Analysis of current economic conditions and policy
Oil Jumps 13%
Tensions in the Mideast cause a spike. One hour into futures trading:
8 thoughts on “Oil Jumps 13%”
Macroduck
We are in the early “fog of war” period, in which we know that we’re shooting at Iran and Iran is shooting back, and tha oil is up and people are dying, but not much else. This time may be a little foggier than usual, because the felon-in-chief hasn’t bothered to make the case for war. One thing we do know, because the felon has said so out loud, is that we want regime change in Iran.
From Politico:
‘Acording to Donald Trump, Iranians have a once-in-a-lifetime opportunity. “The hour of your freedom is at hand,” he declared, as U.S. and Israeli warplanes pounded Iranian cities and the compound of the country’s supreme leader. “When we are finished, take over your government. It will be yours to take. This will probably be your only chance for generations.”
Problem is, there is no record of aerial bombardment leading to regime change:
‘“Never,” Robert Pape, a political scientist at the University of Chicago who studies air power and regime change, replied when I asked whether what Washington was doing in Iran had succeeded elsewhere. “Bombings have never led people to take to the streets and topple their leader.”’
Rather, in at least one instance, our government prompting disaffected citizens to take to the streets got tens of thousands killed:
‘In February 1991, as the American military laid waste to the Iraqi armed forces, U.S. President George H.W. Bush made an appeal. Speaking on international television, Bush called on “the Iraqi people to take matters into their own hands and force Saddam Hussein, the dictator, to step aside.” … after the protests began, Saddam’s forces deployed helicopters, artillery and ground troops against their own citizens. They then slaughtered upwards of 50,000 Iraqis in less than five weeks. The uprising was put down, and Saddam held onto power for another 12 years.’
“This time will be different” seems a poor rationale for war.
Ivan
Trump is setting up the excuse for his own failure -again, again. “We gave them the opportunity but they failed”.
Macroduck
A little context…
The only time in the past year that the price of Brent has been higher than now was last June, during the 12-day war between Iran and Israel (which had help from the U.S). There are a whole bunch of moving parts to the oil market, including the duration of the current U.S. attack, so it’s hard to guess whether last June is much of a guide to prices during this current war.
One point to consider is that OPEC has been gradually ramping up exports over the past few quarters, to the point that only the UAE and Saudi Arabia are likely to have much room for more. It’s not even clear either of them can do much more in the near term.
I’m curious about the latency period between a sustained increase in crude prices and gas pump prices domestically. We’ve had what I consider to be low gas prices nationwide since 2023—fat lot of good that did for Biden and Harris. These low prices are an implicit bargain between Republicans and their base, and if that bargain is broken between now and the midterms things will get even more interesting. Of course, I tend to underestimate MAGA loyalty, so maybe $4 a gallon won’t bother true patriots.
james harold mcClure
Krugman has a new post comparing this to 1978.
Macroduck
Krugman, the codger, recalls the Iranian taking of U.S. hostages. Whatever the motivations of our political leaders, it is that event which made Iran into the perpetual “evil regime” for Americans ever since. Syria behaved as badly. North Korea, too, except for proxy armies.
We had reason to believe over the years that Reagan’s campaign prompted Iranian leaders to hold on to the hostages until after Reagan beat Carter. We now know it’s true. So yes, Iran’s government stirs up trouble and oppresses its people. We stir up more trouble, but are less oppressive to our people – for now. Iran is treated as a special evil case, and treating them that way has mostly led to bad decisions.
We shouldn’t have a forever devil. We should regularizing relations with our adversaries whenever possible. We were doing so with Iran when Shrub gave his “axis of evil” speech as an excuse for war. Everything that we object to about Iran since then is in large measure the result of that speech.
So twice, U.S. politicians have put their own ambitions ahead of U.S. national interest in dealing with Iran. Actually, make that three times, or four if you count the felon-in-chief’s overturning of the Iran nukes deal as a separate instance from today’s war of choice.
james harold mcClure
Off topic but check out Stephen Moore over on X complaining we are not overfishing tuna in the Atlantic enough. The man is indeed the Stupidest Man Alive.
We are in the early “fog of war” period, in which we know that we’re shooting at Iran and Iran is shooting back, and tha oil is up and people are dying, but not much else. This time may be a little foggier than usual, because the felon-in-chief hasn’t bothered to make the case for war. One thing we do know, because the felon has said so out loud, is that we want regime change in Iran.
From Politico:
‘Acording to Donald Trump, Iranians have a once-in-a-lifetime opportunity. “The hour of your freedom is at hand,” he declared, as U.S. and Israeli warplanes pounded Iranian cities and the compound of the country’s supreme leader. “When we are finished, take over your government. It will be yours to take. This will probably be your only chance for generations.”
Problem is, there is no record of aerial bombardment leading to regime change:
‘“Never,” Robert Pape, a political scientist at the University of Chicago who studies air power and regime change, replied when I asked whether what Washington was doing in Iran had succeeded elsewhere. “Bombings have never led people to take to the streets and topple their leader.”’
Rather, in at least one instance, our government prompting disaffected citizens to take to the streets got tens of thousands killed:
‘In February 1991, as the American military laid waste to the Iraqi armed forces, U.S. President George H.W. Bush made an appeal. Speaking on international television, Bush called on “the Iraqi people to take matters into their own hands and force Saddam Hussein, the dictator, to step aside.” … after the protests began, Saddam’s forces deployed helicopters, artillery and ground troops against their own citizens. They then slaughtered upwards of 50,000 Iraqis in less than five weeks. The uprising was put down, and Saddam held onto power for another 12 years.’
https://www.politico.com/news/magazine/2026/03/01/iran-uprising-trump-khamenei-regime-change-00806179
“This time will be different” seems a poor rationale for war.
Trump is setting up the excuse for his own failure -again, again. “We gave them the opportunity but they failed”.
A little context…
The only time in the past year that the price of Brent has been higher than now was last June, during the 12-day war between Iran and Israel (which had help from the U.S). There are a whole bunch of moving parts to the oil market, including the duration of the current U.S. attack, so it’s hard to guess whether last June is much of a guide to prices during this current war.
One point to consider is that OPEC has been gradually ramping up exports over the past few quarters, to the point that only the UAE and Saudi Arabia are likely to have much room for more. It’s not even clear either of them can do much more in the near term.
Brent crude rose as high as $129 after Russia invaded Ukraine in 2022.
https://fred.stlouisfed.org/series/DCOILBRENTEU
Now that Iran has effectively closed the Strait of Horuz, can we expect anything less, particularly since the anticipated 2026 oil glut has failed to materialize?
https://www.msn.com/en-us/money/markets/strait-of-hormuz-closure-are-we-headed-for-another-oil-crisis/ar-AA1XmGeY
https://oilprice.com/Energy/Crude-Oil/The-Oil-Glut-That-Never-Showed-Up.html
I’m curious about the latency period between a sustained increase in crude prices and gas pump prices domestically. We’ve had what I consider to be low gas prices nationwide since 2023—fat lot of good that did for Biden and Harris. These low prices are an implicit bargain between Republicans and their base, and if that bargain is broken between now and the midterms things will get even more interesting. Of course, I tend to underestimate MAGA loyalty, so maybe $4 a gallon won’t bother true patriots.
Krugman has a new post comparing this to 1978.
Krugman, the codger, recalls the Iranian taking of U.S. hostages. Whatever the motivations of our political leaders, it is that event which made Iran into the perpetual “evil regime” for Americans ever since. Syria behaved as badly. North Korea, too, except for proxy armies.
We had reason to believe over the years that Reagan’s campaign prompted Iranian leaders to hold on to the hostages until after Reagan beat Carter. We now know it’s true. So yes, Iran’s government stirs up trouble and oppresses its people. We stir up more trouble, but are less oppressive to our people – for now. Iran is treated as a special evil case, and treating them that way has mostly led to bad decisions.
We shouldn’t have a forever devil. We should regularizing relations with our adversaries whenever possible. We were doing so with Iran when Shrub gave his “axis of evil” speech as an excuse for war. Everything that we object to about Iran since then is in large measure the result of that speech.
So twice, U.S. politicians have put their own ambitions ahead of U.S. national interest in dealing with Iran. Actually, make that three times, or four if you count the felon-in-chief’s overturning of the Iran nukes deal as a separate instance from today’s war of choice.
Off topic but check out Stephen Moore over on X complaining we are not overfishing tuna in the Atlantic enough. The man is indeed the Stupidest Man Alive.