Weekly Economic Report 4.11.26

There was no peace agreement reached in the US talks with Iran in Pakistan, but the two-week ceasefire appears to hold – which likely means oil trades near $100 for many more days as new strategies are explored. It is now more than 40 days since the start of the conflict, which means the pipeline of oil from the Gulf to East Asia is now dry. As many articles have pointed out, the issue is now price for some, but availability for others. As always, the invisible hand is hard at work reallocating scarce resources, which often produces unexpected winners and losers. Al Jazeera, the news service based in Doha, Qatar, says that roughly 200 million barrels of Gulf oil have been lost in March shipments compared to February. That would be about half of the normal flow, with Iran still shipping nearly all its prior level, Saudi Arabia offsetting all but 25% of losses by utilizing the east-west pipeline, and the UAE shipping from its east coast. The bulk of the shortfall is on Iraq, Kuwait, Bahrain and Qatar. With most Gulf nations having declared force majeure, and now selling at spot prices, only these last few are receiving less revenue now than before February 28. That helps explain the Iranian leadership’s intransigence -- and the Gulf States failure to respond to attacks.

EU04-11-2026.pdf

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