Oil

For a country that pumps roughly nine million barrels of oil a day – the third highest of any country in the world – Russia has managed to achieve something genuinely remarkable: it cannot keep its own gas stations stocked. More than half of its regions are now reporting shortages, the consequence of a Ukrainian drone campaign that has struck with increasing frequency and precision at the refinery infrastructure on which the country's civilian economy depends. The sometimes hours-long lines that have appeared – even in Moscow, for what may be the first time in the war – carry a symbolic weight that no amount of official reassurance from the Kremlin has managed to dispel. How this has come about is obvious enough.

A ceasefire has been agreed with Iran. The Straits of Hormuz will reopen. And the oil market will get back to normal very quickly. By Wednesday morning, it looked as if the energy crisis was over. Finance ministers will be breathing a sigh of relief as the crisis abates. But hold on. In reality, the truce is fragile, and huge amounts of supply have been taken out of the market. So long as that remains true, the price of oil, and with it the global economy, will remain stuck. The average price of $90 to $100 a barrel is not what anyone really thinks a barrel of oil is worth The price of oil has been on a wild ride ever since the United States and Israel started the attack on Iran a month ago.

Of all the parties watching the chaos in the Middle East unfold, one should be rubbing its hands together with particular satisfaction. Russia has not fired a shot in this conflict, lost no allies it cannot afford to lose and has so far gained rather a lot, with more to come. A cynic might call it the perfect war for Vladimir Putin. Moscow's public reaction has been characteristically theatrical. The Foreign Ministry denounced American and Israeli actions as a "reckless step" and a "dangerous adventure." Things have gone no further. There has been no announcement of political or military support for Iran from the Kremlin – nor is there likely to be: Russia needs its drones and missiles for Ukraine.

Donald Trump is a radical foreign-policy innovator. Over the past few decades, the US has tried a range of non-military means to nudge, squeeze and occasionally strangle its adversaries. These range from travel bans and banking restrictions, to export controls and trade limitations. But never has the US – or indeed anyone – tried to use import tariffs as a species of economic sanction. Trump has threatened Vladimir Putin with introducing “secondary sanctions” against countries that import Russian oil – a threat intended to strike at the heart of Russia’s war economy. And on August 4, Trump appeared, for the first time, to make good on that threat.

‘We’re going to get all our oil and gas out of the North Sea’ was certainly a winning line for Kemi Badenoch to deliver to the Offshore Europe conference in Aberdeen this week, just as she might open with ‘I love puppies’ to a spaniel breeders’ convention in Surrey. But other than as an appeal to climate-change-sceptic would-be Reform voters, how much sense did it make? A recent study by the industry body hosting the Aberdeen event says that if – in some Ed-Miliband-free alternative universe – all remaining reserves under the North Sea were licensed for development, they could provide half the UK’s hydrocarbon needs until 2050, by which date we might have approached full transition to cleaner energy.

I’m fresh out of advice for those now leaving university and wondering how on earth they’re going to make a living and live their dreams. This week’s bad news (from the job search website Adzuna) was that graduate and other entry-level vacancies have fallen almost a third since the launch of the AI chatbot. Should this unlucky post-Covid cohort stay on at ‘uni’ for another degree? Or does that mean racking up student debt without enhancing employability? I used to urge everyone to go abroad in their twenties before family responsibilities overtake. But where to now? Hong Kong and mainland China are out; it’s the wrong time to go to America or the Middle East; they’ll need work permits for the EU.

One peril of a sudden adverse turn of global events is that it provides cover for bad domestic government. If confidence is knocked by fear of war, if inflation blips because the Strait of Hormuz is blocked, if demand for defence spending sends budgets awry, voters may easily be persuaded that Middle East conflict, rather than Labour policy, has put the UK economy flat on its back. But that’s no excuse for proceeding with bad legislation as the world darkens – and one such item is Angela Rayner’s Employment Rights Bill, currently under House of Lords scrutiny, which in brief summary confers fearsome powers on trade unions and creates a ‘Fair Work Agency’ to interfere in business in all sorts of other ways.

Are we about to find out the full foolishness of Ed Miliband’s policy of blocking licences for new oil and gas extraction in the North Sea? While it may come as a surprise to some, until New Year’s Eve Europe was still receiving gas supplies from Russia – not through the Nord Stream 1 pipeline which was sabotaged in 2022, but via an unlikely route through Ukraine. These taps have now been turned off, after an agreement for Russia to supply gas to Europe came to an end. That leaves the continent facing a similar situation, if less acute, to that which it faced in 2022. It must look elsewhere to make up for lost Russian gas.