Commerzbank economists Jörg Krämer and Bernd Weidensteiner argue that despite a sharper fall in global oil production than during the 1970s crises, advanced economies should suffer less this time. They highlight smaller price increases, lower oil intensity, and strategic reserves as key buffers, but warn that supply chain disruptions and prolonged damage to Gulf energy infrastructure could still significantly hurt growth.

Historic supply hit but softer macro blow

"In fact, oil production has fallen more sharply due to the blockade of the Strait of Hormuz and attacks on oil production and loading facilities in the Persian Gulf region than during any other oil crisis of the past 50 years. According to the IEA, daily crude oil production has likely fallen by at least 10 million barrels since the start of the Iran War. This amounts to approximately 12% of global oil production."

"Despite the sharper decline in oil production during the current crisis, prices have risen significantly less than in 1973–74 and 1978–79. For example, the annual average oil price in 1974 was 250% higher than in 1973, and in 1979 a barrel of crude oil was still about 125% more expensive than the previous year’s average. This year, however, even under pessimistic assumptions for the coming months, the price is likely to be at most 60% higher than the previous year’s average."

"Furthermore, since oil consumption in developed countries has declined over the past 50 years despite rising economic output, the current loss of purchasing power is likely to be significantly smaller than it was during the first oil crisis. For instance, the first oil crisis caused Germany’s oil bill to rise by 2.5% of gross domestic product, while in Japan the increase amounted to nearly 4% of GDP. Currently, however, for the four countries we are examining, an annual average oil price increase of $40 per barrel is projected to result in an increase in the oil bill of between 0.5% and 1% of GDP."

"Our analysis of the energy market suggests that the consequences of the current energy crisis are unlikely to match the impact of the first oil crisis of 1973–74. However, it still seems too early to sound the all-clear."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)