We Don't Talk About Iran

The situation is dire, but the Media are Silent.

Antonio Turiel is often accused of being too pessimistic. In a certain sense, it would be nice if it were true. But I am afraid that he may well be right. With the closing of the Strait of Hormuz, the situation with the supply of vital commodities is dire. But the media are silent. Image from “Encanto.”

A guest post by Antonio Turiel. Translated from his blog.

Dear readers:

The truth is, I hadn’t intended to write a new post for about ten days. Aside from the heavy workload we have right now, I’m engrossed in finishing my next book (which I also didn’t want to write, but given the circumstances, I’ve been forced to; I would have titled it “Trump and the Mother Who Bore Him,” but in the end I’m going to go with a more conventional, though no less ominous, title: “The Bottom of the Well”).

It’s been two and a half months since the war in Iran began, and the Strait of Hormuz remains closed. Ships occasionally pass through, but nothing remotely like the 150 ships a day that used to pass before the closure. There’s a structural shortage of about 12-13 million barrels of oil per day (equivalent to 25% of the world’s trade in this energy commodity), not to mention the natural gas, fertilizers, and other raw materials that used to transit through the strait. In Spain, oil imports from Mexico, Brazil, and Libya have increased, but imports from other countries have decreased because global competition for this resource is now very intense. For this reason, Spain currently only covers 85% of its oil consumption, and the remaining 15% is being drawn from its reserves, from deposits within the country, which are thus losing the equivalent of one day’s national consumption for every week that passes. And Spain is better off than the rest of the European countries thanks to its 8 refineries, and obviously it is incomparably better than many other countries in the world (given that globally there is a shortage of 25% of exportable oil, so that here “only” 15% is missing, elsewhere there has to be a shortage of more than 25%).

In a few weeks, kerosene will begin to run short in Europe. In a few months, diesel will be in short supply. Around one billion barrels of oil have already been lost in these almost three months, which means less activity, less processing, less of what energy makes possible. Inflation is rising. Fuel prices are inexorably increasing. Globally, problems are beginning to arise with the production of medicines, with harvests, with metallurgy... Fuel for cargo ships is running out in international bunkers, which affects the movement of all kinds of goods. Some countries, viewed from here as peripheral, are beginning to ration, and not just fuel.

And the war is not truly over. The blockade continues. Ships are still being intercepted or attacked, skirmishes are ongoing, and bombings, however limited, are still taking place. Even if the Strait of Hormuz were reopened today, it would take months to normalize maritime traffic, and that’s without considering the oil, gas, and other production that has been lost more or less permanently. That’s precisely why we launched the “ Not Normal “ campaign.

We are heading straight for an unprecedented economic crisis, unlike any other in the history of capitalism. And this economic crisis could trigger the bursting of financial bubbles and become an economic disaster of unimaginable proportions.

And yet, the motto here is: radio silence.

The media speaks of the Iran conflict in the past tense. Sporadic news reports emerge about the negotiations, or about whether the price of a barrel of oil remains high (always citing three-month futures contracts, never the price of a barrel for immediate delivery), but these are treated as minor news items, perhaps slightly annoying or unsettling details, but nothing that affects our daily lives. We continue thinking about work, vacations, future plans... The minister says there are no supply problems, nor will there be. The refineries, which haven’t carried out their mandatory maintenance shutdowns, will adjust to produce what is needed. The stock markets are reaching record highs. Everything is going as it should, everything is proceeding as it should. No major problems are foreseen in the distance, much less nearby. The war, the supply problems—that’s someone else’s business, the business of those countries that always have problems.

The slap of reality is going to be terrible. The awakening is going to be abrupt and bitter.

I understand that, given the delicate financial situation and the fear of bubbles bursting, there’s a certain desire to downplay the situation and avoid panic. But the physical reality is what it is. Never before in any other crisis has there been such a shortage of oil, not to mention other raw materials, neither in absolute nor relative terms. In the US, inflation in April reached 18% annualized. In the Canary Islands, April saw a 7.6% decrease in tourists.

Reality is catching up with us. But, in the meantime, the order remains: radio silence.

That will allow us to hear the whistling sound of the impact better before it reaches us. And the subsequent uproar of all the people who will wake up, quite literally, with a start.

Greetings.

AMT

Published by AMT at 13:09