It's bad and could get really bad. The size of disruption is huge. We're not at crazy high oil prices yet because the disruption is relatively short-lived (about a month). Give it a few more weeks and certainly we will get there.

Historical context: 2022 Russia disruption lasted years; 1990 Kuwait invasion resolution took about 8 months.

Market is cushioned by buffers: regular inventories, strategic inventories, and oversupply going into crisis. Countries closer to Strait of Hormuz are impacted earlier due to sailing times. Oil market divided east/west of Suez - Asia impacted first, Europe/Americas later.

Sailing times: Saudi to India = few days; to Philippines = 15 days; to Europe = 3 weeks; to US = 40 days.

In full-blown crisis with Strait closed for many months and land war in Iran, yes - could reach situation where no one is willing to sell regardless of price due to export bans.

Brent is shorthand for average barrel but not representative of Middle East oil. More relevant benchmarks are Oman/Dubai. But more importantly, focus should be on refined products (gasoline, diesel) not crude prices.

Singapore diesel approaching $200/barrel - something never seen before. Refined products show real tension.

Two reasons: 1) Lost significant refined production capacity in Middle East; 2) Global trade in refined products is smaller than crude trade, so small supply reductions have larger impact. Refining sector acting as buffer between missing crude and consumers who haven't yet reduced demand.

Refineries slowing crude intake due to shortage, but consumers haven't reacted yet. Extreme refined product prices are signal to reduce demand.

At $100 oil, everyone will try to do more, but no massive drilling increase in next 3 months. Gap is too big - losing about 10% of global supply. Either conflict ends soon or prices need to move much higher.

Surprised prices aren't higher already. White House verbal intervention has prevented panic buying.

US natural gas trapped in North America due to limited liquefaction capacity. US completely insulated from global crisis - heavy industry, electricity generators not affected.

2022: US gas went from $3-4 to almost $10/MBTU. Now staying around $3.

Not very concerned today. Different from 2022 which affected breadbasket region. Current crisis affects deserts and sea, not farmland. Fertilizer prices high but subsidized in developing world - more fiscal than food problem. Global food inventories high, rice at all-time high.

Main concern if conflict lasts months: monsoon season in India. Bad monsoon would create problem.

Ukraine hitting Russian oil terminals in Baltic - potentially losing 1 million barrels/day. Not the time to be losing more oil.

Would create bad precedent for international shipping. Countries wouldn't be happy but might accept small fee. Long-term gives Iran too much control over neighbors' policies.

At $100 oil, half dollar fee means selling at $99.50 instead of $100.

No. Everyone still wants dollar. Switching to yuan means moving from high interest rate to low, full convertibility to problems, maximum liquidity to no liquidity. Only those under sanctions use alternatives.

Yes - simultaneous push to reduce oil dependence but using more coal for electricity. Asia countries (Pakistan, India, Japan) all going for more coal now. Medium/long term: more solar and batteries.

More electrification but with carbon-intensive electricity production.

How little European natural gas has moved relative to 2022 crisis. Electricity prices normal in Europe. 2022 had all four energy commodities (electricity, gas, coal, oil) spiking simultaneously. Now only oil and some gas in Europe/Asia.

European gas up 70% but same level as 14 months ago. German electricity forward prices at 90 euros vs 1000 in 2022.