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**Hugh** · Yesterday, 20:53

Interesting* article in this week’s Economist

https://archive.ph/Q7nm0

Quote:

The Economist calculated how long normalisation would take if the war ended today. Even if Iran accedes to Donald Trump’s threat on March 21st to unblock the strait within 48 hours or face strikes on its power plants, a big “if”, global oil and gas markets would remain undersupplied for months, hurting the world economy.

For energy markets to right themselves once Hormuz reopens, three things need to happen. First, Gulf producers must restore output to pre-war levels. Second, ships must ferry that output to refiners abroad. And third, those refiners must process it into usable fuel. Each stage of this industrial relay takes time…

… Even if Donald Trump and Iran reached a deal to stop fighting tomorrow, it would thus be another four months before markets regained some semblance of normality. Producers elsewhere cannot crank up output fast enough to recover past losses. The result is to shave off some 3% of planned global oil production this year. Every month Ras Laffan stays shut, the world loses around 7m tonnes of lng—nearly 2% of projected annual supply. And full capacity will, owing to the latest strikes, be lower than before. The upshot is that production will fall 4% short of demand this year even if Qatar started pumping what it can today.

The implications are stark. Global crude stocks, on course to end March in the bottom third of their historical range, will also keep dwindling for weeks after Hormuz reopens. As countries with thin buffers run out, they could trigger bouts of panic-buying and price spikes. Bidding wars for lng are equally likely.

The last cargoes from Qatar to leave before Hormuz closed will reach Asia and Europe in days, says Ashley Sherman of Vortexa, a ship-tracker. After that, buyers must seek supplies elsewhere or go without, jeopardising the restocking of reserves for winter.

Oil and gas traders are still banking on a spring miracle. The world is praying for one. But even if Mr Trump and Iran’s ayatollahs grant this wish, the logistics of oil and gas will not be easily appeased. Energy markets will be living with the war’s fallout well into northern winter.

*as in "Ach du Scheiße!"