A version of this essay first appeared in Crash Course, Salon’s free morning newsletter. Sign up for early access to articles like this, plus more of Salon’s bold journalism on how policies, movements and culture wars affect real people.
America and Israel’s ongoing war against Iran has sunk the global economy so deeply in the mire that economists are now seemingly throwing down their pencils in frustration. On Thursday, for the first time since the start of the conflict, analysts at JPMorgan said they don’t have a baseline view of oil markets.
“We simply don’t know how to model the endgame,” Natasha Kaneva, head of the company’s global commodities strategy, said in a note. According to CNBC, analysts at JPMorgan assumed there were some economic red lines the U.S. simply would not cross in the conflict, and that President Donald Trump would eventually be forced to reach a deal with Iran. But close to seven months after the war began, most of those red lines — including oil hitting more than $100 a barrel, gasoline nearing $5 a gallon at the pump or 10-year Treasury yields rising above 5% — have already been crossed, and “the exit strategy is less clear, not more,” in Kaneva’s words.
Earlier this month, diesel prices climbed above $6 per gallon in the U.S. for the first time ever, and continues to climb. Costs are expected to rise as winter approaches, a season of peak demand for the fuel. Meanwhile, oil stockpiles continue dropping toward record lows, as highlighted by a new analysis from the S&P Global Energy Fuels and Refining team, which warned “winter is coming for diesel markets.”
Karim Fawaz, executive director at S&P Global Energy, warned in the analysis that “Inventories are low, spare refining capacity is scarce, and seasonal demand is about to strengthen at exactly the wrong moment.”
Start your day with essential news from Salon.Sign up for our free morning newsletter, Crash Course.
Maybe it’s bad news when even the economists have quit pretending that everything will be fine. The Iran war continues to be a disaster, yet Trump has refused to stop bombing the Islamic Republic. On Thursday he indicated he might even double down, telling Axios, “I have a big decision coming up. Do I want to go in and annihilate them [the Iranian regime] or do I not? It’s a big decision. Anything could happen with me.”
Anything but peace, I imagine. The previous day, the president recycled an old line, claiming that the Iranians “want to make a deal.” Given how many times we’ve heard that one before, I’m just not convinced. Economic forecasts for the coming months continue to be grim as fighting in the Middle East intensifies. A drone attack that heavily damaged one of Saudi Arabia’s pipelines is expected to cause crude oil exports to fall by 400,000 barrels per day this month alone. That’s just one of countless reasons why energy prices are predicted to keep spiking. Although more war clearly isn’t helping, Trump is now promising to sell 48 F-35 fighter jets to Saudi Arabia. Just what everyone needs.
Earlier this week, the Pentagon told Congress that the cost of the war has climbed to $42 billion, a bit over the most recent estimates of $38 billion from the Congressional Budget Office. Some experts have estimated the cost to be even higher, such as Linda J. Bilmes, the Daniel Patrick Moynihan senior lecturer in public policy at the Harvard Kennedy School, who told The Hill it could be as much as $100 billion — and that was back in July.
But honestly, who cares about gas prices and grocery bills? The most severe cost in war is always human, and Trump’s aggression in the Middle East has resulted in an estimated 1,800 to 3,800 civilian deaths. The Washington Post reported Friday that the Pentagon is also not disclosing the true number of U.S. soldiers who have died in the war. The Pentagon’s public database cites 18 servicemember deaths, but officials who spoke on the condition of anonymity to discuss the figures, said the true number could be as high as 23, plus three U.S. contractors based in the region have died since Feb. 28. Meanwhile, Yemen’s Iran-backed Houthi rebels have attracted significant attention for their attacks along the Red Sea coast, threatening Saudi Arabia’s oil exports, but less attention is being paid to the more than 100,000 people who have fled the renewed fighting.
On Thursday, the U.N.’s top human rights body reported “reasonable grounds” to believe that the U.S. has committed war crimes in Iran, citing two strikes, including one on a school in the southern city of Minab that killed 150 people, including 120 children. A White House spokesperson responded that the human rights body has “accomplished nothing for human rights while spouting unserious nonsense for decades.” While the focus on bottom lines and costs at the pump is understandable, I don’t need baffled economists to know that Trump’s war is born of absolute insanity.
Read more
about the Iran war