No Gulf Oil, No Global Economy: The Trump–Netanyahu War and Its Global Consequences

By Elijah J. Magnier –

Remove 10 to 15 million barrels of oil per day from global markets, and the shock would not remain confined to energy traders or oil companies. It would reverberate across the entire architecture of the modern economy. The Gulf is not simply another producing region. It is the central artery of the global energy system. Interrupt that flow and the consequences spread immediately through fuel markets, electricity generation, transport, petrochemicals, agriculture, manufacturing and high technology.

According to the International Energy Agency, global oil demand in recent forecasts stands at roughly 103 to 106 million barrels per day. A disruption removing 10 to 15 million barrels per day, therefore, represents roughly 10 to 15 per cent of global supply. Few shocks of that scale have occurred in modern energy history. The oil crises of the 1970s involved smaller supply disruptions yet triggered severe inflation and economic contraction across many advanced economies.

The scale of the shock would also be measurable in macroeconomic terms. Energy economists and modelling used by institutions such as the International Monetary Fund suggest that every sustained increase of $10 in the price of oil tends to add roughly 0.1 to 0.2 percentage points to global inflation while shaving a similar magnitude from economic growth. If the removal of 10 to 15 million barrels per day pushed oil prices toward or above $100 per barrel for a prolonged period, global inflation could rise by roughly 0.2 to 0.7 percentage points. In contrast, global economic growth could slow by approximately 0.1 to 0.4 percentage points. In energy-importing economies, the effect can be considerably stronger.