The Iran war’s shock to oil and gas prices has, understandably, dominated much of the recent market news.  Though the downstream effects have yet to be fully understood, there is no question that we are in the throes of the greatest energy crisis in modern history, with significant implications for every facet of the modern economy. One particular aspect that is just beginning to be appreciated is the financial one.  The onset of this latest Persian Gulf war is poised to severely disrupt a channel of liquid investment, known as the petrocapital cycle, which is vital to sustaining modern finance as we know it.  Its failure to operate effectively could inflict a significant credit crunch on global markets just as liquidity and available credit is becoming even more needed than ever. Understanding why the petrocapital cycle, which was first examined thoroughly in el-Gamal and Jaffe’s Oil, Dollars, Debt, and Crises: The Global Curse of Black Gold, may soon be in jeopardy first requires a quick refresher on what this cycle is and how it operates.  In brief, the petrocapital cycle is the flow of finance from oil producers to the financial-system. It is largely sustained by regular infusions of capital from oil-exporting regions, like the […]