PPCC: Pisitófilos Creditófagos. Invierno 2025

[Derby]

https://www.wsj.com/business/energy-oil/oil-is-already-near-a-price-that-hurts-the-economy-3cebcfdc

Oil Is Already Near a Price That Hurts the Economy

The world relies less on oil, but sharp price spikes are still painful


​Gasoline prices are ​expected to rise further in the coming days. Ken Cedeno/Reuters

President Trump’s preferred oil price may be around $50 a barrel. But the war with Iran is getting him prices associated with recessions.

Brent crude approached $120 late Sunday, slipping back to around $100 Monday morning. There is no exact number at which governments and consumers react to costlier oil. Between $110 and $120 a barrel is where demand for crude starts to erode, according to energy analysts. Though not cataclysmic, sustained prices at these levels will do damage.

The pace of increase also matters. Sudden shocks can trigger a more negative response from consumers than a gradual increase. “We started the year at $60 oil. Going to $90 or $100 in a very short period of time has a stronger psychological impact at the pump,” said Jim Burkhard, head of crude-oil market research at S&P Global Energy.

Globally, the risk of a stock-market correction increases when the oil price jumps at least 50% and these levels are sustained over a number of months, according to Deutsche Bank analysis.

A hawkish reaction from central banks is another risk factor. And if an economy is already slowing, an oil-price shock can tip it into a downturn, as happened after the 1990 Gulf War.

True, the global economy needs around half as much crude as it did a few decades ago to generate $1,000 of economic activity. Cars are more efficient, alternative fuels are available and economies have shifted toward services, which aren’t as energy intensive as manufacturing.

But the U.S. economy is still more reliant on oil than others: U.S. oil intensity is twice as high as the European Union and 40% higher than China’s, according to Rosemary Kelanic, director of the Middle East Program at think tank Defense Priorities. This is largely because the U.S. doesn’t have much public transportation or electric-vehicle adoption.

That makes it harder for American consumers to shield themselves from rising gasoline prices. Prices at the pump are likely to go higher in the coming days, on top of their 50-cent climb since a week ago.

According to GasBuddy energy analyst Patrick De Haan, Americans are already spending $187 million more a day on gasoline than they were a week ago. There is an 80% chance that gasoline hits $4 a gallon this month, De Haan estimates. 

The flip side of high prices is that the export revenue of major oil-producing economies whose supplies aren’t trapped behind the Strait of Hormuz will get a boost. This includes the U.S., Canada and Brazil among others. Russia is also getting a welcome breather after fresh U.S. sanctions hit its oil revenue.

America’s oil production has ballooned, so the economic lift from rising energy prices will be sizable. Since 2010, U.S. liquids production has increased by more than Saudi Arabia’s entire output.
However, the sector’s windfall may not be enough to offset the drag on other parts of the economy.

Despite Europe’s lower oil intensity, its status as a big energy importer makes it vulnerable. The continent is now facing its second major energy shock in four years.

Governments in Asia are already moving to shield their consumers from inflation. China and Thailand have banned exports of refined oil products. But this will have a ripple effect on global prices for gasoline and diesel. Gains in wholesale diesel prices already outstrip moves in Brent crude.

Truckers, farmers and airlines may bear the brunt of the impact first. The disruption in the Strait of Hormuz is having a disproportionate impact on the prices of diesel and jet fuel because the Middle East is an important source of those fuels, said energy economist Philip Verleger. U.S. shale yields a lot of gasoline, but not as much diesel and jet fuel. Oil from Venezuela does produce a good amount of diesel, but it won’t be enough to offset the loss from the Middle East.

United Airlines Chief Executive Scott Kirby said rising fuel costs, airlines’ second-biggest expense after labor, will be passed on to passengers quickly.

History shows that energy-price shocks can also really hurt automakers. The auto industry experienced plunging sales during the oil-price shocks of 2008 and 1990.

The last time oil prices went above $100, the global economy weathered the shock. Brent crude futures reached a peak of about $128 a barrel in 2022, which equates to more than $140 a barrel in today’s dollars. In 2008, crude oil hit a high of around $145 a barrel, which in today’s dollars would equate to about $215 a barrel. Beyond a certain threshold, high prices can undermine themselves by causing demand destruction.

Verleger notes that the U.S. in 2022 had some cushion from stimulus checks, as well as lower interest rates. Today’s economy is more K-shaped, and that could “exacerbate the slowdown for the average American,” he said.

On Sunday, U.S. Energy Secretary Chris Wright told Fox that the surge in energy prices is temporary. Oil traders look increasingly skeptical: The oil-futures curve is starting to price in a longer disruption to supply than it was this time last week. 

In just a week, the oil price has reached risky territory. The biggest question now is whether it stays there long enough to cause real damage.

[Derby]

https://www.baha.com/Trump-Iran-war-is-pretty-much-complete/news/details/65833427

Trump: Iran war is pretty much complete

United States President Donald Trump told CBS on Monday that he thinks the war in Iran is "pretty much" complete.

"I think the war is very complete, pretty much. They have no navy, no communications, they’ve got no Air Force," Trump told CBS's Senior White House Correspondent Weijia Jiang, noting that the US is "very far" ahead of its initial estimated time frame of four to five weeks. "They’ve shot everything they have to shoot, and they better not try anything cute or it's going to be the end of that country," he added.

The US president also commented on the Strait of Hormuz, stating that the ships are moving through the waterway for now, but that he is considering "taking it over." He also signaled that he has someone in mind to replace the newly selected Iranian Supreme Leader Ayatollah Mojtaba Khamenei, but did not reveal who it was.

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