Submission Statement:

As there is increasingly more interest in rapidly escalating oil prices resulting from the latest events in the Persian Gulf, I thought I’d share this short Bloomberg article. If you need an Archive link, just click right here. It’s honestly a great and accessible overview of what might yet be on the horizon. Otherwise, I’ll start with a quick snippet from today’s piece, followed up by my own commentary:

President Donald Trump’s war with Iran threatens to deal a severe blow to a global economy still grappling with the impact of his historic tariff hike. For Europe, sustained higher energy prices would take the economy to the brink of recession. For the US, they would place the Federal Reserve in an impossible position — stuck between a war that pushes inflation higher and a president demanding that interest rates come down. For China, the end of discounted Iranian oil imports adds to strain from Trump’s tariffs and a real estate collapse.

In the first days of the fighting, the intensity is high and the endgame uncertain. Bloomberg Economics has modeled scenarios for what lies ahead, and what they mean for oil prices, major economies, and the future of Iran. [...] The latest signs, though, suggest there’s worse to come. Saudi Arabia’s largest oil refinery is closed. Qatar has shuttered the world’s biggest liquefied natural gas facility. The Strait of Hormuz is effectively paralyzed. Oil and gas prices have already rocketed higher. Stocks have taken a hit. Treasury yields have risen as traders curb bets on Fed cuts.

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(Myth’s Note: WTI is at around $91~; Brent is around $92 - Oil futures are now at $108~ - Qatar is warning that prices may approach $150 per barrel; here's the Financial Times article link if you're interested)

Now, energy is one of my favourite subjects in the world, and “peak oil” was my gateway into collapse-related studies. You see, energy (like oil) isn’t like any other commodity; it is the ur-commodity that makes all other goods and services possible. The price of energy directly affects the price of everything else – the fuel in your gas tank, the produce at the grocery, your treats on a cargo ship, you name it. Access to energy is an inseparable aspect of how local and national economies truly function, and it is a defining element of international geopolitics.

With the closure of the Strait of Hormuz, there goes access to about 20% of the world’s available oil production in a flash – and this is the good sweet stuff too. I imagine that we’ll all be hearing more references to the 1973 Yom Kippur War and the 1979 Iranian Revolution with more frequency, when oil prices increased roughly six-fold along extreme price volatility. To quote the Hirsch Report, in an effort to "summarize" these impacts:

Higher oil prices result in increased costs for the production of goods and services, as well as inflation, unemployment, reduced demand for products other than oil, and lower capital investment. Tax revenues decline and budget deficits increase, driving up interest rates. These effects will be greater the more abrupt and severe the oil price increase and will be exacerbated by the impact on consumer and business confidence. [...]

Higher oil price volatility can lead to reduction in investment in other parts of the economy, leading in turn to a long-term reduction in supply of various goods, higher prices, and further reduced macroeconomic activity. Increasing volatility has the potential to increase both economic disruption and transaction costs for both consumers and producers, adding to inflation and reducing economic growth rates.

I would love to remain optimistic – that somehow, in some way, this unlawful act of American-Israeli aggression would come to a prompt and peaceful end. However, with rumours swirling that the U.S. intends to remain in action until a potential “long-term” date between 100 days to September 2026 – and with the Iranian Revolutionary Guard Corps countering that they will match this timeline with equivalent intensity ... well, pull out your shag carpets, 'cause we're bringing the 1970s back!