It's not that simple. Iran is now demanding that oil tankers that pass through Hormuz are settling in Yuan, which directly attacks the petrodollar hegemony. On top of that, US economy depends on trade with other western aligned economies. If they go down, then the US will be dragged down as well. And people in the US can't exactly afford stratospheric increase in gas prices either. Another problem is that fertilizer exports are now collapsing, and that affects the US as well. If fertilizer isn't in the ground by May, then the harvest will be lost with yields collapsing. All of this is very bad news for the US.

[–] discocactus@lemmy.world 4 points 2 hours ago

Also helium supply. Goodbye MRIs, semiconductor manufacturing, and aluminum welding...

[–] MerryJaneDoe@piefed.world 1 points 4 hours ago (1 children)

I agree, of course, that my assessment is simplified. There's always a host of variables.

Until OPEC agrees to Iran's demands to change to Yuan, they'll still settle in USD. So at this point, it's just background noise.

Yes, there are ripple effects. Yes, people will go hungry (hungrier?). Freight costs increase. Less travel. Everything that depends on that sweet, sweet crude will increase in cost.

Again, this doesn't affect Trump and his cronies. They have money. They don't care about the average American and they never did. They don't care about any other citizen of the world unless that citizen is hideously wealthy AND willing to eat at the same table.

It's outrageous, of course. But this situation didn't just magically create itself. It's been the norm since OPEC was formed. Our global economy depends on oil, which means every person's well-being depends on it. The solution is energy independence, but it's really difficult to get people excited about solar panels. They would much rather see bombs and bullets on TV.

[–] yogthos@lemmy.ml 4 points 4 hours ago (1 children)

OPEC can't settle anything at all when they can't ship their gas and oil. And to do so requires dealing with Iran. They can continue to insist that they will settle in USD, but they can't actually move the goods without Iran's approval. That is the conundrum.

Of course, Trump and his inner circle aren't going to be affected by any of this, but that is besides the point. What matters is that if the west collapses economically, then we'll be living in a very different world. The boot of the west will come off the neck of humanity, and the rest of the world will finally have a chance to breathe.

[–] MerryJaneDoe@piefed.world 2 points 3 hours ago (1 children)

OR...and hear me out on this....

Trump escalates the war on the premise that the US should provide safe passage to those ships. He dumps a fleet or two of ships into the Gulf, along with a trillion dollars or so for a ground war and insurance for the tankers. The US and Israel promise to keep the Gulf secure in perpetuity.

we’ll be living in a very different world. The boot of the west will come off the neck of humanity, and the rest of the world will finally have a chance to breathe.

We're already seeing this trend and have for years - but Rome doesn't collapse in a day.

The entire point of the petrodollar is to perpetuate the US hegemony. The entire world, including our allies, know this. The average American knows this. It's just that Americans aren't in agreement as to whether the current arrangement with OPEC is a net good or a net bad.

[–] yogthos@lemmy.ml 2 points 3 hours ago

I mean he can do that, but that's not going to magically open the strait. Iran effectively has unlimited resources compared to whatever the US navy can bring to bear. They're on land, and fighting on their home turf. The US has a fundamental logistical disadvantage here, and there's no way around it. The US is no physically capable of opening the strait.

But, let's for the sake of argument assume that the US could magically open up Hormuz. Iran can simply destroy the rest of oil and gas infrastructure in the gulf in response. So, there's going to be nothing to ship at that point. They've already demonstrated their ability to do exactly that. They hold all the cards here.

Right, the entire point of the petrodollar is to perpetuate US hegemony, and that's precisely why the US is fucked now. As long as Iran controls the strait, they control what currency a huge chunk of oil will be traded in. Meanwhile Russia, which is the other major oil exporter, is already trading outside the dollar. On top of that, I expect that many countries will start getting serious about renewables out of sheer necessity. Even if the war stopped tomorrow, it's going to take years to rebuild the infrastructure that's been already destroyed. This isn't a short term shock countries can just ride out. So, we'll see more oil traded outside the dollar, and less demand for oil going forward. This is basically the worst possible outcome for the US.

Whatever the US agrees with OPEC is completely and utterly irrelevant here.