The world has nearly burned through its oil stockpile buffer

When the Strait of Hormuz closed the immediate worry was that 20% of world crude oil supply would be cut-off.

Due to various factors the knock-on impact wasn't as large as that loss would imply:

- Saudi Arabia's East-West pipeline transported some across to the Red Sea (this might be blown up by now, I haven't been following it closely enough to say for sure)

- The closure wasn't complete, ship-to-ship transfers via the Oman side of the strait provided some flow

- China had large (no one really knows how big) strategic reserves so cut their imports considerably. The US also had a large strategic reserve, reducing/offsetting demand for the new stuff

This cushioned the price shock of the closure, which was felt more by Asia anyway, since that's where much of Hormuz's flows went, due to proximity.

The system is huge and has many complicating factors (refineries, whatever is currently happening with the Houthis as of Saudi's counterattack, China getting back into the global market). But once the stockpiles run out you'd expect to see the price of crude increase. Which, along with the current refinery issues, could make the current discontent about the price of diesel in the US look positively quaint. Probably after the midterms though. But like with the catastrophic predictions around the initial closure of Hormuz, the picture will emerge more gradually, with more confounding factors.

If you think prices have been bad since the US attacked Iran, then you don't know the half of it.

Apparently, we are experiencing the "lite, cushioned" version of how bad prices can actually get. (And the cushion we had that was easing things along is almost gone).

The entire world is in trouble in the short term due to this. In my country of Australia, we consume the most diesel per capita in the world due to our distance and low population density. So for me, and a lot of other people in the world, the price of transporting anything will rise a lot. This means higher prices on all goods and services, as well as likely supply problems.

The increased prices will put upward pressure on inflation causing us to have to increase our already high interest rates. This will in turn cause a lot of people to no longer be able to afford to service their mortgages. In Australia, we mostly have variable interest rate, unlike the US.

There will be problems growing crops because crops require nitrogen which is dependent on oil production. There will be problems transporting goods because that is dependent on diesel.

In the short term, it is likely that a lot of people in the Global South will die. A lot of people in the developed world will suffer a great deal.

In the long term, I see this as the death knell in the USA's hegemony. Most countries will do anything possible in the next few decades to get themselves off oil and onto other sources of energy like solar or hydrogen. The USA will not have the same influence it once did. This will also mean the decline of the global technology sector, which is only as successful as it is because of US power.

You guys don't see this from where you're sitting, but the government in Australia has been trying to protect us against the harms of social media, only to be threatened time and time again by the US. Without the US oil hegemony, it is unlikely the US will have the power to enforce its tech-monopoly globally.

As an aside, I don't agree with how the social media laws in the UK and Australia dictate the collection of personal data to prove age. But that's beside my point.

Further reading: https://www.baldurbjarnason.com/2026/the-old-world-of-tech-i...