Is an energy crisis on the way? What's really happening | personal reflection

josevas217 (80)in PussFi 🐈 • 7 days ago

Hello PussFi friends, good day to all. There's a topic that's been making the rounds a lot lately on YouTube, in financial analysis, and on geopolitical channels, and it has to do with the potential impact of escalating tensions between the United States, Israel, and Iran, especially because of one very specific thing: the Strait of Hormuz. For those who aren't aware, a significant portion of the world's traded oil passes through there, so any disruption could have an immediate effect on prices.

_Source

And of course, the most common refrain is that if that crossing is closed or affected by attacks, oil could easily skyrocket to $100 a barrel, which would have a direct impact on global inflation. This, in principle, sounds quite logical, because oil remains a key component of the global economy, influencing transportation, production, logistics costs—absolutely everything.

But this is where I want to pause for a moment, because there's a detail that's often overlooked in this type of analysis, or at least not given the weight it truly deserves. And that's the issue of the dollar. Because yes, we talk about nominal prices, round figures like $100 a barrel, but the real purchasing power of that currency today is rarely put into context.

Since the great financial crisis of 2008, the dollar has lost approximately 30% to 33% of its purchasing power. This isn't an opinion; it's a fact that can be easily verified. So, when we talk about oil at $100 today, we're not talking about the same impact that price would have had back then.

_Source

In other words, in real terms, a barrel of oil at $100 today doesn't represent as high a price as it might seem at first glance. In fact, if we adjust for inflation, so that we truly feel a shock comparable to past times, we'd be talking more about oil in the range of $150 or even $160 per barrel.

And this is where the perspective shifts somewhat. Because yes, oil at $100 can create a stir, influence expectations, and have a significant psychological impact on markets and people's perceptions, but it doesn't necessarily imply a catastrophic scenario on its own.

However, if the situation escalates and we actually see prices approaching $150, then things change considerably. Then we're no longer just talking about perception, but about a real and significant impact on inflation, production costs, food prices, transportation... on everything. And as always, the most affected end up being the end consumers.

Furthermore, we mustn't forget that we're coming from a context where inflation has already been a problem in recent years, especially after everything that's happened globally recently. So, adding a major energy shock to that equation doesn't bode well, frankly.

_Source

Let's hope it doesn't get to that point, because although many analyses focus on the $100 mark, the reality is that the real problem begins when certain levels are surpassed, reflecting not only geopolitical tensions but also real pressure on the global economic system.

But anyway, that's how things stand for now. The outlook isn't very encouraging, and we'll have to keep a close eye on how all this develops, because if we've learned anything, it's that these issues can change very quickly… for better or for worse. Goodbye, take care.