by John Duncan

The Iranian regime is certainly brutal. But it’s also powerful as it continues to project its might after a month of illegal air strikes by the United States and Israel.

Read more: Iran’s attacks drone on, with the U.S. at risk of losing the war

Iran is in the top 10 per cent of countries by size and population, has the third largest proven petroleum reserves and controls strategically crucial geography.

Furthermore, both the regime and many ordinary Iranians are prepared to defend the country. Since 1953, when the U.S. helped orchestrate a coup to overthrow Iran’s democratically elected Prime Minister Mohammad Mosaddegh, Iranians have understood they’re in America’s crosshairs.

This was especially true after the 1979 Islamic Revolution that overthrew the shah and during the U.S.-backed Iraq war against Iran that killed a million Iranians in the 1980s. As a result, Iran has spent decades beefing up and decentralizing its military capability.

In contrast, Dan Caine, chairman of the Joint Chiefs of Staff, warned U.S. President Donald Trump in February that the U.S. was short on both munitions and allied support for a war against Iran. Israel, America’s partner in war, is also short, especially in interceptor munitions. Trump and Israeli leader Benjamin Netanyahu dismissed the concerns, which suggests they planned a short war.

What are Trump’s options?

Critics have accused Trump of dragging the U.S. — or allowing it to be dragged — into a “forever war.” Those critics include those in his MAGA base, a problem for Trump as he anticipates November’s mid-term elections.

One unconventional option that might expedite victory, discussed during Trump’s first term, is to use nuclear weapons against Iran. Trump has said nukes won’t be used, but he’s well-known for erratic reversals.

A nuclear strike might expedite surrender, but it took two strikes on Japan in 1945 before the Japanese surrendered, and, failing an Iranian surrender, several strikes might be required to destroy the military capability distributed across Iran’s 31 provinces. Because many Americans would be appalled by a nuclear attack, putting the mid-terms at risk, the nuclear option is unlikely.

Much of the concern about Trump’s election machinations heading into the mid-terms is focused on the manipulation of procedures and officials. The legacy of the Jan. 6, 2021 attacks on the U.S. Capitol is one extreme possibility, as is manipulating the Iran war to achieve electoral gains.

Trump will probably lean into his rhetorical strengths and try to convince Americans the U.S. has won when it hasn’t. Claiming victory in the face of its absence is not new to him. Even in his second term, Trump continues to push the false claim that he won the 2020 election.

Consider the bizarre drama that started on March 21 when Trump and Iran exchanged dire threats. Then, out of the blue, Trump declared the existence of peace talks, which Iran denied. Perhaps they are imaginary talks on the way to an imaginary victory for Trump.

Read more: Why Donald Trump is such a relentless bullshitter

Mission accomplished?

It seems clear Trump is planning to declare victory well ahead of the mid-terms — and in part because of them. Such a strategy would involve baiting opponents into “forever war” criticisms, only to ridicule them in stump speeches, generating the image of a president who finishes his wars.

A declared victory in Iran and a timely exit, in addition to the liberation of Venezuela and a possible Cuban coup, might all coalesce into potent election messaging for the Republicans.

Soon enough, Trump may announce something akin to former president George W. Bush’s premature proclamations about the Iraq War in 2003 by saying something like this:

“Major combat operations in Iran have ended. The United States and Israel have prevailed. We do not know the day of final victory, but we have seen the turning of the tide.”

If successful, he will secure two more years “like nobody’s ever seen before” of Republican congressional dominance.

Major obstacles

The battle for November will feature a few competing narratives in the U.S. But there are four major hurdles for Trump in particular.

• Information: For voters to be convinced that Trump is a decisive crusader against evil rather than another “forever war” president, right-wing media must sell yet another big lie, mainstream media must continue to pull its punches and the Democrats must continue to flounder.
• Affordability crisis: Trump also has to ensure he doesn’t “win” in Iran while losing on affordability at home. Most American oil comes from the U.S., Canada and Mexico, so the U.S. is protected from global supply disruptions, but global markets push up prices everywhere. Trump’s mere declaration of talks recently brought oil prices down, but only temporarily.
• Allies needed: Because voters will want to see a significant military withdrawal, Trump needs other countries to manage the chaos he’s created. But after disrespecting allies for months, he is struggling to establish a “coalition of the willing” on which to offload the conflict.
• Iranians must co-operate: But because the U.S. and Israel have twice attacked Iran during diplomatic negotiations, Iran needs other stakeholders in the process. Without them, Iran will not be incentivized to stop fighting and nothing will belie an imaginary Trump victory more than ongoing Iranian attacks.

Democracy waning

Whichever scenario prevails, Americans will likely lose. Their complete war costs could include repercussions from the unprecedented illegal bombing of Iran, as well as from unnecessarily turning regional allies into targets.

All of this is tied to what many Americans regard as increasing Israeli aggression, including the killing of 70,000 people in Gaza, which the U.S. has facilitated with funding, political cover and its widely mocked Board of Peace.

America’s democracy, economy and credibility are waning as Trump shamelessly pursues self-aggrandizement and self-enrichment.

“That makes me smart,” he might say, but only a failed leader serves his own interests at the expense of his country.

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Growth in the world’s demand for oil is expected to slow in the coming years as energy transitions advance. At the same time, global oil production is set to ramp up, easing market strains and pushing spare capacity towards levels unseen outside of the Covid crisis, according to the IEA’s new oil market outlook.

Oil 2024, the latest edition of the IEA’s annual medium-term market report, examines the far-reaching implications of these dynamics for oil supply security, refining, trade and investment. Based on today’s policies and market trends, strong demand from fast-growing economies in Asia, as well as from the aviation and petrochemicals sectors, is set to drive oil use higher in the coming years, the report finds. But those gains will increasingly be offset by factors such as rising electric car sales, fuel efficiency improvements in conventional vehicles, declining use of oil for electricity generation in the Middle East, and structural economic shifts. As a result, the report forecasts that global oil demand, which including biofuels averaged just over 102 million barrels per day in 2023, will level off near 106 million barrels per day towards the end of this decade.

In parallel, a surge in global oil production capacity, led by the United States and other producers in the Americas, is expected to outstrip demand growth between now and 2030. Total supply capacity is forecast to rise to nearly 114 million barrels a day by 2030 – a staggering 8 million barrels per day above projected global demand, the report finds. This would result in levels of spare capacity never seen before other than at the height of the Covid-19 lockdowns in 2020. Spare capacity at such levels could have significant consequences for oil markets – including for producer economies in OPEC and beyond, as well as for the US shale industry.

“As the pandemic rebound loses steam, clean energy transitions advance, and the structure of China’s economy shifts, growth in global oil demand is slowing down and set to reach its peak by 2030. This year, we expect demand to rise by around 1 million barrels per day,” said IEA Executive Director Fatih Birol. “This report’s projections, based on the latest data, show a major supply surplus emerging this decade, suggesting that oil companies may want to make sure their business strategies and plans are prepared for the changes taking place.”

Despite the slowdown in growth, global oil demand is still forecast to be 3.2 million barrels per day higher in 2030 than in 2023 unless stronger policy measures are implemented or changes in behaviour take hold. The increase is set to be driven by emerging economies in Asia – especially higher oil use for transport in India – and by greater use of jet fuel and feedstocks from the booming petrochemicals industry, notably in China. By contrast, oil demand in advanced economies is expected to continue its decades-long decline, falling from close to 46 million barrels per day in 2023 to less than 43 million barrels per day by 2030. Apart from during the pandemic, the last time oil demand from advanced economies was that low was 1991.

Producers outside of OPEC+ are leading the expansion of global production capacity to meet this anticipated demand, accounting for three-quarters of the expected increase to 2030. The United States alone is poised to account for 2.1 million barrels per day of non-OPEC+ gains, while Argentina, Brazil, Canada and Guyana contribute a further 2.7 million barrels per day.

The report’s forecast finds that as the flow of approved projects fizzles out towards the end of this decade, capacity growth slows and then stalls among the leading non-OPEC+ producers. However, if companies continue to approve additional projects already on the drawing board, a further 1.3 million barrels per day of non-OPEC+ capacity could become operational by 2030.

According to the report, global refining capacity is on track to expand by 3.3 million barrels per day between 2023 and 2030, well below historical trends. However, this should be sufficient to meet demand for refined oil products during this period, given a concurrent surge in the supply of non-refined fuels such as biofuels and natural gas liquids (NGLs). This raises the prospect of refinery closures towards the end of the outlook period, as well as a slowdown in capacity growth in Asia after 2027.

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Oil market forecasting not compatible with traditional storytelling methods

By John Kemp

LONDON, Feb 8 – “Once upon a time …” Storytelling is one of the most fundamental human impulses.

Humans have been telling stories for thousands of years as a means of entertainment but more importantly to help them make sense of the world around them and to transmit that understanding to others.

Narratives are a way of organizing a series of actions or events to understand the process of cause and effect, helping make sense of the past and anticipate the future.

“Anthropologists, who conduct research on the behaviour of diverse tribes around the world, have observed a universal that people use narrative to explain how things came to be and to tell stories.

“Visitors to any human society will observe people facing each other, sitting around the television, or the campfire, together and vocalizing, and more recently tweeting, stories,” according to economist Robert Shiller.

“It seems the human mind strives to reach enduring understanding of events by forming them into a narrative that is imbedded in social interactions” (“Narrative economics”, Shiller, 2017).

Or according to the Pixar rules of storytelling, compiled by Emma Coates, the ideal narrative runs: “Once upon a time there was … , Every day …. , One day … , Because of that … , Because of that … , Until finally …” (“Pixar tips”, Washington Post, June 25, 2012).

The narrative impulse is hard-wired into our brains and is present in every creation myth, fairy-tale, history book, academic research paper, newspaper, political rally and corporate earnings call.

Satisfying stories obey a few simple rules:

• Good stories start at the beginning (“once upon a time”) and move linearly through a sequence of events to a conclusion (“the end”).

• Cause and effect are closely and intuitively linked and should be roughly proportionate to one another (big consequences should stem from big causes).

• Each effect should have a single cause, or at most a small and easily comprehended number, rather than result from the complex and incomprehensible interaction among many causes.

• Heroes and villains should be clearly identified and eventually be rewarded or punished by the chain of events according to some definition of morality.

• Luck, chance and randomness can play a part, but hard work, intelligence, worthiness and free will are more important in determining outcomes.

The problem with the campfire model (mono-causal, linear, proportionate, moral and determinant) is that it fails to explain many important real-world processes (which are non-linear/circular, exponential, amoral and random).

Financial market movements, business cycles, oil cycles and even the rise and fall of companies, corporate leaders and politicians – none of them can be properly explained and predicted by the traditional narrative model.

In these real examples, processes are multi-causal, complex, do not always produce virtuous winners, and often do not lead to clear outcomes and predictions.

Forecasting

Descriptions of real-world processes often fail as satisfying stories – while emotionally pleasing stories often fail to explain and predict the real world properly.

Politicians, business leaders, campaigners and opinion formers often prefer simpler narratives that provide a more satisfying explanation, stir an emotional response and serve as a call to action.

The narratives used to frame and explain an issue can have a powerful impact on how businesses, employees, customers and voters respond and the choices they make (sometimes unconsciously).

Storytelling can influence the real world as much as the other way around, so narratives can be instruments of power, whether they are right or wrong.

But forecasters and analysts should prefer accurate descriptions of real processes, for all their limits of complexity and indeterminacy.

The limits of predicting outcomes from circular and complex processes with a significant random element mean forecasts should normally be expressed as scenarios with an associated probability distribution.

Even then, many forecasts are hyper-sensitive to small changes in the starting point or assumptions about the causation process, so the probability distribution itself is often highly unstable or uncertain.

Forecasters should always be humble about their ability to make accurate predictions, especially far into the future or when many variables are changing simultaneously.

Often the most useful part of forecasting is the discipline of having to think in a rigorous way, identifying and analyzing all the potential variables in play, getting a better sense of the range of uncertainty.

Once the key variables have been identified, some risks can be eliminated, transformed, insured or managed, while others simply have to be borne.

Campfire storytellers are judged by the emotional satisfaction their narratives provide; forecasters and analysts should expect to be judged by a different standard.

Acknowledging and embracing uncertainty is not a sign of failure or lack of courage but an honest admission of the limits of forecasting and of the complex way in which processes evolve.

John Kemp is a Reuters market analyst. The views expressed are his own.

(Editing by Dale Hudson)

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