Europe has been weening itself off of Russian oil by substituting LNG from the Gulf - something that has dried up and the available tankers to bring oil from the US (as well as the ability to receive it) is probably logistically challenged. Hungary and Slovakia come to mind as particularly impacted as Ukraine has recently allowed their supply of Russian oil ti remain impaired.

Anyhow, the European exchanges (as well as some of the Asian exchanges are getting whacked. That export number than was growing is bound to become seriously curtailed in coming months.

The current US administration is unlikely to put a significant number of “boots on the ground” in Iran. That means that their main leverage is to drop massive amounts of munitions into the country. This has some interesting outcomes:

While you can bomb the country until it resembles Gaza, it may backfire and, while the country will lose its ability to militarily challenge our “allies” in the area, it will remain an asymmetrical threat.

It is also eating into our ability to significantly handle China if things get beyond the saber-rattling stage. Munitions companies can’t be expected to build larger factories without iron-clad contracts providing a steady flow of orders at a faster rate than current procurement would dictate.

It is my personal belief that our administration was snookered into this war by assorted gifts and flattery combined with a focused news silo egging it on. If the damage to Gulf oil infrastructure is long-term, the economic fallout of this war may far outweigh its benefits.

Jeff

Macroeconomic Trends and Risks FAQ

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