Why are oil traders stupid?
That’s the question.
I have said it before, and I will no doubt say it again, but these supposedly rational market players are demonstrating they are anything but that.
…
The current oil price is around $93 per barrel, which, as the chart shows, represents a marked decline from the peak seen in recent weeks. Yet again, it would seem that oil traders believe what Donald Trump has said. They seem to think that because he hinted that a deal on the Strait of Hormuz might now be available, everything will return to normal very soon.
So, obviously, Spud is going to long the market and be very, very, rich. Good Luck!
Of course, there is an alternative suggestion available. A retired accountant does not, in fact, know more about what the oil price should be than the participants in the $3 trillion a year or so physical oil market, the $8 trillion traded futures and $20 trillion OTC markets.
But, you know, get rich Spud.
But it would be immoral for Spud to get very rich, wouldn’t it?
Or he could turn himself into Soros. I wonder whether that has occurred to him?
Norman
I think Soros makes more in an hour than Murphy made in a lifetime. Both f$%^$s whose evil almost defies belief but there the comparisons end.
‘Why are oil traders all driving round in Porsches and living in multi-million $£€ houses, while I have an end terrace in Ely and shanks’s pony. It’s not fair!!!’
Perhaps a glimmer of self-knowledge?
By the way Tim, we get it – we’re against digital ID, too, but the current pop up is nuts.
Agreed!!
What pop-up?
Tim’s taken it off now
Here is an interesting question: If MMT is correct as Spud says it is, then would you make more money trading FOREX by following MMT or not following MMT?
You could test how good Spud is at finance and economics by running two portfolios: The Spud and anti-Spud.
Which ever one wins would be an indicator of whether or not Spud is an unappreciated genius or a an example of a left wing intellectual living a tragically comic existence.
Unfortunately I think there’s a lot of possible portfolios that could be considered “anti-Spud”. So he’s not even a reliable figure to bet against.
For that reason I’d be interested to hear what he has to say about gold and crypto.
The last post I heard directly about Crypto was that it needs to be taxed at 99% or some such like number.
What an insufferable cretin the man is:
Maxwell Goldstein says:
June 1 2026 at 8:32 am
Thank you very much, NOT, for calling me stupid Richard. I’ve just ordered at $93 for delivery at the end of this month. I represent a client on the buy side of a trade, I’m a trader in other words.
If you’re going to call me stupid, then I’ll call you a daft banana.
+3
Reply
Richard Murphy says:
June 1 2026 at 9:19 am
I think you prove my point
Stupid and uncouth to boot.
+4
Is Maxwell Goldstein Emmanuel’s big brother?
He’d need some capital to invest. Selling the back issues of Railway Modeler and a well thumbed copy of “Dummies Guide To Libel” isn’t going to be enough.
Herr Oberst Professor Kartoffel seems more adept at putting other people’s money where his mouth is.
And yet, and yet. Market traders must surely have been wrong just before the dotcom crash and then the GFC? Can they possibly be right now about the valuations they put on the big software and AI companies?
The great American economist of the day assured his readers that Wall Street was at a “permanently high plateau” just before the crash of ’29.
South Sea Company, Tulip bulbs … the madness of crowds.
Why doesn’t His Spudiness short META to teach us all what a genius he is/isn’t?
I have a low opinion of most traders. Really being able to analyse a company or a market depends on deep understanding the products, the customers and what’s going on at ground level
Most analysts back in 2000 didn’t even know that the tech world was gradually shifting from Sun Sparc to Red Hat Linux. And you probably wouldn’t know unless you were hanging out with nerds at Amazon or some large merchant banks. I was casually talking about Linux to one of my neighbours around 1999 and he told me they were running a pilot at the bank he was working at, and it seemed to perform as well as Sun Sparc. Most analysts didn’t know this and were bullish about Sun Microsystems.
Lots of people writing about Wizz Air don’t understand that it is not that much of a holiday airline but more about the transport of immigrants. It’s how Romanians go home to their mum. And that’s an important distinction because flying home to mum is much less discretionary than a weekend in Paris. It’s also why they have a loyalty card and no-one else does. Because people want to fly off to Cluj-Napoca 3 or 4 times a year.
I have about 30% of my SIPP in Adobe, ServiceNow, RELX, Salesforce and Veeva Systems. They’ve all taken a beating because AI is supposedly going to replace them. Because I have over 30 years working in enterprise software. I also understand what is involved in software beyond “vibe coding” and how shonky that stuff is. No-one but complete idiots is going to replace Salesforce with some custom vibe coded shit. It doesn’t add up. And no-one is going to run important tasks on AI agents which produce questionable results. It’s like seeing breadmakers appearing and thinking Hovis are going to the wall. Only, the bread is worse than Hovis.
That doesn’t mean AI is completely useless. It has some applications. But the most likely future (and this is already happening) is that AI gets added to existing tools. Like, you can be in Photoshop and ask it to produce an object for you and it does, and you use it. And that generation is based on Adobe’s massive licensed image library, so you have no risk of your ad campaign using anything that hasn’t been cleared. LexisNexis AI can answer questions you give it against a reliable dataset of news and documents.
Once OpenAI and Anthropic go public and various VCs stop needing to hype them, the whole thing is going to go a lot more quiet.
“Really being able to analyse a company or a market depends on deep understanding the products, the customers and what’s going on at ground level”
The traders (Eurobond traders excluded) sometime read the Research Analysts reports and the Analysts sometimes talk to their colleagues in IT, or at least they did where I have worked.
That said I always got on best with the gold traders. They were generally likable well rounded people that understood the way things worked from a political and economic perspective in exactly the way Murphy doesn’t
“That doesn’t mean AI is completely useless. It has some applications. But the most likely future (and this is already happening) is that AI gets added to existing tools. Like, you can be in Photoshop and ask it to produce an object for you and it does, and you use it. And that generation is based on Adobe’s massive licensed image library, so you have no risk of your ad campaign using anything that hasn’t been cleared. LexisNexis AI can answer questions you give it against a reliable dataset of news and documents.”
The problem with that is that there’s no way such demand for AI services can actually pay for the models to be operated in a profitable manner. They are so expensive to run that the whole concept only works if it becomes a mass market ‘replace hundreds of millions of paid employees’ type thing. If it doesn’t then it never generates the extra value that is required to cover the costs of operating the models.
AI is going to be a very expensive lesson in ‘Just because you can do something doesn’t mean its economic to do it’.
“The problem with that is that there’s no way such demand for AI services can actually pay for the models to be operated in a profitable manner. They are so expensive to run that the whole concept only works if it becomes a mass market ‘replace hundreds of millions of paid employees’ type thing. If it doesn’t then it never generates the extra value that is required to cover the costs of operating the models.”
Do you know how much AI costs to run? For starters, there is no simple answer. More complex models like the latest GPT models cost a lot. Deepseek is more efficient and much cheaper.
But overall, even though it’s an expensive form of computing, it’s still cheap compared to humans. Adobe Firefly is about 0.5p/image generated. It’s not hard to find some value in that for someone that wants to do artwork. I had ChatGPT do some stock market analysis today. Biggest FTSE250 fallers in the past 5 days. I’d pay 5p to get that, and they’d make a heathy profit for it.
Indeed, to add to that you have to remember that companies aren’t averse already to spending thousands of pounds per seat on productivity software. They don’t just look at the cost of eg Adobe and say “no thanks, we will make our own in house instead”. So the economics of this is not totally new.
Generic software scales massively. Diablo IV cost over $250m to produce, with over 9000 staff involved You get it for £50 because it can be scaled for millions of users.
Same thing with business software.
No-one with any sense builds what can be bought. If possible you buy off the shelf and either live with the gap from what you want, or you add some sort of plugin to make it specific.
I did a plugin for a business to feed orders out of Shopify to another system. Not a huge thing but it costs them about £5K. More than Shopify would cost them for years.
If AI threatens anything it’s smaller software. Things that you can buy which only half a dozen customers. It might be worth building your own instead.
I think part of the AI disruption will be people doing old things in new and unexpected ways, or doing new things entirely. Much of the discussion I see about it only focuses on “can AI displace/destroy” as if it’s either going to be a direct drop-in replacement for human intervention (or existing software/hardware solutions) for a particular task, or it’s a dud that will have no impact on that sector whatsoever, but once that replacement has (or has not) been made then that system will basically work again like before. And most of the pushback to that view of the unchanged underlying system comes from people arguing that AI slop will break everything in some kind of self-ingesting doom loop that ends with vital systems breaking down after we delegated them to AI and no human has expertise to fix it, or panicking about superintelligence and “the singularity” or “Roko’s basilisk” (Effective Altruism perps are the most normal well-balanced people lol), or that hundreds of millions of jobs being lost will disrupt the economic system so radically that we’re doomed to rule by tech oligarch fascists (boooo) or going to enjoy fully automated luxury UBI communism at last (yaaay!).
I think the truth is more prosaic yet also more unpredictable. One example I think about a bit… in Africa a lot of commerce is done by WhatsApp. People who previously would have been market traders now save on stall costs by flogging their wares online. But not by Shopify or WooCommerce, in fact their web presence might be limited to Facebook posts (see later), but all selling via WhatsApp chat as if you were negotiating down the market. You can make recommendations in the conversation for eg what handbag or clothes would suit your customer best, photo the goods etc. If it’s a repeat customer you can see your previous chat history. It’s a very human way to do business, and aside from the fact you’re doing it over a phone and generally posting the goods (though collection is also possible) it looks a lot like transactions conducted thousands of years ago did.
Traditionally westerners do our online shopping on the Web via quite impersonal portals. But if chat apps had come first maybe we would have been using them more instead? For Africans one driving force is that WhatsApp and Facebook data may be covered in their phone contracts in a very different way to browsing data. But even without this distinction, youngsters in the West are increasingly using apps instead of web browsing, just like they’ve largely abandoned email. And beyond the obvious commerce apps like supermarket apps, deliveroo, Vinted, Amazon, eBay etc they’re also spending big money on TikTok livesellers (one of the reasons eBay have invested serious money in liveselling and the “personal” experience of interacting with the buyer). So we are somehow “catching up” with the way Africans do so much business.
Obvious glitch here economically is how badly this scales in terms of the seller’s time – which is why as a model it works so better in low-wage areas like Africa. But it’s also something AI agents would be well suited to. So it wouldn’t surprise me if in 10 years or so, even more commerce has moved off the Web into apps with chatting and livestreaming functions (okay, that’s a safe bet as it’s a well established trend at this point) and much of the experience is dealt with by AI (which would be new). Maybe I’ve already trained my AI agent to understand my clothes shopping budget, sizing, tastes, style, perhaps the general look I’m going for, and it talks to the selling agents to narrow down the options for me. After inspecting the goods online, it can use generative AI to show how an ensemble (possibly with items from different sellers) would look on me. Crucially I may “own” the data on my home AI in a way that makes me feel comfortable with sharing 3D photos of myself that enable it to do this, even if I wouldn’t want to share this with the seller so they can show me how I’d look using their own system.
I’m not saying this is how things will pan out. It’s just one way things might look different in future, in a more fundamental way than the reductive “will AI substitute for humans in task X”. And that these kind of changes could be popping up in all kinds of niches of the economy. Even if the overall effect doesn’t turn out to be radically transformational, it may still be totally unpredictable from our current state of knowledge. Part of the point of Schumpeterian creative destruction is we don’t really know how the new organisation is going to look, if we did we could manage our way to the analytically determined new arrangement. Instead we’re going to rely on lots of people trying things out, many of them failing, and learning from all those wins and losses.
That’s a very good comment, and a lot of valuable ideas in there. Particularly the thing of different evolution in different places. I know Timmy has mentioned how Africa largely skipped landlines. You can get different leaders in different places because of network effects and what becomes the established norm.
I’ll tell you one that is already disrupting which is people using ChatGPT instead of traditional stock screeners. You can ask more sophisticated questions to find potentials. I think we might see some disruption to AutoTrader as people use something like Gemini to just ask who has a car and you might be able to get a wider source of cars for sale than just those on AutoTrader.
But it depends on the problem. Also, cost and unreliability. I think things like Salesforce and ServiceNow are less prone to disruption for this reason.
Andrew Orlowski today in the Telegraph (if you hit the paywall, just disable JavaScript).
“Do you know how much AI costs to run?”
I’m working on the theory that if it was dirt cheap then they would have been shouting that fact from the roof tops, and showing us the books to prove it. The fact they aren’t, and are burning through hundreds of billions instead suggests to me these models are costing them an arm and leg to keep operating, and they are nowhere even close to breaking even on a cash in/cash out basis, let alone paying back all the money they’ve borrowed from all and sundry.
This is mixing up several things – there’s a big difference between training a new model in the first place (which currently there’s an arms race for, in future the rate of releases might slow down substantially as the marginal benefits of a slightly larger model reduce) and of operating a model once it is trained.
There’s also big differences based on the size of the model. DeepSeek, the Chinese entrant, was a big shock because of how useful it is despite being far smaller and cheaper both to train and to operate. There are some small models that are still pretty useful which can be deployed purely locally on a reasonably powerful laptop. It might be a bit slow on that hardware but you only need to worry about your electricity costs – you won’t be burning through subscription tokens. For some use cases, this is all that’s needed. Corporates that can afford beefy hardware stacks to serve their models locally have even more options here. In the long run, hardware is likely to get cheaper again once production capacity catches up with the increased demand, and AI costs per unit of output should trend downwards.
Are a lot of people going to lose eye-watering amounts of money? Absolutely. Is AI going to just go away because it’s “too expensive”? Absolutely zero chance. There are different types of AI, available at different costs, many of which have already been integrated as vital parts of professional workflows because they are obviously net positives on the cost-benefit scale.
Coders will use AI to help write boilerplate code and increasingly to detect bugs or vulnerabilities. Designers, illustrators and FX artists will use AI in pictures and videos. Tourists will use AI in translation. Websites will use AI to summarise user reviews. Companies will use AI analysis of customer complaints to augment their existing sentiment analysis. AI will power customer service chatbots and helplines, at least for first level support (the ones solving common queries or who redirect you to a specialist), because it’s cheaper than hiring someone from India or the Philippines. High frequency trading firms will automate trades based on AI analysis of newswire stories. AI will be used in assistive technologies like autogenerated subtitles and describing what’s visible in an image, video or live camera feed. Safety technologies in cars will use AI to automatically avoid collisions with pedestrians. This isn’t a genie that will vanish back into its bottle.
I just smell BS. It has all the hallmarks of 1999 and 2007 all over again. And both of those cost the average Joe a lot of money while those who spewed the BS walked away with all their ill gotten loot intact. I foresee the same thing happening again.
If I was Sam Altman et al I’d be looking for somewhere to retire to with no extradition treaties to anywhere. The peasants aren’t going to let those responsible for crashing the economy to walk away free a 3rd time.
It is a lot like the dot com boom. A lot of people are going to lose a lot of money. Capital has been misallocated. At the same time, the tech is real even if the timescales and expectations are off. In the end, the Internet did radically transform commerce and working patterns. We got Shein instead of Boo, Airbnb and Expedia instead of LastMinute, and it wasn’t until the 2010s that online shopping made up even 10% of UK retail sales. These days that figure is over one in four pounds spent, and we clearly haven’t hit the ceiling yet. https://www.ons.gov.uk/businessindustryandtrade/retailindustry/timeseries/j4mc/drsi
For comparison with those rates of adoption, 97% of secondary school students in the UK use AI (around 80% use it in their studies) while 85% of workers under-30s are using it. To be honest, spend any time with technically literate under-40s and you’ll quickly realise how ubiquitous this stuff is, for good or ill.
Nothing wrong with being an AI skeptic and some perfectly respectable, intelligent people are AI doomers. But I think there’s a common misunderstanding that all AI is about enormous models that only AI hucksters have the funds to create, and other gullible companies have to pay big money subscriptions for those models to be run for them at the hucksters’ massive data centres, so once the plug gets pulled on the hucksters then this whole circus stops and we’ll need to go back to doing stuff with humans instead. That’s not just wrong on the economics, it’s completely wrong on the details and nature of the technology.
It’s going to get increasingly wrong as more AI-efficient consumer hardware arrives that can run more useful models locally – you might notice this first with certain features on your future phones. As that hardware scales to the data centres then the energy costs of Big AI will fall too, which will have a substantial effect on the economics: more corporate use cases will be cost effective once the current era of subsidised tokens comes to an end.
Even if the big AI players go bust, and I’m not expecting Google or Meta to do so any time soon, their models are assets that will be bought up. There will still be paying subscribers for the product. In this sense it isn’t going to be like the dot com crash where large chunks of the Web just vanished forever once the funding ran out. The arms race to train newer, larger models might slow to glacial with investors wary of burning any more cash on them, but DeepSeek suggests it’s still possible to do something very interesting with fewer resources. Rage as much as you like about the money poured into this that could have been more valuable somewhere else, it’s a valid and righteous anger. Just don’t expect the AI itself to go away once the bubble bursts. It will have its uses, and younger people are less likely to give it up than they are to start watching linear TV, posting handwritten letters or typing an email instead of a chat message.
Its not that like the dot com boom, because the big investment splurge then was fibre optic cabling. Which we are still using today. The money that paid for it is long gone, but the cables are still in the ground and being used. The investment in AI is in chips and tech that may in fact be obsolete before it even ever gets turned on. No one is going to be running data centres on Blackwell chips in 5 years time, they’ll have been superseded by something better by then. So there are no long term assets to rescue from the wreckage of an AI crash except some big sheds, and maybe a power station or two.
“Its not that like the dot com boom, because the big investment splurge then was fibre optic cabling. Which we are still using today.”
It wasn’t just about fibre optic cabling. Far from it. It was also about hardware, storage, routers, and investments in software. I knew a business that was set up for selling spare parts and they bought about £150K of Sun Sparc and Oracle.
Lots of those businesses went to the wall, but there was some value in the hardware and software. I saw a couple of management buyouts where the business gave up on a thing, and 2 guys bought it and made it work.
“No one is going to be running data centres on Blackwell chips in 5 years time, they’ll have been superseded by something better by then.”
Yes they will. If someone goes bankrupt, there will be Blackwell chips and they’ll be bought at whatever the value of them is, unless the operational cost is so much cheaper.
Just re “walked away with all their ill gotten loot intact” – for a lot of founders, the dot com crash wiped out the vast majority of their (admittedly paper) net worth. It’s odd to lump this together with the GFC where bank bailouts resulted in “socialised losses, privatised profits”.
Someone walked away with the money spent (and lost) in the dotcom boom, it didn’t get vaporised. If some dotcom darling burned through £100m given it by the banks and then went bust that money went somewhere.
In a lot of cases the money went on nice comfy offices in upmarket parts of town, fancy $1000 Herman Miller chairs, all-singing-all-dancing coffee machines, and other fripparies attractive to geeks with $100m VC finance burning a hole in their pockets.
In short, it got spent: so it just circulated through the economy as usual. So winners were assorted supplies, losers were the venture capitalists.
Most of the money goes to funds. You have certain VC companies that invest in private tech firms and their goal is to build them up, hype them up, then dump them on idiots at IPO. The profit goes into the fund to mostly invest in other companies.
It’s funny to me that no-one can see the same people pulling the strings that did a whole lot of other bollocks in the past.
Buying a tech company when it floats is just asking to lose money. Some may eventually figure out a profitable model, but Amazon spend a decade of the share price barely moving. Snap is cheaper than in 2017. Twitter never made much money in all its years.
To be fair I think the economics where it breaks even is more like high millions or tens of millions of workers equivalent to the output produced, rather than hundreds of millions. But still, it’s bigger than people are finding realistic use cases for at present.
Depends what you mean by traders. Most market traders aren’t trading their own book. They’re executing orders they’ve been given. Why I quoted “Up (down) on anticipation, down (up) on realisation” on a recent comment thread. Usually they’re trading what the analysts want. The fucking “back room boys”. Why market traders tend to regard them as a joke. They’re too obsessed with their maths & don’t understand psychology. All market prices are OPINIONS.
Yes, analysts is the right word, but I generally think “people at Deutsche/Barclays etc”.
I buy what I have some edge on. A company I’ve worked in, products I use. Or just maybe I have some weird interest in. And when I see exaggerated falls and read the buzz, buy some.
To me, the numbers thing is broad. Doing it at the back of a fag packet level. It’s much more important to understand the business, market, regulatory risks.
I don’t just think it’s about Trump saying it. It’s also that thing BIS said about people panicking hard, worst possible case. Then as you realise other sources or routes are coming on line, chances of war continuing decline, the number gets reassessed.
I guess maybe some countries have decided it’s worth arming some people to deal with the Houthis now? Everyone had another route via Hormuz, that gets closed, maybe it’s worth spending a little to get it through Suez?
WB
I think the Saudis and Israel (If not co-ordinating) have stepped up efforts to use the Red Sea Route and recommenced the campaign against the Houthis, whose supply of weapons has most likely been disrupted by the damage to Iranian infrastructure.
I think moves are afoot to use Oman as a potential outlet (Albeit this was initially for finished goods rather than Oil but whatever the outcome of the war am guessing the Straits of Hormuz will remain a potential flashpoint and the Sultanate I am sure sees potential profit in being able to act as an alternative.
Obviously the big potential alternatives are a renewed expansion of Venezuelan capacity or even renewed pressure on Ukraine to accept a temporary ceasefire to enable Russian oil to come back on stream. Also if from at least the UK perspective Reform come to power and both put a stop to and criminalize the support of ‘Nut Zero’ that might affect prices.
Either way Murphy hasn’t got even the kernel of a clue.
No the campaign against the Houthis has not resumed in any meaningful way. Though they may be disrupted by what’s happened in Iran, they’re still stuffed full of IRGC embedded in their command structure. Analysts think they’ve got plenty of missiles and drones in storage to be a pain regardless of supply issues. Saudi Arabia doesn’t want that hornet’s nest disturbed any time soon. They don’t want another round of attacks on their infrastructure and they don’t believe that the Houthis will be easy to shift by military means after all their previous attempts failed.
The most interesting stuff happening in Yemen lately has been the Houthis largely being bystanders in the recent conflict, and the UAE and Saudi having a very serious argument about UAE’s backing of certain anti-Houthi proxy forces there with a more separatist bent. In the end, the Saudis bombed the Emiratis out of the region, so this was a disagreement of the utmost seriousness. https://www.bbc.com/news/articles/c8xdxz48l7yo
This is despite the fact that UAE and Saudi both oppose the Houthis in principle, and both countries were sufficiently angered by the Iranian bombardment that they sent their own air forces to launch reprisal bombings of Iran (not as part of the Israel-US coalition and kept secret at the time, though press briefings have now occurred so we know it happened, as had already been widely speculated). In practice, Saudi has already made an accommodation with the Houthis as part of its rapprochement with Iran a few years ago. The UAE had been increasingly active but its campaign was about pitching its own stake of influence in Yemen as a whole, rather than specifically anti-Iranian or anti-Houthi.
Anyone who thinks of the Middle East as a simple Sunni vs Shia Cold War, with Saudi as the big boss of the Sunnis, needs add a bit more complexity to the picture. There are quite separate Sunni axes organised around Turkey and Qatar (who largely are aligned due to Muslim Brotherhood influence), Saudi Arabia (very anti-Brotherhood, but also had a big rapprochement with Qatar a few years ago following their boycott) and its key security partner Pakistan (which is becoming more active in the Middle East), while Egypt, Jordan and the UAE pursue their own interests somewhat independently. Places like Syria, Libya (where Turkey backed the opposite side to Egypt and UAE), Yemen and Sudan are where these various axes end up fighting it out
Oman is a very special case as they are Ibadi rather than Sunni or Shia (the only country where this third school of Islam is the majority) and have maintained warm relations with both the Iranians and their Sunni neighbours. At the moment they’re feeling a bit miffed as their government believes the USA was manipulating them to act as mediators for the previous nuclear negotiations while planning to bomb Iran all along. Nevertheless, they’re not blind to the fact that Hormuz gaining a reputation for instability gives them economic opportunities to present alternative transit routes. There are factions in Iran who would like Oman to agree to a carve-up of access rights through the strait, but I don’t think the Omanis will bite on the offer – they’re more susceptible to outside pressure than Iran is, even if they’re feeling betrayed by their Western partners at present. Of course they’re not the only ones feeling betrayed and so we can expect to see countries bringing in more security partners to augment, though likely not replace, the US security umbrella – certainly Pakistan, Turkey and China are looking to increase their role in the region, Israel hoped to but only the UAE has been receptive to their aid. And the Ukrainians (and French, Russians, and everyone else) see the arms sale possibilities.
Thanks Anon
I appreciate that level of insight – I had heard there were sporadic strikes against Houthi emplacements and targets but agree these don’t appear to have reached anywhere near the level of attacks on Lebanon or Iran, and am guessing the Houthis themselves are content (As they have done since the conflagration began!!) to bide their time!
Indeed, Israel are too bogged down in Lebanon right now to do any serious business in Yemen. IDF is more likely to have another go in Gaza than Yemen – to put pressure on the disarmament talks and try to squeeze out a few more “facts on the ground” before (or in case) those international peacekeepers finally show up.
Of course Oz has been so enlightened as to shut down most of its oil refineries. And Labor has sternly discouraged talk of drilling for more oil in Western Australia and Queensland.
The noble and decent inhabitants of New South Wales and Victoria have quite rightly cracked down on this hideous drilling for fossil fuels. They import from overseas, and also feel that we should sell our oil to them at reduced prices. Instead of screwing the foreigners for everything we can get.
Do I remember rightly that South Oz shut The Leigh Creek open cast mine and the associated Port Augusta power station?
Idiots, morons, cretins. Cretins, morons, idiots.
They blew up the Port Augusta power station to make sure that if the voters changed their minds, it couldn’t be started up again.
You’re really too polite when you call them idiots, morons and cretins!!
Everyone had another route via Hormuz, that gets closed, maybe it’s worth spending a little to get it through Suez?
Everyone had another route to where via Hormuz? The Persian Gulf is a dead end. Once you’re in, the only way out is the way you got in – through the Strait of Hormuz. From there if you want to go west, the options are Suez or the long way via the Cape. For the east, its via Malacca Strait and Singapore Strait unless you are heading for Australia.
Iran has considered itself at war with America for 50 years, and their expectations for the inevitable cataclysmic Allahdammerung with the Great Satan was based on two assumptions:
1) that they could effectively weaponise the Strait to cause a 1970’s style energy crunch and stock market crash in the United States
2) that they could sink at least one of the infidel’s carriers, using fast boats, drones and missile swarms, to inflict a 9/11 at sea on Satan senior
Neither outcome has come to pass. Hormuz remains a vital global chokepoint and Asia is suffering badly from the disruption. But the US is now a major oil and gas exporter, they’re no longer dependent on the Middle East like in 1974. Americans cottoned on to the importance of sovereign supply before energy starved Europe did.
American military technology means their satellites, planes, ships and missiles can see you and hit you without warning, anywhere, at any time, from hundreds of miles away. There were no naval battles, the Yanks just slaughtered the Iranian navy in its own ports.
Now, a sensible Iranian person might consider this, and the mounting catastrophic losses to Iran from not being able to produce and export oil normally, and come to an agreement with Uncle Satan. Allegedly, that’s what is happening, but the public tone of Iran remains delusionally defiant so who knows.
I don’t think Iran is negotiating in good faith, but it’s possible neither is Trump. Give war a chance?
I don’t just think it’s about Trump saying it. It’s also that thing BIS said about people panicking hard, worst possible case.
Trump’s market manipulations (to counter Iran’s manipulations) have been spot on. He blunted the worst of the initial price shock (to Americans) in a fissiparous market situation where sentiment could turn very bearish, very quickly.
I have no idea what he’s doing with the current “peace talks”, which seem to lack credibility on all sides, but let’s see what happens. Multiple games are being played at the same time by the US govt, Israel, Iran, Pakistan etc. This is a new Great Game, a complex and contested geopolitical situation the like we haven’t seen since the Cold War, and the Western media can only report it in terms of Orange Man Bad and will this help Democrats in the mid terms. Like thinking the most important part of the Cuban Missile Crisis was JFK’s poll numbers.
But yarp, the market reacts quite quickly to Uncertainties to price in the prospect of future uncertainties along the same lines too. We saw this with Trump’s tariffs, which all the experts assured us would lead to starvation and death, and it just led to some currency readjustments and more revenue for the federal government. First tariff announcements led to briefly dramatic stock market movements, but by the 10th time the markets felt they’d priced in the Trump factor. At the end of the day, while he’s the most powerful elected person on the planet, he’s just a president. Global markets are a caravan that must and does move on, regardless of any barking.
Which economist was it who did make a fortune by backing his theories with cash? Was it Ricardo?
Keynes made a pile for himself and for King’s College.
Murphy’s investments have been so successful that he is appealing for donations on his blog.
Maybe ‘The politics of care’ will break open the piggy bank?
For years now, commenters on Murphy’s blog have suggested that he use his extraordinary financial insights to make vast profits, so that he might break free from the time-consuming and humiliating grind of appealing for funds from naive charities and the like.
To date he seems to have resisted the opportunity. Perhaps he is just trying to give other market participants a chance?…
Interesting. I hadn’t known that.
But having done a bit of reading, it seems his successful investments were a result of ignoring his macroeconomic theories and doing some detailed microeconomic stock-picking.
Ricardo was a stockjobber first (when that meant gilts) then used the money to fund writing about economics.
Ah, thank you, didn’t realise it was that way round.
By “stockjobber” I presume you mean he was someone who “made” the market. Bought from prospective sellers, sold to prospective buyers. So yes, he would have managed his pricing & thus his “book” to make a profit. But I don’t understand “when that meant gilts”. As far as I was aware, at the time, jobbers were already making markets in shares & loan stocks etc. It’s a natural development in any market. Without jobbers, each prospective buyer would have to find all prospective sellers to check offers & vica versa for bids
Most of the market was govt bonds. After South Sea there weren’t all that many limited/joint stock companies until the Victorian era.
And yes, I know what a jobber is and that is what I mean, not broker, but jobber.
Somewhat tangential, but talking of economic advisers…
Mandelson recommended someone to be Starmer’s economic adviser, so that he could bypass the Treasury and Reeves’ spads:
”I do have an idea for economic adviser. Older, sage, nice, discreet. [REDACTED] … He was director of university’s think tank. Now a fellow at [REDACTED]. He is friend”
Any guesses who?
above quote via Guido:
https://order-order.com/2026/06/01/mandelson-and-no10-staff-scheming-to-hire-economic-adviser-to-mentor-starmer/
Mandelson recommended someone to be Starmer’s economic adviser,
It’s these two, but currently he’s still on shapes and colours.
I know Murphy likes to predict doom and disaster, which can only be solved by us all doing exactly what he says. But presumably the Hormuz thing is only going to be a fairly temporary problem.
There are already two pipelines going through Saudi, from the Gulf to ports on its Western, Red Sea coast. One of them built by Saudi, the other by Iraq (but the Saudis took it off them in compensation after the Kuwait war).
Capacity about 5 million barrels per day, compared to 20 through Hormuz in normal times, so yes Hormuz is more, but not orders of magnitude more.
Oman has lots of coast East of Hormuz. And yes, ports on the Arabian Sea are probably not as protected from the weather as the Gulf ones, but it’s hardly Aberdeen, is it.
The UAE has coast East of Hormuz, and a pipeline taking oil there from their Gulf fields. Only 1.5m bpd, but a couple of weeks ago they announced plans for a new one, which they claim is going to be operational next year (can HS2 borrow their project managers when they’re done?).
Yes, building more or increasing capacity would cost money, and no doubt there are problems with pipelines as well (security must be a constant cost these days). But it’s been done already and they’re mostly working, so it can be done again (and out there they don’t have all the environmental laws, planning systems and HR costs that prevent anything being built here).
And it’s hardly new, high risk, cutting edge technology; one of the Saudi ones was built in the ‘80s, the other in the 1950s. Iraq even built one all the way to Haifa on the Mediterranean in the 1930s, although of course that hasn’t operated for some time. So it’s hardly difficult cutting-edge technology.
So presumably these problems are probably going to be solved, or at least largely mitigated, fairly quickly. And that’s even if we don’t overthrow our eco-worshipping governments and start fracking.
Or am I missing something?
The Saudi pipeline to the Red Sea was already in use. It’s now running at full capacity, but the amount of “extra” coming out is only the difference between what was in use before and what’s in use now. Cranking it up to full power also brings maintenance risks.
The UAE pipeline can be done quickly because it’s something that they’ve had on paper for years, just never built because it wasn’t needed. That they’re now willing to commit to the infrastructure means that they don’t believe the Hormuz problem is going away in the next couple of years. Building the pipeline to a higher capacity than originally planned isn’t that difficult, but IDK how much spare capacity they’ve got at Farujah and how quickly/easily they can expand; they recently pulled out of OPEC, which I doubt they would have done if they weren’t ready, but… there’s a difference between a capacity expansion that makes a difference to their own revenues and the capacity expansion that would make a difference to the world’s supply. Farujah is also close enough to Iran that Tehran could still make things spicy.
Piping trapped oil from the North end of the Gulf to somewhere safe-ish is going to be the thick end of a thousand miles — options are basically Oman or Israel-via-Jordan — plus the negotiations involved in crossing borders, so it isn’t going to be quick.
Aye. But my point was more that, if they could build one in the 1950s, and one in the 1980s that’s still operational, they ought to be able to build a new one now, and with a higher capacity.
And that’s purely through Saudi territory to the Red Sea, so no border problems.
The UAE pipeline can be done quickly because it’s something that they’ve had on paper for years, just never built because it wasn’t needed. That they’re now willing to commit to the infrastructure means that they don’t believe the Hormuz problem is going away in the next couple of years.
Not necessarily. The ability of Iran to (attempt to) close the straits isn’t new, and isn’t going away. It’s a perpetual threat, and building a pipeline is a counter to the threat. Even if the straits reopened next week and there was a new ‘moderate’ Iranian government, the threat would remain.