Losing 5% of global crude supply due to the Ukraine war may have a significant impact on the global economy as energy demand is inelastic, potentially leading to a tripling in oil prices and a broadly global energy-induced depression.
The podcast discusses how Russia's decision to flood the oil market during the pandemic is affecting the global economy. It also explores the country's strategy to maintain the value of diamonds by limiting their supply.
Potential Russian oil cuts of 3-5 million barrels a day may cause a decrease in supply, leading to a rise in oil prices up to $180 per barrel, while Saudi Arabian production is set to increase from 10 to 11 million barrels a day.
The increase in supply and decrease in demand for oil has led to a decrease in prices. The cyclical nature of supply and demand highlights the effect of increased production on lowering prices and the consequences of rate increases on the economy.
Russia uses its proxies, such as Wagner Group, to advance its interests in Syria while denying it's a function of the state, which was demonstrated in a fight between US Special Forces and Wagner Group.
If the United States were to stop drilling for oil, their current rate of production amounting to 12 million barrels per day would drop by 40% in the first year, 25% in the second and 20% in the third. Furthermore, if wind installations increased by five times their current amount, it still wouldn't be enough to power a heat wave if the wind isn't blowing.