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“Airlines left with fewer flight routes as global conflict zones expand.
“Airlines are facing increased operational and financial burdens due to the rise in global conflict zones, including threats from missiles and airspace closures. Airspace closures around Russia, Ukraine, the Middle East, and parts of Africa are forcing airlines into expensive, last-minute re-routings.”
“Several major international pipelines are facing geopolitical risks in 2025, threatening the stability of global energy supplies and prices.
“Pipelines like the CPC and Druzhba are particularly vulnerable due to political tensions and potential disruptions that could affect millions of barrels of oil per day.”
https://oilprice.com/Energy/Energy-General/Pipelines-That-Could-Spark-the-Next-Price-Shock.html
“Global Bond Auctions Show Weaker Trend as Fiscal Pressures Grow.
“A spate of poorly-received longer-dated sovereign bond auctions worldwide has raised questions about the willingness of investors to fund the spending plans of governments from the US to Japan.”
“The dollar just had its weakest start to a year on record. Why it might be doomed to fall even further.
“…the dollar has seen a stunning unwind since the start of the year, as President Trump’s vision to reorder global trade via tariffs has inspired investors — both foreign and domestic — to fundamentally rethink the role that the buck plays in their portfolios.”
“A world with no safe assets.
“This column explores a hypothetical scenario in which the world is deprived of the dollar as its global safe asset. In such a world, interest rates would be higher and more volatile. Liquidity would be scarcer.”
https://cepr.org/voxeu/columns/world-no-safe-assets
“Global slowdown in banking regulation…
“After two decades, are the lessons of that crisis at risk of being forgotten? The United States, European Union and United Kingdom are currently delaying the implementation of new banking regulations, each fearing unfair competition from the others.”
“Loan defaults are looking worse below the surface…
“Creditors’ willingness to work with troubled borrowers over the past few years seems to have been influenced by the threat of companies stripping assets from lenders’ collateral pool, alongside rate cut expectations. Such generosity is likely to fade as market participants come to terms with life in a new interest rate regime.”
https://www.ft.com/content/993053ef-f32a-419e-b9fd-97549a457668
“Trade war bigger challenge for EM central banks than COVID-19: IMF.
“The trade war fed by U.S. President Donald Trump presents an even tougher challenge for emerging market policymakers than the COVID-19 crisis five years ago, a top official at the International Monetary Fund (IMF) has warned.”
“Trump is increasingly hostile to China. He’s playing with fire…
“Trump and his administration in recent weeks have grown increasingly hostile toward China, accusing the country of breaking the promises it made in mid-May. China has similarly said the United States has failed to live up to its obligations under the agreement.”
https://edition.cnn.com/2025/06/05/business/trump-china-economy-tariffs-trade-war
“US auto suppliers say immediate action needed on China rare earths restrictions.
“”The situation remains unresolved and the level of concern remains very high,” the group said. “Immediate and decisive action is needed to prevent widespread disruption and economic fallout across the vehicle supplier sector.””
“Two Chinese scientists have been arrested for smuggling a toxic fungus that can be used as an “agroterrorism weapon” into the United States…
“The fungus can infect crops like wheat, barley and rice with “head blight”, and subsequently cause vomiting, liver damage and reproductive defects in humans and livestock.”
“Permian or Bust? U.S. Oil Growth Has a One-Basin Problem.
“Permian dominates U.S. oil growth, contributing over 6 million barrels per day and nearly half of total U.S. output, but its growth is increasingly seen as unsustainable. The Permian’s outlook depends on price and demand, with future growth likely tied to higher oil prices…”
“US reactor builders need bigger fuel deals to avoid supply crunch.
“U.S. nuclear development activity has soared as surging power demand from AI accelerates the need for low carbon power generation. SMRs offer smaller capacities and land requirements than conventional large-scale nuclear plants, as well as longer operating cycles and increased efficiencies.”
“Falling sales underscore China’s property sector woes…
“Cumulative sales of China’s top 100 property developers from January to May fell 7.1% year-on-year to 1.3 trillion yuan ($180.4 billion), accelerating from the 6.7% drop for the January-to-April period, according to figures published Saturday by China Real Estate Information Corp.”
https://asia.nikkei.com/Spotlight/Caixin/Falling-sales-underscore-China-s-property-sector-woes
“Korea’s debt-fuelled property boom stirs echoes of Japan’s lost decades.
“South Korea’s household and corporate debt has ballooned to more than twice the size of its economy, reaching levels last seen in Japan on the eve of its 1990s asset bubble collapse, the Bank of Korea has warned.”
https://www.chosun.com/english/national-en/2025/06/06/PM4BGMF5CNEWXLUG7GMJLXEQ7M/
“Rate cut firms on Australia sliding into per capita recession…
“Rabobank senior strategist Ben Picton said the RBA will likely decide on back-to-back rate cuts when assessing economic conditions and dwindling household consumption. “You can’t polish this one, it was a poor growth figure,” Mr Picton told Sky News Business Now.”
“Canada’s debt crisis explodes: Households near breaking point as missed payments surge.
“Canadians are slipping deeper into financial trouble, and the numbers tell a sobering story. Turns out more Canadians are missing loan repayments at a much faster rate than taking on new debt — a clear sign that many are running out of financial runway as many struggle to pay bills.”
“‘Stress crisis’ in UK as 5m struggle with financial, health and housing insecurity.
“More than 5 million UK adults are experiencing a triple whammy of financial, health and housing insecurity as British households hit levels of “multi-stress” not seen since the global economic crash well over a decade ago, research shows.”
https://www.theguardian.com/society/2025/jun/06/stress-crisis-uk-financial-health-housing-insecurity
“Chaos in Paris: What really sparked France’s riots…
“France has long wrestled with its issues regarding identity integration and inequality. On top of all this, there was the symbolic aspect; many non-French flags were waved during the national sporting celebration, and the fact that such flags appeared on national monuments only sharpened this debate.”
https://euroweeklynews.com/2025/06/05/chaos-in-paris-what-really-sparked-frances-riots/
“European Central Bank Cuts Rates as Trade War Weighs on the Economy.
“The European Central Bank cut interest rates on Thursday to their lowest level in two and a half years, as uncertainty caused by President Trump’s trade war is expected to slow Europe’s economic recovery and reduce inflation.”
https://www.nytimes.com/2025/06/05/business/european-central-bank-interest-rates-economy.html
“Trade tensions simmer under surface of cordial White House meeting between Trump and Merz…
“Mr Trump described Mr Merz as a good representative of Germany and also “difficult,” which he suggested was a compliment. He said US troops would remain in Germany and said it was positive that Berlin was spending more money on defence.”
“Slovak parliament backed anti-Russian sanctions stance – by accident.
“A small number of Slovak MPs approved a resolution obliging the government to oppose anti-Russian sanctions, which only passed because the opposition mistakenly failed to present themselves for the vote.”
“Russia wants to deploy 10,000 troops in Moldovan breakaway region, PM warns…
“Moldova’s Prime Minister Dorin Recean told the Financial Times Russia was meddling in the country’s upcoming parliamentary election in September, in the hope that a more friendly future government would allow it to deploy more soldiers.”
https://www.ft.com/content/c5a1faba-957c-4d5f-ac40-d126b643f07e
“UK to station military officials in Finland as Russian troops mass on the border.
“Britain is to send military officials to Finland to support the country as it faces a build-up of Russian troops on its eastern border. A team of UK military liaison officers will join the development of the Nato alliance’s Forward Land Forces (FLF) in Finland.”
“Russia mounts deadly barrage on Kyiv after vowing revenge for Ukraine attack on bomber fleet.
“Russia mounted an intense and sustained barrage of Kyiv overnight, with missiles and drones targeting the Ukrainian capital where there was a succession of large explosions, Reuters reporters in the city said.”
“Pakistan Says India Moves Boost Nuclear Risk in Future Conflict.
“A senior Pakistani official said India has lowered the threshold for future military action between the two arch-rivals, adding that India’s use of a nuclear-capable missile during the latest conflict has made the situation more precarious.”
“Could US and Israel Destroy Iran’s Nuke Program? Yep, Here’s How.
“Despite hopeful signals from President Donald Trump’s administration about a potential nuclear deal with Iran, the fundamentals don’t look good… Israel, meanwhile, is sending blatant signals that it is ready and enthusiastic to launch strikes at Tehran’s nuclear facilities now.”
“Rubio imposes sanctions on four ICC judges for ‘targeting’ US and Israel.
“The United States is placing sanctions on four judges from the international criminal court (ICC) for what it has called its “illegitimate actions” targeting the United States and Israel… The decision to move forward with the sanctions will escalate Trump’s feud with the court and other international organisations…”
https://www.theguardian.com/us-news/2025/jun/05/marco-rubio-sanctions-icc-judges-israel-gaza
“Massive explosions reported in southern Beirut following Israeli airstrikes…
“The strikes were the first to hit the capital’s outskirts in more than a month and represent the fourth such operation since a U.S.-brokered ceasefire agreement was signed on November 27, 2024, following a major conflict between Israel and Hezbollah.”
“Netanyahu confirms Israel arming clans opposed to Hamas in Gaza…
“Several Israeli politicians have accused Netanyahu of endangering Israeli security. “What’s wrong with this?” Netanyahu says in a short video he’s tweeted. “It only saves the lives of Israeli solders”, he continues – “and publicising it only helps Hamas”.”
https://www.bbc.co.uk/news/articles/cwyn2m9yk0vo
“Surging jihadist violence in Sahel fuels fears unrest may spread…
“The three Sahel states’ military juntas, who had pledged during the coups that brought them to power to make security a priority, are struggling to contain the advance of jihadists, who are threatening more than ever neighbouring countries on the west African coast.”
“Former Bolivian President accused of ‘terrorism’ over road blockades.
“Former Bolivian President Evo Morales was accused of “terrorism” on Thursday for allegedly telling his supporters to obstruct the flow of supplies entering La Paz as Morales seeks to circumvent a ban on running for a fourth term amid harsh criticism of current leader Luis Arce.”
“Colombia: unrest hits banana exports.
“The Magdalena and La Guajira Banana Growers Association (Asbama) has warned that roadblocks in the municipality of Zona Bananera, one of Colombia’s biggest banana producing regions, has paralysed exports, generating substantial losses and jeopardising thousands of jobs in the area.”
https://www.fruitnet.com/eurofruit/colombia-unrest-hits-banana-exports/267154.article
“Cuba Issues Urgent Warning: Intensified US Pressure Could Lead To A Catastrophic Migration Surge And Economic Collapse…
“Cuba is currently grappling with its largest wave of emigration since the 1959 communist revolution. Economic hardships, combined with the aftermath of rare and widespread mass protests in 2021, have contributed to this unprecedented outflow.”
“Trump’s travel ban triggers fear and uncertainty in affected countries.
“The latest ban is expected to lead to chaos and disruption in communities already facing precarious circumstances, including Haiti, Cuba and Venezuela… The Trump administration cited visa overstays as justification for imposing the ban on multiple countries.”
https://www.washingtonpost.com/world/2025/06/05/trump-travel-ban-afghanistan-venezuela-reaction/
“Collapse Of Forest Eco-Systems Could Destabilise Economies, Study Finds.
“The study by the International Union of Forest Research Organizations (IUFRO) …warns many forests are being pushed to the brink of collapse, which could send ripple effects across the globe, destabilising societies and economies, and it adds they simply cannot be ‘put back together again’ afterwards.”
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You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
Mostly an “everybody’s getting poorer” theme today but all wealth is ultimately energy so here is another long oil discussion:
There has been a lot made of OPEC+ increasing quotas through July, in part to allow Saudi to punish overproducers, but I think a lot of this is really posturing to increase pressure on top of the price drop to get US light tight oil producers to cut back their drilling and completion activity.
Kazakhstan has been exceeding quota the most this year. About 60 to 70% of its production comes from projects owned and operated by western IOCs and there is no way of artificially limiting it. In January Chevron started the Future Growth Project at Tengiz, which adds about 250,000 barrels per day to overall well capacity, however the first limit is likely the processing plant capacity, which would only allow a smaller increase. Tengiz had a reserve to production ratio of about six years by Chevron’s 2024 SEC reports, and this is probably now lower, so it’s likely there will be a short plateau for FGP and a fairly rapid decline for the other Tengiz production (the other major project, Kashagan, is also declining with, like Tengiz, very few recent discoveries or upward revisions). Comparing EIA and OPEC data it looks like the new crude supply, which is counted in the quota, has displaced condensate, which isn’t, possibly because the reservoirs use gas injection for pressure support. Therefore while the quota exceedance is large the hydrocarbon added to the market is much less.
However the new Kazakhstan quotas are not much of increase so unless there is decline or voluntary cut backs in the smaller projects it will still be in excess at least through Summer. Also to consider is that Its production is quite noisy because of planned or unplanned shutdowns at its two big projects and summer will be the maintenance season.
Russia has hardly exceeded its quota and to meet the new levels would need to add 250,000, which it may not want, or be able, to do at current price levels given its geology, sanctions and sabotage issues.
Iraq has consistently exceeded its quota but has been steadily declining and in April was not much above; without adding output it will be 100,000 below the raised numbers by July (it has trouble with water injection capacity even if the oil wells are available).
Congo, Equatorial Guinea and Nigeria are below quota and declining. UAE, Kuwait and Algeria have slightly overproduced but the new quotas are well above their recent production and I think only UAE will be able to reach its limit. Malaysia, Azerbaijan, Brunei, Bahrain, Sudan and South Sudan are all producing below current quota and declining. Mexico joined OPEC+ only on condition its production, which was declining at the time but then rose, was not limited, so I don’t really know why it is a member. In any case it is now declining again. The worst offender in relative terms (25%) has been Gabon, the majority here is owned by Shell, Perenco and TotalEnergies so can’t be limited, in any case it is a minor player.
Saudi has been slightly overproducing and with the new quotas it would be able to add about 500,000 barrels per day by July. Overall there are about 650,000 extra for countries that have some capacity, but if Kazakhstan cut back to be on quota this falls to below 500,000, and given the continuing decline in some of the smaller countries it could be less than half that by year’s end.
Also relevant is that reported OPEC+ operating oil rigs (without ex USSR states and Iran) have dropped from a post COVID peak of around 380 in January 2024 to 300, and at current decline will hit the July 2020 low by August 2026.
Also here is the absolute best explanation of what makes Trump tick that I have seen:
https://www.youtube.com/watch?v=uczpVZmROVA
“There has been a lot made of OPEC+ increasing quotas through July, in part to allow Saudi to punish overproducers, but I think a lot of this is really posturing to increase pressure on top of the price drop to get US light tight oil producers to cut back their drilling and completion activity.”
If so, it won’t work short of the American state losing its ability to support that industry. There’s a lot of chatter about “state capitalism” with respect to China but the best example of that has been the US for most of its independent history. Russia and China need “state owned enterprises” because their capitalist classes are far less robust than ours. The US and to a lesser extent the EU can (for now) indirectly manage their economies while keeping strategic sectors in “private” hands. Ain’t no thang, as the kids like to say.
Jupiviv, here in the UK we’ve flogged off most of our state assets to private equity. You know who’ll be picking up the tab when it all goes wrong… 🙄
“Concerns Thames Water may need government bailout as bidder withdraws.”
https://www.independent.co.uk/bulletin/news/thames-water-kkr-nationalisation-b2762519.html
George, thank you. As someone whose first introduction to our “Limits to Growth” predicament came via the peak oil route, I’ve always been particularly fascinated by the oil story.
As I understand it, Russia was very unhappy with the OPEC+ production hike (and with Saudi in particular) because it did not feel the demand was there to soak it up and it fears lower oil prices. As far as Saudi’s intentions towards the shale industry go, this article suggests, FWIW, that for the time being at least, they are minded to co-operate with the US:
“…according to a senior energy source who works closely with the U.S. Presidential Administration, Washington believes the Saudis will take a modulated approach to further oil production increases, in tandem with the U.S… these conversations were part of the dialogue that U.S. officials had with their Saudi counterparts during Trump’s visit to Saudi Arabia on 13 May to sign a broad-based economic agreement between the two countries.”
https://oilprice.com/Energy/Crude-Oil/Is-A-New-Oil-Price-War-Between-The-West-And-OPEC-About-To-Breakout.html
Re Trump, for anyone who hasn’t seen it, I recommend checking out Matt Friend’s spot on impersonation:
https://www.youtube.com/watch?v=2HFkePv4CiM
These symptoms of accelerating industrial collapse give me great pleasure and HOPE.
The more They try to save and fix it the more it accelerates.
Yes!!! I’m with you. 💯 👍🏼 💥
I am torn – weary of the damage we inflict on the planet and each other, but don’t want my loved ones plunged into the hell of a civilisational collapse.
Hello Pan
Just a quick note on an overlooked aspect of declining oil production. Kaplan already refers to this, citing Iraq as an example, but it is happening in many places, not least in the Permian Basin.
Oil and Water – The Invisible Ratio
The public debate about oil rarely touches on water. Yet every barrel of crude oil is only possible thanks to a multitude of barrels of water. Without water, there is no pressure; without pressure, there is no yield. The relationship between oil and water is therefore not only physical, but also strategic – and problematic.
1. From sweet spots to water wells
In the early days of oil extraction, the oil flowed upwards naturally – an EROI of 100:1 was not uncommon. But as the fields aged, the natural reservoir pressure dropped. To extract the oil, water (or gas) now has to be injected. In fields such as Ghawar (Saudi Arabia), Burgan (Kuwait) and Rumaila (Iraq), 90% of the fluid coming out of the well is now sometimes water and only 10% oil. The so-called water cut is therefore the silent indicator of depletion.
2. Water injection as an addictive habit
The large-scale use of water injection extends the life of fields, but creates a paradox: you need more and more water to extract less and less oil. Some fields already consume 5 to 10 barrels of water per barrel of oil. That water has to be extracted, purified, pumped and injected – an energy-intensive process that further erodes the EROI.
3. Competition between energy and hydrology
In regions with water scarcity – the Middle East, Central Asia, North Africa – water injection is at odds with drinking water and agriculture. The oil industry is literally competing with its population for water. In Iraq, water now comes through expensive pipelines from Iran or from drainage channels of the Tigris.
4. Water management as the Achilles heel
Without good infrastructure for water injection, production stagnates. We are seeing this now in Iraq and Kazakhstan, where technical undercapacity in water injection is a direct constraint on oil production. It is not oil wells that are running dry, but water pumps that are failing.
5. The forgotten brother of EROI: the OWR – Oil-Water Ratio
Perhaps, in addition to EROI (Energy Returned on Energy Invested), we should introduce a new measure: the OWR – how much water do you need per barrel of oil? In the long term, this ratio will determine the sustainability of an oil economy just as much as energy efficiency.
I’m always so appreciative ot these recaps Zip. Thank you!
Zip, yes indeed, thank you for that glimpse into this lesser known corner of the oil industry – water-injecting oil fields = yet another of Homo Saps’ crazily convoluted and obviously unsustainable solutions to self-generated problems.
https://san.com/cc/texas-explores-treating-oilfield-wastewater-amid-growing-water-shortage/
8 billion idiots don’t know what’s the most valuable thing on this rock, potable water, because they are too busy counting their fiat currency or what other material good they value.
Everyday it’s proven, “You can’t fix stupid.”
If one is not a U.S. citizen, don’t come to the U.S.
https://www.mediaite.com/politics/steve-bannon-straight-up-calls-for-trump-to-suspend-the-writ-of-habeas-corpus-following-latest-court-rulings/
When they come for everyone else, I say, they deserve it. 😉
Trump Travel Ban Unnecessary After Rest of World Shows Zero Interest in Coming to Sh*thole Country. – Andy Borowitz