Robert Pape looks at the likelihood of the next global economic shock

“First, inventories. Watch U.S. East Coast diesel inventories, European LNG storage levels, and Asian jet fuel reserves. U.S. distillate inventories are already running roughly 11–18 percent below seasonal norms, while European gas storage remains near 30–35 percent full — far below the roughly 55 percent level Europe normally enters summer with. Historically, once inventories fall below roughly 20–25 days of forward demand coverage, governments begin losing the ability to stabilize shortages through temporary releases and subsidies alone.”

“Second, industrial slowdown. Watch for refinery utilization cuts in India and South Korea, fertilizer shutdowns tied to LNG shortages, falling container freight volumes, and airline route reductions across Asia and Europe. If major Asian refiners begin reducing throughput by 10–15 percent, or if airlines begin cutting summer schedules by another 5–10 percent because of jet fuel shortages rather than weak demand, the crisis has likely entered synchronized contraction.”

“Third, political intervention. Export controls, diesel allocation programs, anti-price-gouging measures, emergency food subsidies, and fuel rationing indicate governments are entering the political phase of the crisis. Early warning signs include limits on diesel purchases, restrictions on fertilizer exports, government fuel-allocation orders, and emergency price caps spreading across multiple countries simultaneously.”