Brent oil futures are now at $105 according to Bloomberg. the spot price is $101 according to Trading Economics: that may or may not be as of Friday. On April 22nd, about a week after my April 14th post, it crossed the $100 threshold and has fluctuated with a ceiling of $120 since then. So yes, the 90-100 range was low, but we’re still below $110 this weekend.
So why aren’t prices higher? No clue. I still don’t get it. Is short run oil demand more elastic (price responsive) than I thought? Did I underestimate the effects of oil inventories? Is the actual supply shortfall a great deal smaller than reported? Anyway, I’m going to set another baseline: let’s say oil will be fluctuating in the $110-$130 range by June 7th (4 weeks) and that it will be above $110 on that day.
If oil is below $110, I’ll have some explaining to do. I have explaining to do today. I can’t do it now, and if things are similar in 4 weeks I’m drawing a blank on how I will explain it then. If oil is above $120 or $130 that won’t surprise me. No explanations necessary.
Briefly speaking to the gas price sidetrack (hint hint)
Basically, Americans at least with our car culture are dong what they can to reduce driving to offset costs. See also the reports on various Rideshare/food delivery options leaving in droves due to the increases in underlying costs.
Predictions about the Iran War as related to the above - it would be absolutely in Iran’s interest to draw out the ongoing lower-grade attacks, demands on shipping, et al. at a minimum through the USA midterms. If rising costs (to @CaveMike’s point that the final pre-war deliveries are done which may cause ANOTHER spike) contribute to a governmental changeover in the Legislature, then it’s likely that Trump’s actions will be curtailed (not eliminated, but curtailed).
They likely won’t be able to get good-faith negotiations worked out, but if the House has an infusion of spine, not funding Trump’s Pet Peeve is a real win for the Regime. Though of course, it’ll give Trump the perfect “out” - “I would have won the greatest peace ever but the Demon-rats held back our glorious military!”
I’m not saying Iran is, or ever should trust the USA regardless of the party in power, but they may be willing to give some concessions (that Trump will of course, try to ixnay) to Democrats, who can similarly try to reset some relations while throwing Trump under the bus for all the bad faith efforts.
Do I think it would work? Probably not - as long as Trump controls the executive, lasting peace or honest negotiation is going to stall. At best it’s the weak trope of “the enemy of my enemy may be my ally of the moment” - And by the time Trump is out of office () they may well be in a position of sufficient power in the region that they have no need, and no reason to compromise on their control because they suspect (correctly I believe) that Democrats have no willingness to continue to try to force a new peace when there are so many issues at home.
Also, even if the Democrats ever get back in power, the Iranians have the personal experience of a Republican just throwing out agreements made by a Democrat out of spite. Even with the Democrats no nation with sense is going to trust a deal to last more than 4-8 years before the next Republican destroys it.
Prices up 90% and quantity down 30% implies an elasticity of 0.33. That’s for Asia, some countries which have instituted rationing. The high elasticity scenario implies 0.20, the medium .15, and the low .10. So Asia has been relatively price-responsive, as short term responses go, more so than the high elasticity scenario.
The problem with that analysis is that the .33 figure includes inventory draw-downs which by their nature are temporary. So presumably elasticity is lower than that.
Mostly agree. But remember that humans are short-sighted, so there’s still room for international agreements. Also, foreign powers can game things out. So I don’t think agreements are foreclosed. They are just a lot less ambitious. “Until the next election” would be a soft wall, not a hard one.
) they may well be in a position of sufficient power in the region that they have no need, and no reason to compromise on their control because they suspect (correctly I believe) that Democrats have no willingness to continue to try to force a new peace when there are so many issues at home.