OIL IS GLOBAL. YOUR GASOLINE PRICE IS NOT.
How the Iran war turned one oil shock into nine very different economic realities
A barrel of oil is one of the world’s most global commodities.
A litre of gasoline is not.
That distinction has become remarkably visible since the Iran war began.
The disruption was extraordinary. The closure of the Strait of Hormuz interrupted the transit of roughly 20 million barrels per day — around one-fifth of global oil consumption. Physical crude briefly approached $150 per barrel, compared with roughly $70 before the war.
One might therefore expect motorists around the world to have experienced roughly the same shock.
They did not.
Since the last weekly observation before the conflict, gasoline prices have risen by approximately:
USA +41.7%Germany +30.9%Spain +29.4%United Kingdom +27.7%Italy +27.4%France +26.5%Argentina +24.4%China +19.2%Brazil +3.7%
Nine countries.
One geopolitical shock.
Completely different outcomes.
This is more than a curiosity about petrol stations.
It reveals something fundamental about modern economies:
There is no single oil shock.
There is a global commodity shock that is subsequently transformed by national taxation, currencies, refining capacity, regulation, subsidies, infrastructure, consumer behaviour and political decisions.
By the time a barrel passing through the Strait of Hormuz becomes a litre of gasoline in Milan, Munich, Madrid, London, Shanghai, Buenos Aires, São Paulo or an American suburb, it has become a different economic product.
And therefore a different macroeconomic shock.
THE LARGEST DISRUPTION DID NOT PRODUCE THE LARGEST PROPORTIONAL OIL-PRICE SHOCK
There is an apparent paradox at the centre of the story.
According to ECB analysis, the Iran conflict disrupted oil supply far more severely than Russia’s invasion of Ukraine.