Trump is facing a humiliating crisis he created himself |
Trump is facing a humiliating crisis he created himself
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Britain and France “won” the Suez war in 1956. They destroyed Egypt’s air force on the ground and gained total control of the skies within hours.
They crippled Egypt’s tank forces. The assault was professional and achieved all of its immediate military objectives.
Yet the Suez crisis degenerated into their worst humiliation since 1940 because the two powers failed to anticipate the economic fallout. Both faced capital flight and pressure on their fixed exchange rates.
In a larger sense, they misread the world’s post-imperial mood.
Donald Trump risks his very own Suez crisis if he lets this conflict drag on through March. Markets may have rallied after he pronounced the war “very complete”, but Iran is still fighting and the Strait of Hormuz is still closed.
‘We haven’t won enough’: Markets like what Trump’s saying but mixed messages abound
He launched this war with 21 days’ consumption cover in the US strategic petroleum reserve – China is thought to have at least 120 days’ cover – and with inadequate warships to protect shipping.
The 20-million-barrel buffer of “floating” Russian crude has mostly been soaked up already. Vladimir Putin will not step into the breach. He is already exporting as much as he can.
Michael Haigh and Ben Hoff, from the Societe Generale bank, estimate that the war has cut off 17 million barrels a day (b/d) of oil supply, or a sixth of global consumption. It is worse for liquefied natural gas.
Iraq has run out of storage and has been forced to slash production by 3 million b/d. Kuwait is following suit. Abu Dhabi will do so within days.
Saudi Arabia has more storage but has had to close the Safaniya, Marjan, Zuluf and Abu Safa fields because of drone attacks, curtailing more than 2 million b/d. Energy experts at Argus say almost 7 million b/d has already been shut in across the region.
The Saudis can divert some crude through the East-West pipeline to the Red Sea, but the port at Yanbu has capacity........