eliotho

couldn't have said it any better

it came from the data (UN Comtrade) that notably doesn't include sanctioned oil flows (Iran, etc). On top of that, China's reserve levels are a state secret, yet, the model's framework is BYOD (Bring Your Own Data) which gives the depletion timeline for free. Also, the model is more of a sensible baseline than a prediction

Thanks! Two answers (repeated in other comments): UN Comtrade data doesn't include sanctioned oil (Iran), and nobody (except their government) knows China's actual stockpile. The model is more of a sensible baseline/stress testing tool than a prediction, the cool part is that anyone can BTON (bring their own numbers) and rerun their scenarios

Thanks, added to list of possible UX improvements

Yes, and the network setting is flexible enough to allow smaller supply chains where nodes don't have price setting power

the models, proofs and writing are mine (with some AI assistance for proofreading/formatting). AI was mostly used in the visualization and the rerunning of multiple scenarios of the numerical examples

This pipeline predates the data but its oil is routed to Bab-el-Mandeb which is in the network. That being said, the numbers are more of a sensible baseline as the actual flows for many countries are unknown/sanctioned.

France imports 0 oil directly through Hormuz, but when the Strait closes, all other countries start raising their safety stock which increases oil prices. This makes France's stockouts very expensive mostly due to price (not flows). Which is contagion without direct connection.

Think of the 2008 crisis where companies that had nothing to do with Credit Default Swaps were exposed to the crash due to network effects, potentially crashing the whole economy.

Then, the government intervened by bailing the banks out. Here, it's not really clear if there is even an effective intervention.

this is an interesting market design question: the point is that tapering would require everyone knowing everyone else's depletion clocks. As they are unknown (sanctioned trade, non-public state figures), the opacity is the game itself (that I called game of chicken in other comments). Surely the main players are trying hard to guess each other's numbers by every mean possible