What to Expect From a Mammoth Disruption of Global Oil and Gas Supplies

"I've been absolutely flabbergasted that the US has not been a little bit more planned as to how they would deal with this very, very predictable situation. Starting a war in the Persian Gulf, a region that produces roughly a third of the world's oil, was bound to send shock waves through global markets."

"The world is very well-supplied with oil right now. It gives President Trump more leverage in his political actions not to worry about a crazy spike in oil prices. Yet those large supplies have not been enough of a buffer to soothe markets after the Iranians effectively closed the Strait of Hormuz, the narrow gauntlet through which most of the oil and natural gas exports from the Persian Gulf region flow."

"If this takes a long time, that will have a serious impact on the global economy. Due to advances in fracking and other drilling techniques, the United States has become the world's largest producer of oil as well as the largest exporter of natural gas."

The Trump administration's military assault on Iran has triggered Iranian retaliation through shipping attacks and threats that have severely disrupted global oil and natural gas markets. Despite the United States becoming the world's largest oil producer and natural gas exporter through advances in fracking, these domestic supplies have failed to buffer market disruptions. Iran's effective closure of the Strait of Hormuz, through which most Persian Gulf oil and gas exports flow, has created a mammoth supply disruption. Energy officials initially believed US production increases would provide leverage against price spikes, but markets have reacted severely to the conflict. Experts criticize the administration for being unprepared for Iran's predictable retaliatory capabilities and the resulting global economic consequences.

Read at The Nation