Oil update

Geopolitical analysts grimly estimate the world will teeter dangerously at the edge of a very dark oil cliff two or three weeks from now, or roughly by 20 April or thereabouts.

This is so because even if the Persian Gulf War — “a war that cannot be won because it was the result of a whim, not a plan” — were to be over soon, oil wouldn’t be flowing or be promptly delivered as before.

This is largely because there’s the big question of the Middle East oil producers quickly returning to the production and delivery of oil after they stopped pumping and shut down the oil wells for lack of storage facilities.

As of now, getting the oil back onstream is optimistically estimated to take months. A news outfit, quoting a Kuwaiti oil executive, reported that it could take three to four months for Middle East oil companies to return to full production once the war ends.

The immediate effect of all this for us is the dire prospect of being bedridden for six more months — or if the war gets worse, even longer.

Meanwhile, contingency measures resorted to by various governments, like releasing strategic petroleum reserves or buying recently unsanctioned oil from Russia, can’t substitute for pumping out Middle East oil.

Russian oil supplies, a tanker of which the country managed to get hold of two weeks ago, as well as strategic oil reserves are expected to run out by mid-April, oil industry analysts say.

Scrambling for Russian oil and hunting for other sources is, for our part, to make sure our oil reserves stay at the 50 to 60-day level.

Our oil reserves, by the way, are privately owned commercial inventories — a fact that leaves the market-oriented government to rely mostly on “excise tax cuts for petroleum products, additional imports by the Philippine National Oil Company, and ad hoc appeals to private companies for releases,” says an oil industry analyst.

At any rate, having to spend so much on an essential commodity is now the cold hard reality across Asia.

Unfortunately, the need to shore up dwindling crude oil supplies and contend with the intense demand that’s driving up current prices is compounded by another serious problem.

Across Asia, countries already vulnerable to the sustained disruption in energy supplies are also contending with “their currencies being suffocated by a dollar that is surging in value,” The New York Times reported.

In short, many Asian currencies, including the Philippine peso, are growing weaker at a time when their buying power is most needed to buy oil and survive.

Higher oil prices and a weaker peso present a “double whammy that will double inflation in the coming months, hitting millions of poor Filipino families the hardest,” says the IBON Foundation.

All these are occurring even as there are uncertainties over the war itself. As the conflict enters its second month, the US still has no answer to the Iranian attacks on oil tankers and other commercial vessels transiting the Strait of Hormuz that has led to prices soaring. Clearing the strait really matters.

Escalating the conflict by launching a full-scale ground war will bring even greater catastrophe for Asia and the rest of the world: the intertwined global economy will crash and burn.