Letter from the US: This crisis Is different

Oil traders warning of $200/bl oil are wrong, and the market should be wary of proclamations that the impact of the oil shortage has only begun to be felt and a that a ‘harsh adjustment’ is coming—even for industrialised nations

The bullish oil market narrative is mired in a 1970s mentality, when oil shocks had large impacts on industrialised nations. This crisis will be different for two reasons. First, the impact will be heavily concentrated in East Asia. A prolonged disruption of shipments from the Mideast Gulf could depress East Asian GDPs by as much as three percentage points. Second, developed nations will see only modest impacts because their economies are much less dependent on oil. Also, the leading OECD nation, the US, is now an oil and gas exporter. Thus, its overall economy will remain strong, lifting the economies of other OECD countries through trade despite the Trump tariffs. The impact on the US and