Donald Trump’s oil crisis will come for you too

We are at the mercy of Britain’s “allies” – people who talk like serial killers

Photo by Joyce N. Boghosian/ Official White House

As the war in Iran trudges into a fourth messy week, several facts dominate. The first, and most immediately obvious, is that things don’t appear to be getting any better for its instigators. Strikes and counter-strikes targeting energy infrastructure in Iran, Saudi Arabia and Qatar have only exacerbated the fuel crisis spurred by the ongoing Iranian blockage of the Strait of Hormuz. For its part, the Trump administration seems increasingly at sea with regard to the war’s aims and goals, and correspondingly eager to wrap things up.

When Trump issued one of his patented Truth Social Fatwas late Saturday night (21 March), demanding the strait be re-opened within 48 hours or else he’d authorise the bombing of Iran’s power plants – itself another war crime, but who’s counting anymore? – it was merely the most plain-faced display of panic yet from a president who’d spent the previous week vacillating between “Mission Accomplished” and “Please Somebody, Anybody, Help Us”, sometimes in the space of a single social media post. His partners-in-war Israel, on the other hand, briefly paused from extending their offensives into Lebanon on Friday, to declare that Iran’s missile capabilities had been destroyed. Iran replied by launching a ballistic missile to Diego Garcia base in the Chagos Islands the following day – the longest-range Iranian missile strike ever recorded.

The Chagos attack highlighted just how much the chaotic miasma of the broader war may be viewed in miniature within Britain itself. One again, it placed the UK’s armed forces directly in Iran’s firing line, as partners in a war that much of the country’s press, and all parties to Labour’s right, are bashing the government for failing to play a larger part, and which 70 per cent of British voters oppose playing any part in at all. To their left stand the Greens, long heckled as unserious idealists for their policies on accelerated green transition and decoupling from America’s defence umbrella; both now seeming a mite more reasonable in the face of yet another war being waged via fossil fuel security.

Amid the horror and destruction of a conflict most famous for killing 175 schoolgirls, any attempt to follow its currents is tough. A war fought by the most expensive military ever assembled, without scrutable cause, without coherent aims, and conducted without moral seriousness or, seemingly, a mote of tactical competence. It is, however, already having serious economic consequences for an entire planet, which several commentators are increasingly keen to make clear.

A glance at the timelines of people who look at oil charts for a living does not, to put it mildly, make for happy reading. Everything I know about Brent futures and WTI crude oil markets could fit along a single string of complex hydrocarbons, so I’ll admit the past week has been a time of learning for me. My casual understanding of the situation before this past weekend might have read something like the following: we’re gearing toward a “bad shock”, one in which fuel prices will increase at the pump, air travel will become more expensive, and our energy bills will go up by an anticipated £300 this summer. These are not minor disruptions, by any means, but they are so vanishingly small a piece of the actual crisis we’re in, that the next few paragraphs have been very little fun to research on your behalf.

To take just Hormuz by itself – leaving aside the disruption caused by attacks on various other refineries and gas fields throughout the gulf in the past week – the strait ordinarily traffics about 20 per cent of global petroleum liquids, 95 per cent of which have now stopped moving. As a result, according to Canadian energy analyst Rory Johnston, we’ve spent the past two or three weeks with a reduction in global oil supply equivalent to around 24 million barrels per day. As with anything measured in millions – or, indeed, barrels – the exact nature of that loss is hard to compute, but one way of putting it into context might be to cast our minds back to the last time we “went without” anything like that much oil for a sustained period.

In April 2020, the planet’s oil market saw “demand destruction” of 18-20 million barrels per day amid global pandemic lockdowns – which is to say, the entire planet used that much less oil than usual across all uses and needs. A quick glance at that figure might indicate something troubling. Our current loss of 24 million barrels per day, has, for the past three weeks, far outstripped the amount we went without during the peak of the Covid lockdowns. So, even if we’d spent those three weeks with every single plane on earth grounded, cars barely moving, 90 per cent of offices, millions of factories, and all public buildings closed, we’d still be in substantial enough fuel debt to cause the scary “bad shock” I mentioned above. Observant readers might have noticed that we have not been doing that, so what we’re actually in for is something much, much worse; one of the worst economic shocks in human history.

If you can’t quite feel it yet, that would be because the last tankers to leave the strait while it was fully operational won’t be arriving at their final destinations for another week. Those of us watching from the sidelines are not, therefore, the roadrunner, galloping to the end of this crisis via a speedy and clinical end. We are Wile E Coyote, suspended in mid-air, with a week to go before we realise the path below us has been an open canyon for quite some time. The outlook, for all of us, is so starkly terrifying that our immediate future would be somewhat disastrous, even if the war were to end with handshakes and smiles sometime in the next few hours. Since this doesn’t look remotely likely, we must adjust those dire expectations downward, and further downward, for every day this morass continues.

Lessons to learn will be plentiful. Most immediately: on the conduct and competence of the supposed leaders of the free world, and the bellicose, reactionary blowhards to whom European leaders have willingly wed themselves, as well as on the logical consequences of entrusting so much military power, and diplomatic largesse, to allies whose every statement can be meaningfully compared to those of a serial killer. But most existentially, and perhaps belatedly, there will be a reconsideration of the seriousness of any military or environmental policy that continues to balance the world’s economy on the fossil fuels now literally and figuratively choking the planet to death.

[Further reading: The world energy shock is coming]