# Statler and Waldorf _Why I keep picking holes in the consensus. A post-mortem of what the experts said when war broke out in the Middle East, and what the oil and jet fuel markets actually did next._ Neil Woodford · 23 June 2026 · 8 min read ![Emirates aircraft being refuelled with jet fuel.](https://cdn.sanity.io/images/v3acfbvo/production/029c05e6a2751209eceafacd7ca954b3cb1e646d-3024x4032.jpg?rect=0,997,3024,2193&w=1600&fit=max&auto=format) --- For anyone not familiar with The Muppet Show, Statler and Waldorf were a pair of characters famous for heckling and criticising the cast, yet despite the barbed comments, the two always returned for the next show in their usual box seats. I was reminded of that great show and of these two in particular over the last few weeks as I reflected on the content of several of my recent posts. _[Embedded media](https://wikipedia.org/wiki/Statler_and_Waldorf)_ Although not pretending to be anywhere near as humorous, I began to think I might be coming across as a latter-day Waldorf, albeit without the moustache and with a bit more hair. Given the repeatedly critical nature of what I’ve been writing, I thought the time had come for some explanation. Why am I so critical of the consensus economic narrative, and what is the point of voicing that criticism? I suppose the first point to make about a world in which we are bombarded with a constant stream of economic and political news and opinions is that, in general, it’s objectively true that there is an inverse relationship between output and quality. Given modern journalism’s requirement to have instant reactions and opinions on everything, carried on multiple, typically digital platforms, speed overcomes considered thought, and as a result, institutional laziness creeps into the production of so much content. In parallel, there appears to be a vanishingly small and shrinking market for facts and data, especially amongst politicians, whilst the market for opinions and sound bites grows ever larger. More often than not, this then leads to a very crowded and loud consensus which, like propaganda, if repeated often enough, in time becomes fact. Clearly, I am not the font of all knowledge, far from it, but over forty years of financial market experience has given me a very healthy, sceptical, enquiring mind and possibly a boring predilection for the facts, where they can be established. This “Columbo”-like approach, combined with an affinity for data, frequently leads me to question established thinking, not because I am some kind of rabid iconoclast, but because better decisions are made when they are based on facts rather than myths. To illustrate the point, I thought I would do some post-event analysis of the most recent war in the Middle East to show how important it is not to accept the hurried “informed” conclusions of experts and to always retain some degree of healthy scepticism about consensual thinking. When war broke out in late February this year, it came as a shock to financial markets and seasoned observers of Middle East politics. Almost immediately, “experts” were diagnosing the significance of the event and its impact on energy prices, the world economy and on geopolitics. Quite quickly, the consensus settled on a very negative interpretation of the war’s consequences, particularly regarding its duration. Here are some examples of what I was reading at the time: > The conflict in the Middle East has created the largest supply disruption in the history of the global oil market, due to the near halt in shipping traffic through the Strait of Hormuz. > > — IEA In its March report, the IEA called the war “the largest ever oil supply disruption”. Its executive director added that the effect on energy markets had not been understood by world leaders, and that the war in Iran was equivalent to the combined impact of the 1970s oil shocks and the fallout from Russia’s invasion of Ukraine. _(Neil in the margin: The International Energy Agency, the rich world’s energy watchdog, set up in 1974 in response to the first oil shock. Which makes its “largest ever disruption” billing all the more striking.)_ The IMF warned in April that the war had elevated financial stability risks, which could tighten funding markets and stress non-banks, private credit, and AI borrowers. The OECD waded in with a warning that even a temporary disruption to energy supply would knock 0.6% off global growth, and that a prolonged disruption would likely pitch many countries, particularly in Asia and Europe, into or close to recession. The ECB, as recently as June, described the war’s impact as a “major energy price shock” and used it as justification for raising interest rates despite ongoing weak growth of less than 1% in the EU. Other dire warnings followed about global shortages of jet fuel, LNG, fertiliser and helium, which would disrupt global food production and the semiconductor industry, amongst many others. In the Bank of England’s April Monetary Policy Report, three scenarios were outlined showing how the Bank’s staff thought elevated energy prices would affect the UK economy. My summary on first reading them was that they were bad, worse, and terrible. No scenario was outlined that showed anything close to what actually happened. In the Bank’s best-case projection, for example, the earliest oil prices fell below $80 per barrel was in Q1 2027, a full nine months after they did exactly that. (Today, Brent crude trades at $77.9.) _[Watch: Why the IMF is wrong about the UK economy — The Iran War Is Already Over — Here's Why](https://www.noisecancelling.co/the-show)_ Quite quickly, the “informed consensus” was established, which viewed this war as a disaster for the world economy and, according to the IEA, which one might argue was best placed to understand its consequences, would result in the largest ever oil supply disruption. Given that the two energy shocks in the 1970s had led to global stagflation, fuel shortages and economic stagnation, this was not especially encouraging, and understandably led to all sorts of alarmist scare stories in the media. Not satisfied with this grisly forecast, the media then carried on catastrophising, for example about Iran’s attack on Qatar’s massive LNG facility, which was described as a disaster for Qatar, for its LNG export capacity and of course for its customers, and which would apparently take 3-5 years to repair; or Trump’s blockade of the Strait of Hormuz, which the FT said would be “likely to backfire”. On 13 April, Gideon Rachman repeated the IEA’s dire warning in a major article and added that the impact of the war had initially been cushioned but was now “really kicking in”. _(Neil in the margin: The narrow channel between Iran and Oman through which roughly a fifth of the world’s seaborne oil passes. Closing it is the market’s worst-case scenario, which is exactly why both the bombing and the blockade drew such alarm.)_ Clearly, whilst all of this was unfolding it was pretty difficult to anticipate what was going to happen next, but whilst the crowded consensus had made its mind up very early about what the war’s implications were, it was possible to see the glass as half full too. Clearly it was appropriate to be concerned about what might happen in a prolonged conflict that lasted for many months if not years, but equally, my view was that a balanced appraisal of what was happening should also look at the incentives acting on both sides of the conflict to reach some kind of settlement. That is what I was focused on, but it seemed the media and the economic establishment had already made their mind up that this was impossibly naïve. My confidence in this alternative narrative increased once President Trump announced the blockade, which at the time was heavily criticised by the same constituencies that were most bearish about the war. I thought this was more than a little odd, and said so at the time. Now, I think it’s reasonably clear that the blockade proved more consequential than the bombing and is what led to the peace agreement and the reopening of the Strait of Hormuz. Although there has to be some chance that the negotiations will break down and the conflict will start again, I think the most likely outcome, which may indeed take longer than 60 days to hammer out, is some kind of lasting deal which delivers for both sides. Having said that, the next few weeks provide a good opportunity to take a look back at what the “informed consensus” was saying, and to see how wrong it was. Let’s start with the oil price. This is a chart of Brent crude over the last five years. ![Brent crude: the spike that round-tripped](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/LHOfQD764hBreMC0SJPF8x-0597b2a95e3c-light.png) Whilst it is clear that the oil price spike was unwelcome and potentially very disruptive to the world economy, it was also clear that by late May the price was telling anyone who was bothering to look that the disruption was nowhere near as bad as the IEA’s dire warnings. All sorts of factors contributed to this less stressed environment, including inventory drawdowns (what else are they for?), increased production from other parts of the world, significantly reduced Chinese imports, Saudi Arabia and the UAE maximising the use of pipelines that bypassed the Strait of Hormuz, and, towards the end of the period, some shipping being able to navigate through the Strait under escort and at night. In other words, lots and lots of mitigation. And whilst we are on the subject of mitigation, QatarEnergy predicted that, despite the long-term loss of two (of 14) damaged trains at Ras Laffan, within two months of the opening of the Strait, the facility would be operating at 80% of its nominal capacity. _(Neil in the margin: Governments and oil companies hold strategic and commercial stocks precisely so they can be run down in a supply shock. Drawing on them is the system working as designed, not a sign of distress.)_ > Better decisions get made when they are based on facts rather than myths. > > — Neil Woodford, (a.k.a. Waldorf) Another example might be what happened to jet fuel prices. At the height of the crisis, soon after war broke out, we were all told, once again by the IEA, that Europe only had about six weeks of jet fuel reserves left, and to expect widespread cancellations, significantly reduced route networks and massive increases in ticket prices to compensate for much higher jet fuel costs. Not many weeks later, Ryanair’s boss, Michael O’Leary, was saying that he had zero concerns about its jet fuel supplies, despite the fact that, before the war, we were told 60% of the UK’s imported jet fuel came from the Gulf. ![European jet fuel: spiked, then retreated](https://r4at4qm6kmohrtvq.public.blob.vercel-storage.com/charts/DbdLXmU6qojhJQsRI52CVs-4ee6352234c7-light.png) So, what was going on? At first sight, it seems hard to reconcile these statements, and maybe even harder to understand why, after spiking, jet fuel prices came all the way back to close to where they were before the war started, despite the Strait of Hormuz only really opening in the last week. Once again, aside from the fact that, based on this evidence, it seems one should not pay too much attention to the IEA’s alarmist rhetoric, it appears that mitigation in the jet fuel market was alive and kicking just as it was in the oil market. In this case, it appears that refineries across Europe, including BP’s Castellón refinery in Spain ([reported in the FT](https://www.ft.com/content/90c952ad-5a85-4981-878c-e9abd6bbe3f6?syn-25a6b1a6=1)), almost as soon as the US and Israel started bombing Iran, started to implement plans to reconfigure their refineries to maximise the output of jet fuel which, when replicated across many of Europe’s 70 plants, resulted in a pretty immediate and very significant increase in output, which then cut the amount Europe needed to import in half. > BP’s Castellón refinery on Spain’s east coast was able to increase its production of jet fuel by about 30%. > > — [Financial Times](https://www.ft.com/content/90c952ad-5a85-4981-878c-e9abd6bbe3f6?syn-25a6b1a6=1) In other words, price signals, an ever-present feature of free markets, provided all the incentives oil companies across Europe needed to maximise jet fuel output, which in turn significantly alleviated what would otherwise have been a difficult situation. Increased exports from the US did the rest. ## Conclusions These examples of how “expert” opinions can be so quickly made to look ridiculous are nothing new, but they do serve as a timely reminder that we should all remain sceptical about crowded consensus views in economics. I try at all times not to be like Statler and Waldorf, who appeared to be critical for the sake of it, but to always have an enquiring instinct and, as the best economist in the country keeps telling me, to challenge everything! Consequently, given how ridiculous most of the output is from politicians and the media, and indeed from august pillars of the establishment such as the OBR and the Bank of England, I expect to be very busy.