“China, Iran weaponized the global economy to beat the U.S. at its own game…
“Washington once enjoyed a near-monopoly over this type of economic warfare… But as faith in global economic integration broke down amid the pandemic, Russia’s invasion of Ukraine and souring U.S.-China relations, nations increasingly saw commercial links as potential pressure points.”
https://www.washingtonpost.com/business/2026/04/12/iran-war-global-economy/
“Chockpoint as weapons: Hormuz sets template for future conflicts…
“Several natural straits and artificial canals, including the Strait of Malacca, Strait of Hormuz, Bab el-Mandeb, the Turkish Straits (Bosphorus & Dardanelles), the Strait of Gibraltar, the Taiwan Strait, the Suez Canal, and the Panama Canal, serve as critical nodes of global supply chains and transnational connectivity.”
“Trump’s strait blockade risks another serious blow to the global economy…
“Trump’s plan could certainly be disastrous for Iran’s economy, already devastated by years of sanctions and the new war. But it also threatens to worsen the war’s economic impact on the US and global economies.”
https://edition.cnn.com/2026/04/13/politics/trump-strait-blockade-hormuz-iran-war-analysis
“A Panicked Race for Barrels Grips the Global Oil Market…
“The extreme level of premiums for immediately deliverable crude is putting huge strain on the market, traders and analysts said. Smaller refineries are struggling with greatly increased financing needs due to the higher prices, as well as the challenge of hedging in a market where the physical crude oil they buy is much more expensive than the most liquid derivatives linked to it.”
“LNG Shock Hits Supply Chains as War Disrupts Global Flows…
“Damage to Qatar’s LNG infrastructure and export disruptions have shaken confidence in supply reliability and could take years to fully recover. High prices are already destroying demand, with Asian buyers cutting imports and even shifting back to coal.”
Airlines cut global schedules as Iran-driven energy shock ripples into May…
“Analyst Matt Akers said in a note to clients on Friday that carriers have reduced global capacity for April by roughly 7%, a deeper pullback than the 5% cut estimated just a week earlier. May schedules are also starting to weaken…”
“US–Iran talks collapse: Structural shock for global textiles.
“The collapse of US–Iran talks signal a structural shift where energy volatility becomes a permanent cost driver in textiles, reshaping competitiveness. Polyester chains and processing hubs face rising instability, while demand risks deepen amid inflation, pushing the industry into a margin squeeze and strategic reset.”
“US inflation tripled last month on record spike in gas prices…
“Frustration with higher prices pushed consumer sentiment to a historic low, below anything recorded during the Great Recession or the Covid pandemic.”
https://edition.cnn.com/2026/04/10/business/live-news/us-cpi-march-inflation-iran
“Germany’s Cozy Catastrophe…
“Germany has borrowed from tomorrow by making promises it did not fund and has kept the borrowing out of the ledger by calling it something other than debt.”
https://quillette.com/2026/04/12/germanys-cozy-catastrophe-economics-reform/
“Ukraine and Russia accuse each other of breaching Easter ceasefire…
“Recent months have seen several rounds of United States-brokered negotiations fail to bring the warring parties closer to an agreement to stop the fighting, triggered by Russia’s February 2022 invasion.”
“North Korea fires missiles toward sea after ridiculing South’s hopes for better ties…
“The back-to-back launches came after North Korea made it clear that it has no intentions of improving ties with South Korea, whose liberal government has steadfastly expressed its hopes to restore long-dormant dialogue.”
“Australia looks to Southeast Asia for fertiliser amid supply crunch…
“With Iranian drones and missiles making the Strait of Hormuz too perilous to transit, 30 per cent of the world’s fertiliser supply has been cut for weeks, spurring warnings of a “food security timebomb”.”
“Cambodia urges Thailand to resume talks on disputed border.
“Cambodia has urged Thailand to resume talks as soon as possible on their disputed border, a long-standing disagreement that led to deadly clashes last year.”
“Three Coast Guards personnel killed in separatist attack in Pakistan’s Balochistan…
“The troops were killed after their patrol boat came under attack in Jiwani, a coastal town located some 84 kilometers from Pakistan’s Gwadar port, according to a senior police official who requested anonymity.”
https://www.arabnews.com/node/2639662/pakistan
“‘Everything is gone’: Israel destroys entire villages in Lebanon.
“The Israeli military has demolished entire villages as part of its invasion of south Lebanon, rigging homes with explosives and razing them to the ground in massive remote detonations.”
“Syria slams Israel’s ‘frenzied expansion’.
“Syria’s Foreign Minister Asaad Hassan al Shaibani has condemned the repeated Israeli attacks on Syrian territory, calling them a “blatant violation” of sovereignty and international law.”
https://www.trtworld.com/article/8d0705558f9c/amp
“Israeli army raids across the occupied West Bank overnight.
“Israeli forces storm camps and villages in an overnight raid across the occupied West Bank arresting more than 22 Palestinians. This comes days after Israel approved 34 new illegal settlements.”
“Is This Africa’s Next Big Conflict?
“Ethiopian Prime Minister Abiy Ahmed has reignited tensions with Eritrea with renewed calls for access to the Red Sea. His push comes after the collapse of his alliance with Isaias Afwerki, leader of Eritrea, following the fallout from the Tigray War.”
https://m.youtube.com/watch?v=SVRpsYxwZBw
“Sudan: 14 Million Displaced; Hunger And Attacks On Health Continue As War Enters Fourth Year…
““Unfortunately, we are not seeing clear progress towards any resolution,” she said, stressing that fighting is still ongoing in large parts of the country: the Kordofans, Darfur and Blue Nile State.”
“Scores Killed in Nigerian Military Strikes as Clashes With Militants Intensify.
“Nigerian officials said they attacked a terrorist enclave, but locals and rights groups said the airstrikes hit a popular market, killing many civilians.”
https://www.nytimes.com/2026/04/12/world/africa/snigerian-airstrike-insurgents-civilians.html
“Mutually Automated Destruction: The Escalating Global A.I. Arms Race…
“Each nation is aiming to amass the most advanced technological stockpile in case they need to fight drone against drone and algorithm against algorithm in ways that people cannot match, defense and intelligence officials said.”
https://www.nytimes.com/2026/04/12/technology/china-russia-us-ai-weapons.html
“Abhorrent’: the inside story of the Polymarket gamblers betting millions on war.
“…longtime users say it increasingly resembles a casino – where everything, from Trump’s fury to the second coming of Jesus Christ can be monetised. So where they can, players in this powerful “casino” have started trying to shape the world to secure a payday.”
I rely on donations and tips from my readers to keep the site running. Every little bit helps. Can you chip in even a dollar? Buy me a coffee or become a Patreon supporter. A huge thank you to those who do subscribe or donate.
You can read the previous “Economic” thread here. Kali will be back tomorrow with a ”climate” thread.
Quark’s latest essay is titled “Paper markets and physical reality. The future (present) is the struggle for resources”
https://tinyurl.com/mvekwnuu
Google translation below. Two charts are missing:
We have been living for more than six weeks with a “closure” of the Strait of Hormuz, which barely allows the passage of 10% of the ships that transited just two months ago, which has led us to a situation of shortage of physical oil (in addition to other products).
Once the last ships have delivered their cargo, the market must be supplied from reserves, available inventories, and some of the barrels from the strategic reserve. If this is insufficient, refineries must bid for oil available for immediate delivery.
Paper futures markets do not reflect a shortage. Their price barely exceeds $100 per barrel, while the price of a barrel of physical oil has reached $140, a difference rarely seen (if ever).
“ With traffic through the Strait of Hormuz still severely disrupted , the real tension is playing out in the spot markets , where refineries are racing for immediate delivery, leaving an unusually wide disconnect between financial benchmarks and the price of crude oil available today. That fragility was exacerbated over the weekend when talks between the US and Iran collapsed without an agreement and Washington signaled it could take tougher measures to restrict Iranian oil flows, including potential actions in and around the Strait of Hormuz,” Keller elaborates.
The UniCredit report includes a revealing chart that combines the nearest month’s Brent futures on the ICE exchange with Brent FOB Northwest Europe for immediate delivery. The comparison highlights the extraordinary and aforementioned dislocation between physical and paper oil markets. “During the COVID crisis , the spread turned markedly negative as physical demand evaporated. It turned decidedly positive as the war in Ukraine erupted , reflecting fears of a supply disruption. However, the current divergence far exceeds even those levels, pointing to an acute and persistent shortage of North Sea crude for immediate delivery. While futures price expectations remain stable, physical buyers continue to pay a substantial premium for barrels for immediate delivery,” Keller analyzes .
Once the transit period ended, a veritable scramble for physical barrels began, but refineries are facing financing problems due to the high prices, as they cannot avoid taking risks. Normally, futures markets can be used to hedge this risk, but given the difference between the price of a physical barrel and a paper barrel , it is no longer possible to use the futures market to hedge a transaction, which puts smaller refineries in a difficult position.
“ According to traders and analysts, the high premiums for immediate delivery crude are putting enormous pressure on the market. Smaller refineries are facing a considerable increase in their financing needs due to the higher prices, as well as the challenge of hedging their risks in a market where the physical crude they buy is much more expensive than the more liquid derivatives linked to it .”
This risk and need for financing is causing some refineries to stop buying crude oil, which means that diesel and kerosene production is reduced, further increasing the prices of derivatives.
“ As a result, some refineries are beginning to withdraw from the market, which will lead to a reduction in their production and greater pressure on petroleum product markets.
Jet fuel and diesel prices have already reached record or near-record highs, exceeding $200 a barrel. In the politically vital U.S. gasoline market, inventories have fallen to their lowest level in almost 16 years, according to the Energy Information Administration .
Now, an interesting arbitrage opportunity has arisen at the end of the month . With one week remaining, it’s possible to buy a barrel on the futures market, demand its delivery at the end of the month (remember, in one week), and then transfer it to the physical market for immediate delivery, taking advantage of the significant price difference.
“ Let’s talk now about how arbitration can be used to your advantage.
Large physical traders and refiners (specifically the names already bidding on the Platts window, such as Trafigura, Mercuria, Total, etc.) can execute this:
Buy WTI futures for May 2026.
You can choose physical delivery in Cushing during May, or use EFP (Exchange for Physical) operations to convert your futures position directly into physical barrels of WTI or WTI Midland.
Transport and export the barrels (by pipeline to the US Gulf Coast if necessary, and then load them onto tankers for CIF Rotterdam or similar).
Selling in the physical spot market at Platts’ high levels (WTI Midland cargoes with loading dates from May 7 to 17 with Dated Brent premiums of more than $20, which equates to absolute values well above $96 after costs).
Net profit: Approximately a margin of over $40 less logistics, transportation, storage, financing, and quality adjustment costs (typically between $8 and $15 per barrel total for this route). Even so, it represents a huge guaranteed margin for anyone with pre-arranged shipping and purchasing .”
This operation would bring the prices of both markets closer together, increasing the price of the futures market and reducing the spot price of a barrel, but we can imagine that if the futures market is “controlled”, the pressures to avoid arbitrage can be immense (even the payment of a premium to roll over the expiration date and not have to deliver the barrels, something that is common in the gold-silver markets).
The problem, of course, is that this situation cannot continue indefinitely, because what we consume are physical barrels, not paper barrels. If the shutdown continues, there will be a shortage of many barrels of oil, and therefore of diesel, gasoline, and kerosene, leading to increasing scarcity as inventories are depleted.
All those who need to know this are aware of it, which is why an agreement is essential before widespread shortages occur. And given that transit takes between 20 and 45 days for major markets, even if the Strait of Hormuz were to reopen tomorrow, we would already be behind schedule. Inventories will suffer immense depletion, forcing a replenishment effort over the coming months, which will increase demand for oil and refined products at a time of production shortages due to infrastructure damage, delaying a return to normal for months. This means that oil prices will have to remain high for almost all of 2026, with the resulting impact on inflation.
And that’s assuming the strait reopens tomorrow…
Preparing for the future. Fighting for resources.
The sense of normalcy in the markets is only apparent. We are hanging by a thread, and if, for example, there is destruction of energy infrastructure or the conflict drags on for a couple of months, the situation will become irreversible.
And if it doesn’t, very soon oil production will begin to decline permanently, entering the left side of the production curve, the downward slope. We need to understand that the key players are positioning themselves to enter that part of the curve, playing their strongest cards.
If, for example, the resource pie was going to shrink by 2030, it’s logical to think that before that date arrived, positions would begin to be taken to secure the largest share of it. Therefore, conflict was inevitable, and we can speak of a struggle for resources not only in the Middle East, but also in the associated wars in Venezuela, Russia, and Africa. Some have already begun, others are in the development phase, one has ended (Venezuela), and finally, the beginning of the battle in Africa remains.
But oil isn’t the only thing that’s coveted. Other scarce resources will also be treated as indispensable, and this includes Greenland, Africa, Latin America, and even Southeast and Central Asia. If you want to see a global distribution of critical resources, here’s a map. Yes, China is a global power…
We have long ignored adjustment, but we have now reached the point of no return in terms of the difficulty of sustaining global growth, with resources that will clearly begin to run short in the next decade, suggesting that interventions must (and have) begin a few years before the shortage (2030).
Successfully balancing resource competition with sustained economic growth (i.e., avoiding recession) is crucial for maintaining stability. Imagine a war in the midst of an economic depression; it would be unsustainable because the general public would refuse to support it. Therefore, markets must be manipulated for as long as necessary to achieve the desired outcomes.
Europe.
Europe has a rearmament plan that has come a little late. The idea is to match Russia’s resources, and we must prepare for that.
“ Addressing the challenges in security and defense
In the first half of 2025, the Commission proposed several key initiatives to boost European defense preparedness and investment:
the White Paper “European defense preparedness 2030”,
the ReArmar Europa Plan,
the omnibus defense readiness simplification package.
These proposals are fundamental to addressing the gaps and challenges facing the EU in security and defense.
In October 2025, the Commission presented a roadmap for defense preparedness 2030 in order to measure progress and discuss next steps.
The following month, as outlined in the White Paper, he presented a new package of measures to improve military mobility in Europe. At the same time, he also established a roadmap for transforming the European defense industry by unlocking disruptive innovation .
The initial cost is known: 800 billion euros.
“ Plan to Rearm Europe / Preparedness 2030: the plan to finance the EU’s defense
800 billion euros, the amount that member states intend to mobilize to boost defense spending
The ReArmar Europa / Preparedness 2030 Plan will boost defense funding by offering EU countries greater financial flexibility.
To do this, the following steps will be taken:
Activate the national safeguard clause of the Stability and Growth Pact , which allows member states to increase defense spending. A 1.5% of GDP increase in defense budgets could generate almost €650 billion in fiscal space over four years.
Launching a €150 billion loan facility: Action for the Security of Europe (SAFE) to help countries invest in key defense areas, such as missile defense, drones, and cybersecurity. Funds will be raised on capital markets and disbursed to interested Member States upon request, based on national plans. The EU Council adopted SAFE in May 2025 , which will encourage Member States to spend better, jointly, and with a focus on Europe.
Support the European Investment Bank Group in expanding its lending to defense and security projects, and accelerate the Savings and Investment Union to mobilize private capital so that the European defense industry is not solely dependent on public investment.
Making full use of these financial instruments will have positive effects on the EU economy and competitiveness. This includes building new factories and production lines essential for creating good jobs in Europe .
It’s not just the US, Russia, or Europe; China , Japan , and Australia are also developing large defense programs, preparing for an uncertain future.
We’re in survival mode, plain and simple.
Just an opinion…
I’m just over here trying to survive and get my oil changed…
This fantastic chart shows “global production of critical and strategic raw materials”, I’ve never seen it before:
https://www.sgu.se/globalassets/mineralnaring/kritiska-material/global-production-of-critical-and-strategic-raw-materials—world-map-2023-eng.pdf
Just like the so called “Bronze Age” collapsed, so to is the “Power Age or “Oil” or Age of a”Plenty” will too. Maybe just as quickly. We happened to be privileged enough to be aware of the transition back to a more “primitive”existence. I’m using the word in the meaning
of “prime” or “first”, based on its Latin root, so no good or bad connotation implied.
Remember reading Drew Langsner book on Country Woodcraft and he pointed out folk wisdom created highly advanced engineering marvels, such as “Windsor Chairs” or wooden pipes that survived hundreds of years of use without the insane effort of our modern worlds mining, global supply chain, and military industrial complex to protect it all.
These folks of the past would be undoubtedly befuddled by it all. The best quote was from an Indian of the American Mid-West witnessing the aftermath of a plowed field that was once a prairie, “Wrong way up”. ..that sums it up nicely.
Thanks Flippr for inspiration.
Great chart, Flippr! And thanks for the quark translation. Well, the good thing is good jobs will be created in Europe with the giant military investment /sarc!
Great point,VPK, about Windsor chairs (I can immediately picture them and how lovely they are) and pipes. I also think of Islamic tile mosaics. So many examples come to mind.
Yes, “wrong way up” hits to the core. Our poor (ex) prairies!
As for survival and oil changes, Truth Wizard, yes, I got the rear wheel bearings on my 2007 Subaru replaced. Hoping no more major repairs until TSHTF.
Good profile of environmental intellectual giant, Bill Rees.
https://3quarksdaily.com/3quarksdaily/2026/04/bill-rees-ecological-footprint-analysis-grew-from-a-boys-contemplation-of-soil-and-sun.html
From Yanis Varoufakis, “TechnoFeudalism”:
‘“The true revolution cloud Capital has inflicted on humanity is the conversion of billions of us into willing cloud serfs volunteering to reproduce cloud capital for the benefit of its owners, a tiny band of multimillionaires residing mostly in California or Shanghai.”
What we do here is exactly that: we create cloud capital for which we are completely uncompensated, enriching strangers in the process.
For those that don’t like inflation, what are you going to do about it.
Some have no problem maintaining ‘Corporations are people.’s stock price, corporate profit, stockholder dividends, management’s bonuses. We certainly wouldn’t to limit other’s wealth while the masses are struggling.
Stupidity is a global pandemic.
From an AI: “The French Revolution was primarily caused by financial crisis, social inequality, and political absolutism.”
From another AI: “Humans have 46 chromosomes (23 pairs), while great apes like gorillas, chimpanzees, and orangutans have 48 chromosomes (24 pairs).
Sounds like de-evolution.
Just blew up my theory about a Clever Ape. 😉