Today Gerald Celente issued a major update on the Iran War and its impact on global markets.
OIL, GASOLINE PRICES SPIKE AS WAR INTENSIFIES
March 11 (King World News) – Gerald Celente: The price of Brent crude oil, the world’s pricing benchmark, spiked briefly above $119 on 9 March and could go even higher this week, many analysts expect, as the Iran war has effectively shut down the vital Strait of Hormuz, through which about 20 percent of the world’s oil passes.
Kuwait is curtailing oil and gas production as it runs out of storage space. After an Iranian drone attack, Qatar’s government shut its oil and gas production and declared force majeure, meaning it is unable to fulfill its contractual delivery obligations due to forces out of its control.
Bahrain’s national oil company also has shut down and invoked force majeure. Saudi Arabia reported thwarting an Iranian air attack after an earlier one struck a Saudi refinery.
“Everybody that has not called for force majeure, we expect will do so in the next few days if [the war] continues,” Saad bin al-Kaabi, Qatar’s oil minister, told reporters. “All exporters in the Gulf region will have to call force majeure. If they don’t, they are going to pay the liability for that.”
Iran, OPEC’s second-largest producer, has cut its oil output by 70 percent.
“The market is shifting from pricing geopolitical risk to grappling with tangible operational disruption,” Natasha Kaneva, JPMorgan’s chief commodities researcher, wrote in a 6 March note to clients.
By the end of this week, the Gulf’s oil output could be cut by as much as six million barrels a day, she warned.
The U.S. national average price for a gallon of gasoline broke upward through $3 to $3.32 on 6 March as the war on Iran continued, according to AAA. The price varied from a low in Oklahoma of $2.624 to $4.674 in California. The average had been $2.95 the week before, AAA reported.
Diesel fuel’s price jumped to $4.124, the highest since December 2023…
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The increase in fuel prices will bleed into the cost of anything that is delivered, forcing many retailers to boost their prices and shippers to increase their fees, re-energizing inflation that already has proved stubborn.
The rising costs come as Donald Trump claims to have “won affordability” and tamed the rising cost of living as he attempts to help his Republican party keep control of Congress in November’s elections.
“Higher gas prices are hitting at a time when the effects of tariffs and inflation are still lingering,” Diane Swonk, KPMG’s chief economist, said in a statement. “Adding inflation when we are five years of being above the [U.S. Federal Reserve’s] 2-percent goal is worrisome.”
The longer the conflict lasts, the dimmer the hope that the central bank will cut its interest rate. As inflation rises, the Fed is more likely to raise the rate, not lower it.
“What’s happened [to oil prices] is very inflationary,” Tom Kloza, a Gulf Oil analyst, told the Financial Times. “The prices for gasoline on Easter Sunday, they’re going to be…$3.25 to $3.50.
“If you start fooling with oil logistics and installations in Saudi Arabia andKuwait, you’re throwing some things in the mix we haven’t seen before,” he added.
“Forty percent of the economy is made up of people who are not saving and who live week to week based on salaries and other sources of income,” Ed Morse, a senior advisor at British energy advisory firm Hartree Partners, said to the FT. “You get to $3.50 or $4 [for gasoline] and it will certainly have an impact on a large part of the population.”
For every $10 bump in the price of a barrel of oil, U.S. gas prices tend to rise by 25 cents a gallon, Swonk noted.
Even so, the U.S. will fare better than much of the rest of the world. The U.S. imported just 17 percent of its crude oil in 2024, according to the U.S. Energy Information Administration, the least since the mid-1980s.
TREND FORECAST:
Yesterday, President Donald Trump boasted that the “excursion into the Middle East” to “get rid of some evil” will end “very soon”.
Brent crude, which was around $120 a barrel when the futures markets opened on Sunday, closed on Monday at $94.77 a barrel after Trump made that statement.
Iran’s IRGC responded to Trump’s claim saying, “we are the ones who will determine the end of the war.”
President Trump had promised that the U.S. will ensure cargo ships can cross Hormuz and that American naval ships escorting vessels in transit will make a significant difference in the amount of oil and other goods coming across the strait.
And now, as we go to press, oil prices fell 15 percent to below $80 a barrel following a statement by America’s Secretary of Energy Chris Wright who said the U.S. Navy has escorted a tanker through Strait of Hormuz.
Again, only time will tell what is true or false, and how Iran will respond.
There are expectations that the windfall profits made by U.S. oil and gas producers will trickle both directly and indirectly back into the U.S. economy, helping moderate a loss of consumption that will be seen in statistical reports but will not ease the burden of higher prices on the typical American household.
If oil prices continue to decline it will be positive, if they accelerate, it will be negative. Again, only time will tell if Iran will attack American naval vessels in the Strait of Hormuz.
And if they do, and Americans sailors are killed, that will be sold to the public as a reason to escalate the Iran War… which in turn will push oil prices back up and the global economy and equity markets back down.
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