Oil shocks and war - This could be different

UBS provides an interesting chart on the impact of war on oil prices. As expected, there will be a positive price shock, but it usually returns to normal after 4-5 months. Call this a fear factor. There will be some hoarding at the beginning of the war to protect inventories. Once the worst is over and the disruption is viewed as manageable, the price increase will be reversed. Yet, you cannot extrapolate from this evidence that the current situation will be normal. First, there is no reason to expect a return to normalcy. We only know that after the fact. Second, a disruption ot the Middle East is different from a war in other regions. If infrastructure is lost due to the destruction of refining capacity, there cannot be a quick adjustment. Oil can be pumped, but without refining, a "soft target" there will not be any easy way to create the end product needed by consumers. Capital expenditure for refining is costly and long-term, unlike the sinking of a tanker or the closing of a strait. The focus for any oil shock should be centered on what is happening to infrastructure.