Countdown to a Global Energy Shock
On Trumponomics, we discuss how long it would take for the Iran War to do major economic damage—and who might benefit from the conflict.
Photographer: Bloomberg
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Oil and gas traders are confronting a potential worst-case scenario after the US-Israeli strike on Iran Saturday: the Strait of Hormuz is effectively paralyzed, Saudi Arabia’s largest refinery is shut and Iran has hit Qatar’s giant liquified natural gas export facility. On this week’s episode of Trumponomics, host Stephanie Flanders speaks to Bloomberg Opinion columnist Javier Blas and Ziad Daoud, chief emerging markets economist for Bloomberg Economics. Together they unpack the unsettlingly wide range of outcomes from the war, and how Russia will gain economically the longer the conflict continues.
The US economy, Daoud points out, isn’t in immediate jeopardy. This according to the Bloomberg Economics global shock model, which shows it to be “very, very hard” to generate a significant US recession from oil prices alone. The bigger hammer would land on traditional US allies, such as the UK and Europe, where an extreme oil price of $108 a barrel could shave roughly half a percentage point off of output while adding around a percentage point to inflation.