Supply-shock arithmetic

Use (12.21). Assume:

• world liquids demand is 104 mb/d (assumption);
• Hormuz flows fall from 20 to 2.7 mb/d;
• bypass pipelines carry 2.6 mb/d;
• the IEA release of 400 mb is spread over 120 days;
• $\epsilon_s+\epsilon_d=0.25$ (assumption).

(a) Compute the net supply loss $\phi$. (b) Predict the Brent price starting from $72. (c) Compare with the 2026 settled peak of $118.35 and list what the model leaves out.