An alternative explanation for the steeper rise in oil prices today than in 2022 is that people expected the invasion of Ukraine to succeed quickly and the West to respond less severely. If that happened, Russia's economic isolation would be more limited (similar to the 2014 sanctions). Prices really took off as Ukraine showed a willingness to resist and Western sanctions against Russia intensified. In other words, there was a "learning" period in the 2022 case.
In contrast, no one thinks that this war is going to end quickly and scenarios involving greater disruptions to the oil markets are more likely (because of who rules the US and Iran).
Good observation about the “learning” period in the Ukraine. I actually feel that the Iran conflict war may end relatively quickly. The regional peace may, however, take decades to sort out.
So..... the attack by the US pays for itself by the income they generated for big oil in the US? And the LNG they export to Asia and Europe? Bit like the awkward moment Russia made a killing the first period after starting a war on Ukraine.
Short-term gain, long-term loss I cannot see it any other way.
And god, I felt it was painful to see Merz sitting with Trump today. Not like Carney, being used as a lapdog. Why did Germany have to make themselves so ridiculously dependent on Russian and now American hydrocarbons. Killing their nuclear fleet, going completely wrong on their energiewende. Sigh...
There was only a potential cut off of 3 million barrels because Europe was going to stop importing 2.5 million barrels and US was going to stop buying .5 million barrels from Russia, but that oil could go other places and China never stopped buying, same for India and other countries never stopped buying from Russia... so there was never an actual reduction in the exports of Russian oil from their invasion of Ukraine. Whereas in this situation we have a reduction in oil shipments of at least 15 million barrels that's actually happening NOW! Saudi might be shipping some out the other side we don't really know. Iran is still shipping out about 2 million barrels a day and natural gas from Qatar is completely shut off. The largest nat gas exporter in the world is shut off.
Great post.
An alternative explanation for the steeper rise in oil prices today than in 2022 is that people expected the invasion of Ukraine to succeed quickly and the West to respond less severely. If that happened, Russia's economic isolation would be more limited (similar to the 2014 sanctions). Prices really took off as Ukraine showed a willingness to resist and Western sanctions against Russia intensified. In other words, there was a "learning" period in the 2022 case.
In contrast, no one thinks that this war is going to end quickly and scenarios involving greater disruptions to the oil markets are more likely (because of who rules the US and Iran).
Does that make sense?
Good observation about the “learning” period in the Ukraine. I actually feel that the Iran conflict war may end relatively quickly. The regional peace may, however, take decades to sort out.
So..... the attack by the US pays for itself by the income they generated for big oil in the US? And the LNG they export to Asia and Europe? Bit like the awkward moment Russia made a killing the first period after starting a war on Ukraine.
Short-term gain, long-term loss I cannot see it any other way.
And god, I felt it was painful to see Merz sitting with Trump today. Not like Carney, being used as a lapdog. Why did Germany have to make themselves so ridiculously dependent on Russian and now American hydrocarbons. Killing their nuclear fleet, going completely wrong on their energiewende. Sigh...
Hasn’t the Real fallen much further today what is your forecast for a reversal
There was only a potential cut off of 3 million barrels because Europe was going to stop importing 2.5 million barrels and US was going to stop buying .5 million barrels from Russia, but that oil could go other places and China never stopped buying, same for India and other countries never stopped buying from Russia... so there was never an actual reduction in the exports of Russian oil from their invasion of Ukraine. Whereas in this situation we have a reduction in oil shipments of at least 15 million barrels that's actually happening NOW! Saudi might be shipping some out the other side we don't really know. Iran is still shipping out about 2 million barrels a day and natural gas from Qatar is completely shut off. The largest nat gas exporter in the world is shut off.
More great analysis.