by Michael Snyder, The Economic Collapse Blog:
We are watching a slow-motion train wreck play out right in front of our eyes, and nobody can stop it. Every single day that the Strait of Hormuz remains closed, commercial oil inventories will get even lower and national strategic oil reserves will get even lower. Right now the global economy is using more oil than it is producing, and everyone agrees that we are reaching a major crisis point.
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Unfortunately, we may arrive at that major crisis point even sooner than many experts were originally projecting.
The head of the International Energy Agency is warning that commercial oil inventories are “depleting very fast”…
International Energy Agency Executive Director Fatih Birol warned that the tally of commercial oil inventories is shrinking at an accelerated pace.
“I think it is depleting very fast,” he told reporters at the sidelines of a meeting of Group of Seven finance ministers in Paris, echoing comments from last week. It will be “several weeks, but we should be aware of the fact that it is declining rapidly,” he said.
He also highlighted that the spike in fertilizer and diesel prices comes at the start of the travel and planting season.
“This could have major implications for the food prices and together with the higher energy prices they might give a big push to inflation numbers,” he said.
Once the cushion that we are running through now is gone, energy prices will go completely nuts and we will see widespread rationing and shortages.
In fact, we are already beginning to experience a shortage of motor oil.
This is something that I wrote about yesterday, and today CNN issued a major report about this…
Wholesale motor oil prices are rising rapidly, and some industry executives are warning of imminent shortages caused by the war with Iran.
Damage to key facilities in the Middle East and the shutdown of the Strait of Hormuz have combined to create a perfect storm in this tiny but critical corner of the oil market.
The risk is that some of the most popular kinds of motor oil will be in very short supply, forcing drivers to delay getting their oil changed or rely on suboptimal lubricants.
“We’re looking at shortages — I have no doubt in my mind,” Holly Alfano, CEO of the Independent Lubricant Manufacturers Association (ILMA), an industry trade group, told CNN. “It’s a big mess — and it’s not going to be resolved quickly. It could take a year or so before we see any real relief.”
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