Keep pulling the thread on Brad Setser.
The current physical interruption to the global oil market is between 10 and 15 million barrels per day, representing 10-15% of global supply and 20-30% of globally traded oil.
The oil futures market is currently balancing two scenarios: a return to $60 per barrel if supply normalizes in 2-3 months, or a spike to $150 or more if the current disruption persists.
Saudi Arabia needs an oil price of $100 per barrel with exports of 7 million barrels per day to achieve a current account breakeven.
A significant portion of 1970s petrodollar surpluses were deposited in London-based bank accounts as Eurodollars and subsequently lent to oil-importing emerging economies, contributing to the Latin American debt crisis of the 1980s.
Russia began reducing the U.S. dollar share of its foreign reserves to 40-50% even before the 2014 annexation of Crimea, and subsequently reduced it to near zero after the conflict in Donbas.
The international portfolio of Saudi Arabia's Public Investment Fund has an 80% allocation to U.S. dollar-denominated assets.
China has, as a matter of policy, reduced the U.S. dollar share of its official foreign reserves from 79% in 2005 to a last-disclosed figure of 55%.
The U.S. dollar share of the portfolios held by China's state-owned banks is approximately 70%, significantly higher than the share in the country's official foreign reserves.
In the last year, South Korea's current account surplus was matched by outflows into foreign equities, with one-third from the National Pension Service and two-thirds from retail investors preferring U.S. tech stocks.
The United States has a current account deficit of over $1 trillion, requiring it to sell an equivalent amount of U.S. dollar-denominated financial assets to the rest of the world.
Taiwanese and Japanese life insurance companies have significantly reduced their currency hedge ratios on foreign assets due to the high cost of hedging.
Saudi Arabia's balance of payments breakeven oil price has increased from approximately $60 to a range of $90 to $100 per barrel.