"A lot of the world, including the U.S. and much of Europe, is the least reliant it's been in decades on Middle Eastern oil because of greater domestic production and/or rising reliance on renewable energy. There are greater emergency oil supplies across the globe-from the U.S. to China-relative to, say, the Arab oil embargo in the 1970s, which was the trigger for the U.S. creating its Strategic Petroleum Reserve."
"Oil traders remain optimistic that this war will prove short lived-although that optimism wanes or waxes a bit each day-and that Saudi Arabia, Iraq, and the United Arab Emirates will continue to successfully reroute portions of their exports to provide temporary buffers until the strait is reopened. Also, Iran continues to export some of its oil while allowing a select few tankers to pass through, such as to India."
"Southeast Asia is getting nailed by this, but the reality is, in our part of the world, nobody even knows where Indonesia is. As consum[ers in developed nations remain insulated], the war is most dramatically affecting the supplies thus far of Pakistan, Bangladesh and southeastern Asian countries that depend the most on Middle Eastern supplies for their oil and gas."
The conflict in Iran creates the largest energy supply shock in history, with the Strait of Hormuz effectively blocked to 20% of global oil and liquefied natural gas. U.S. oil prices have risen 70% to near $100 per barrel, yet remain below the $150+ per barrel that supply disruption theoretically justifies. Energy analysts attribute this to several factors: reduced global reliance on Middle Eastern oil due to domestic production and renewable energy growth, larger emergency oil reserves compared to the 1970s Arab embargo, trader optimism about conflict resolution, and successful rerouting of exports by Saudi Arabia, Iraq, and the UAE. However, Pakistan, Bangladesh, and Southeast Asian countries dependent on Middle Eastern supplies face the most severe impacts.
Read at Fortune
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