One Strait, a thousand disruptions

As the Houthis now join the fray, and crude pushes back above $110, we’ll see more headlines capturing the ripples across every part of our day, starting with that…

• ⏰ Morning alarm

Some workers might now smash the snooze button, with Pakistan and the Philippines moving to a four-day week for bureaucrats — Sri Lanka has gone a step further and declared every Wednesday a full public holiday! It’s all an effort to curb fuel use.

Meanwhile, many folks in India need to wake up earlier to pack their own lunch now that several tech giants are winding down their staff cafeterias amid a shortage of LPG (popular cooking fuel).

Anyway, it’s time for your…

• 🚗 Work commute

While many like Vietnam and Thailand are now pushing work-from-home, and parents in Pakistan will need it amid mandatory school closures, commuters elsewhere have faced big gas station queues in parts of China (Jiangsu/Suzhou), Indonesia (Yogyakarta), and beyond — it’s a function of panic-buying rather than actual shortages at this stage.

Meanwhile, Beijing is quietly and selectively easing its export ban on refined fuels — the idea was to stabilise prices and curb local discontent, but it was also a curve-ball for neighbours like the Philippines that rely on China for half their refined fuels. We say ‘selectively’ because while Manila is getting China’s fuel again, others like Australia are not.

Anyway, you finally make it into…

• 🏢 The office

As you arrive downtown, you might start to notice some changes: in Bangkok, for example, several buildings are curbing AC and even elevator use. So by the time you hike up 15 floors and stagger to your prime cubicle, you will be schvitzing.

And of course, folks working outside will feel it too, whether it’s Manila’s iconic jeepney drivers seeing their take-home incomes halve amid fewer trips and higher costs, or the million delivery workers on India‘s dominant Swiggy and Zomato platforms seeing their orders halve amid the LPG shortage hitting restaurants.

Anyway, you’ve fired off an email and consulted a stakeholder, so it must be time for…

• 🍲 Lunch

Bakeries in Lagos are having to pour extra diesel into their generators amid worsening blackouts — the city’s grid problems pre-date Iran, but this Hormuz squeeze is exacerbating it all, and Nigeria’s food inflation has now spiked as a result.

But it’s not just bakers in Lagos. The fertiliser squeeze we foreshadowed weeks ago is now prompting farmers to delay or reduce usage, whether it’s corn belt growers in the US, maize farmers in East Africa, or Bangladeshi rice farmers entering Boro (growing) season. So we’re now locking lower yields and higher prices into the year ahead.

Anyway, if you’re in Kuwait, your new six-hour workday now means you can head home a little after lunch, but…

• 🌃 Evening plans

If you’re in Mauritius, don’t expect to gaze upon any fountains or decorative lights on your commute home, nor even enjoy a dip in your heated pool back home — these are now officially non-essential activities banned from the electricity grid.

But if you’re in Cairo and plan to grab dinner with friends instead, Egypt has introduced a nationwide curfew for all restaurants, cafes and malls — it’s 9pm on weeknights, which only sounds late if you’ve never been to Egypt, where folks typically start dinner at 9pm.

Anyway, if all these rules are getting on your nerves, buying a ticket elsewhere will get trickier, too: several markets have now seen jet fuel prices double, nudging airlines from Scandinavia to New Zealand to start raising fares and/or cutting routes. Even in the US, United has now shaved 5% off its Q2 and Q3 capacity, the first major US carrier to do so.

And… that’s your day, amid an oil crisis that’s barely shaving 10% off global supply!

Intrigue’s Take

Notice any patterns in our little whip-around-the-world above? The biggest we see is income: it’s the developing world now getting hit hardest and earliest, as wealthier nations (where most Intriguers live) can afford to pay a premium to guarantee supply.

We semi-saw that play out during the big 2022 LNG crisis, when a dozen tankers changed course mid-voyage from Asia to Europe after Putin’s invasion — higher spot prices more than made up for any contract-breakage fees. Keep an eye out for similar reports this time (though LNG prices are still barely a third of 2022 peaks).

The other thing that strikes us is all the Covid parallels: work-from-home, restaurant curfews, school closures, grounded flights. In both cases, it’s about authorities deliberately destroying demand to slow a contagion, but this time the enemy is an oil shortage rather than a pathogen.

There are some similarities in the inflation risk, too, but whereas Covid’s inflation came via supply shocks meeting government-stimulated demand, this Iran inflation will not just be classic cost-push, but also a function of price-inelasticity: with a lot of oil use non-optional (at least short-term), those higher prices just mean less disposable income to buy other stuff, curbing broader growth. That’s where the spectre of stagflation comes in.

And eventually, perhaps like Covid, the daily disruption will be less some distant problem we ponder via our screens, and more something rattling those martini glasses at home.