The Severity of the Situation.

The largest [total addressable market] in mankind’s history.

“I start every day pretty much the same way: Coffee and News Items.” — Richard Haass, president emeritus, Council on Foreign Relations.

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1. Bloomberg.com:

The biggest oil supply shock in history has reached the one-month mark. Prices have surged, growth forecasts are being cut worldwide, and shortages are emerging across Asia, from Thailand to Pakistan.

But the energy industry is warning that the crisis is only beginning.

In conversations with more than three dozen oil and gas traders, executives, brokers, shippers and advisers over the last week, one message was repeated over and over: The world still hasn’t grasped the severity of the situation. Many drew parallels with the 1970s oil shock, warning the closure of the Strait of Hormuz is threatening an even bigger crisis. Fuel crunches hitting Asia will soon start spreading west, they said. Europe is likely to face surging prices to secure cargoes and is at risk of diesel shortages in the coming weeks.

If the strait stays closed, the world will have to significantly reduce its oil and gas consumption — but not before prices spike to a level that forces consumers and businesses to fly, drive and spend much less. Already, demand has begun to drop, and some countries in Asia are hoarding and rationing fuel. US government officials and Wall Street analysts are starting to consider the prospect that oil prices might surge to an unprecedented $200 a barrel….

A simple back-of-the-envelope calculation suggests the closure of the strait is reducing global oil flows by some 11 million barrels a day, after accounting for the interventions so far aimed at offsetting the loss. When compared with pre-war demand levels, that leaves a roughly 9 million-barrel shortfall — a yawning gap that is more than the oil consumption of the UK, France, Germany, Spain and Italy combined.

The situation is even more extreme in liquefied natural gas. The Strait of Hormuz typically accounts for about a fifth of global supply, with the final cargoes on the way from the Middle East now about to arrive at their destinations. Unlike in oil, there are no alternative routes to get the gas to market and very few strategic stockpiles to cushion the shortfall.

The US is the world’s biggest LNG exporter, and its domestic gas market is relatively insulated from the war due to its massive production.

But it’s not just fuel: petroleum is used to make plastics, which are used in just about everything. (Read the rest. Source: bloomberg.com.)

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2. The Wall Street Journal:

President Trump is weighing a military operation to extract nearly 1,000 pounds of uranium from Iran, according to U.S. officials, a complex and risky mission that would likely put American forces inside the country for days or longer.

Trump hasn’t made a decision on whether to give the order, the officials said, adding that he is considering the danger to U.S. troops. But the president remains generally open to the idea, according to the officials, because it could help accomplish his central goal of preventing Iran from ever making a nuclear weapon.

The president has also encouraged his advisers to press Iran to agree to surrender the material as a condition for ending the war, according to a person familiar with Trump’s thinking. Trump has been clear in conversations with political allies that the Iranians can’t keep the material, and he has discussed seizing it by force if Iran won’t give it up at the negotiating table. (Source: wsj.com)

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