(An earlier abbreviated text of this piece was sent to clients on the WhatsApp service at the weekend. Their savvy comments inspired revisions to the original now incorporated below.)
New data and field work has been worked into this updated analytical framework for the impact of the MIddle East crisis on energy prices and geopolitics.
The global supply deficit has been revised down to 12mn bpd from 20mn bpd (for oil only). This is due to ME export leakage that escapes the triple blockade and new supply in a few places. This lower supply deficit results in a re-estimation of demand destruction to a new forecast of 2% of crude demand.
The 2% of demand destruction for oil translates into a 1% drop in GDP. The report explains why this is so. The fall in GDP is focussed in EMDE (Emerging Market & Devekoping Economies) and in Europe.
The global supply deficit now matches the published decline in inventories so that total inventories (commercial and strategic) will hit the cliff of 40 days consumption in August and earlier in Australia, India, UK and Europe.
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