West: the exogenous shock waves rippling towards the US economy are bad. Vewwy, vewwy bad. And there is no double-slilt experiement available to cancel out the oncoming waves.

What next?

Oh yeah: Too Big To Fail. Nope. Stress test? Are you Dave Chapelle?

Just ask Lehman Bros or AIG. This time around one of the Too Big To Fail institutions will fail. Maybe more than one. If I had my choice it would be Goldman, but if I am being realistic I’d put odds on Wells Fargo and/or Citigroup. Why? Well, Wells Fargo has a history of laundering tons of cartel cash, so no real culture of compliance/risk management. Citigroup has brazenly challenged the SEC to regulate them on multiple occasions. Those would be my two choices.

Finally, I’ll recap phase three of the credit cycle: the Ponzi unwind. As I wrote here,

“Crypto will be the first big Ponzi unwind. And it will take a lot of suckers with it. Plus, a damn lot of fools who worked for investment, commercial banks and private credit/equity shops. Crypto is bullshit, wrapped in dead fish skin that’s been perfumed by Chanel. No matter how good it smells, it’s rotten to the core. Crypto is to this financial crisis as CDOs and synthetic CDOs were to 2008.”

Moroever,

“The AI-hyperscalers will suffer as well, during the Ponzi unwind. Why? They are in essence engaging in a similar sort of vendor financing like CISCO and Juniper Networks did in the dot-com bubble. Nvidia is giving chips to AI-hyperscalers as collateral for loans. Never mind the chips will depreciate long before the earnings are solid enough for the AI-hyperscalers to payback the “loans.”

It’s accounting legerdemain in extremis.

So, to be clear: multiple endogenous-domestic-headwinds coupled with very ugly exogenous-international-shocks, real and potential, increase the odds, hourly, that we’re nearing financial armageddon.

To recount what to expect: a housing crisis, a credit crisis, an energy-shock, fertilizer shortages leading to potential famine, one or two Too Big To Fail, failing and the AI bubble bursting. All at the same time. Same time. Boom. Boom. Boom.

This ain’t gonna resemble your daddy’s financial crisis. In the words of Grunge’s greatest lyricist, Chris Cornell, “I’m feeling California, but looking Minnesota.”

The Credit Cycle: Phase Two Accelerating

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On March 19, 2026

18 Comments

~by Sean Paul Kelley

Here are today’s Phase Two developments. Many are ominous. Things not looky so goody.

The smartest guys in the room, i.e., Goldman Sachs had this to say about AI: “Massive investment in AI contributed basically zero to US economic growth last year.” What will they predict next? An oil price spike if we go to war with Iran? Oh wait. 

Dario notes that the liquidity crisis is going global: “Middle East liquidity crisis in the financial system is surfacing.”

He cites Rashid ben Saeed who elaborates: “Citi and Standard Chartered literally evacuated their offices this week. Told staff go home, work remote. HSBC closed their Qatar branches. Hedge funds are in “contingency mode.” That’s a polite way of saying they’re bricking it. Analysts are saying customers could pull out $307 BILLION if this goes on another month.” 

First Squawk writes that both JP Morgan and Goldman are offering Hedge Funds ways to short private credit. That’s just weird.

Ripplebrain conveys just how devastating the attack on QatarEnergy’s LNG production is: “17% of QatarEnergy’s production is 3.4% of the world’s LNG production.” Ending ominously saying, that it’s “gone in the blink of an eye, perhaps for years.”

The irrepressible Matt Stoller highlights a video that highlights “straightforward market manipulation.” He also points our attention to the #2 story at the Wall Street Journal: “U.S. Regulators Propose More Lenient Capital Rules for Big Banks.” This kind of proposal is in direct contravention to the ‘stress test’ rules put in place after the 2008 Financial Crisis. It also clearly foreshadows liquidity and/or solvency issues that the commericial banks will soon face. 

In another clear phase two clusterfuck is this story from the WSJ, cited by Unicus Research. The upshot: “Stone Ridge’s LENDX fund just told investors it would honor only 11% of redemption requests.” The post on X also includes what kind of garbage is in the fund. Go take a look. It’ll engender a ton of schadenfruede. Enjoy! 

As pending crises morph into full blown disasters investment banks often prepare by enacting the following policies. First, they raise production quotas for their employees while simultaneously cutting their commission payouts. It’s a cut-throat business. Payout cuts are painful. I’ve lived it. And they always cut payouts right before or during bear markets. I endured this twice at Morgan Stanley. Guess what: Goldman has begun that process, as First Squawk reports: “Goldman plans performance-based job cuts in late April.” This we can infer two important factoids from this: Goldman is worried about cash-flow. You don’t plan to run employees off if you’re flush with cash. Two: timing, Goldman clearly sees this credit cycle accelerating rapidly with an April inflection point.

Shashank Joshi catches an excellent highlight from the Economist: “Average prices of petrol and diesel have reached $3.88 and $5.09 a gallon, compared with $3.11 and $3.72 at Mr Trump’s inauguration. Republican support for the war is strong, but softening.”

More Perfect Union informs us “the cost of vegetables jumped 49% last month as inflation hit hard and companies raised prices.” Its source is BLS data. Now I know, some will dispute how the CPI is computed. I thinks it full of balderdash and male bovine excrement. So does Ian. So I post and you decide. 

Sohrab Ahmari notes, unconfirmed but entirely plausible, that “force majeur [has been declared] on Qatari LNG contracts for up to five years.” Five years? That’s going to pile Pelion atop the already messa Ossa of the energy markets globaly. 

CORRECTION: according to EarlyGray the video below does not say anything about Japan buying Russian oil. Mea culpa. I regret the error. SPK

Richard posts a video and apparently translates it. If true, it’s a bombshell: “Japan is now openly buying Russian oil with the yuan.” Why not with JPY? I would imagine that China has already set up a Yuan based transaction system for buying and selling oil to steadily chip, chip, chip away at dollar hegemony. Yeah, Japan has said it publically and officialy. That’s pretty much like pissing on the petrodollar. Our closest North East Asian Ally. That’s fuckery on an hitherto unseen level. 

Meanwhile, to Japan’s northwest, South Korea is considering resuming imports of Russian oil.

And I make the observation, in utterly obscene Russian fashion that “with these high oil prices the Russian Treasury has certainly Как бога за яйца поймал.” Translated idiomatically: Russia is in the catbird seat. Translated directly:they got God by the balls.

Rory Johnston notes just how high Dubai crude prices have risen: “Cash Dubai crude (balance of the month) just broke above $170 per barrel.”

Here’s what I’ve previously written on this credit cycle. I stand by it all. The only comment I’ll add at present is this: if the exogenous shocks to the US economy continue and the energy shock intensifies, all bets are off on the proximate cause of the end of dollar hegemony.

 

Personal Consequences Of The Iran War

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On March 18, 2026

19 Comments

I’ll keep this one short. Israel just hit a major Iranian oilfield. Iran has said it will now hit Gulf oilfields in retaliation. Ali Larijani, probably the last person in the Iranian administration who could have negotiated an off-ramp, has been assassinated.

This war is about to enter the economic devastation phase.

Unless you live in China (bought half the world’s grain production for the last 4 years and massively increased its fuel stockpiles) you’d better start preparing. Stock up on food. Check your local power grid to see how reliant it is on natural gas and oil turbines (Europeans, this is you.) Buy medicine. Acetaminophen, for example, is basically 100% a petroleum product. Figure out how to stay warm or cool and how to cook — can you still get some solar power and batteries. India mostly relies on gas for cooking, and it’s going to run out soon.

Australia’s got maybe 3 weeks of petroleum left. The Gulf States aren’t going to be able to run air conditioning soon. Everyone’s going to start putting export bans on key supply chain items soon. The Chinese have already banned export of natural gas and oil, but this will spread to food, key medicines, etc, etc… if the war goes on much longer.

Don’t assume this is all going to work out, even in most countries which can keep the power on and enough food, there will be price increases. A lot of the world economy is based around oil, gas and… fertilizers. About a third of the world’s fertilizers come from the Gulf, thru the Strait. Even if the war ends in a couple weeks, there will be aftershocks, and, of course, companies like supermarkets will jack up prices then keep them up even after the shock, just like they did during Covid.

But over the next few months expect shortages and increased prices and in some parts of the world straight up energy brown outs.

Unless you’re Chinese or Russian, don’t expect your government to do anything competent to protect you. Even if it can, it won’t, unless you’re part of the 1% at least.

Prepare. Perhaps we’ll be lucky, but don’t be count on it.

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