The World is Running Out of Fuel

The Strait of Hormuz closure was seen as a nuclear option that would have massive ramifications for the global economy.

Tapping strategic reserves and commercial stocks helped slow the rise of oil prices, but they would not be enough if the crisis went on for too long.

Allowing purchases of sanctioned oil from Iran and Russia helped contain prices and prevented a doomsday scenario of $130-$140 per barrel.

China's pullback of roughly three million barrels a day freed up supply that helped keep crude oil under $100 a barrel.

The peace deal fell apart weeks later, and Iran reportedly closed the Strait of Hormuz again following accusations of violations.

Commercial inventories and strategic reserves are exhausted after months of crisis, and refinery damage in the Middle East and Russia has created a diesel shortage requiring months to fix.

Significantly increasing oil production in Venezuela will take years and billions of dollars, and there are no miracle solutions beyond small potential fixes.

Diesel prices are rising sharply, increasing shipping costs and leaving businesses frustrated after months of hoping the conflict would end.

Businesses like farmer Jim Barber and major retailers are absorbing higher fuel costs to maintain customer relationships and compete for stretched consumers, betting that lower prices will increase sales and market share.

Companies like Ambix are now passing higher resin and fuel costs to customers, with the August fuel price surge marking when firms started embedding price shocks into the economy.

J.P. Morgan analysts say they cannot model the oil market anymore due to extreme uncertainty, and while the economy looks healthy on paper, consumers feel bad about prices and the crisis duration is unclear.