investments—which implies they would need to spend trillions of dollars a year if AI is to reach its potential. So far, however, there is little evidence of an intangible-investment boom. Data-organisation firms like Palantir have revenues in the billions, not hundreds of billions. The share of American workers leaving their jobs is close to an all-time low, suggesting little reorganisation of labour. New data indicate that American companies’ investment in “organisational capital”— essentially efforts to improve their routines, processes, culture, supplier relationships and data flows—has been declining as a share of GDP (see chart 3). When AI takes over the economy, you will be able to feel it. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/07/28/ai-revenues-are-growing- fast-but-not-fast-enough
Finance & economics | Smoke signals Oil prices remain highly flammable As tensions flare in the Gulf, triple digits could return in a flash Jul 30th 2026 A CYNIC MIGHT say that ceasefires between Iran and America hold well between attacks. In the past fortnight a pattern has become familiar. A pause in fighting is declared; one party breaches it; tit-for-tat strikes and superlative threats ensue; détente is announced once again. This cycle changes little of the reality on the ground: traffic through the Strait of Hormuz remains anaemic and the global energy system is under strain. Talks have not progressed and Iran insists it wants sole control of the strait. Yet oil markets remain optimistic that a lasting truce is around the corner. At $90-odd a barrel, Brent crude, the global benchmark, is well short of its $102 intraday peak on July 23rd.
How big is the ongoing risk to the oil price? Five months of war have failed to propel Brent futures to, say, $150 a barrel. But today oil markets are more fragile than in March, for three reasons: the Hormuz problem has grown more intractable; new threats have emerged; and protective buffers have worn thin. Hormuz is at the heart of recent escalations. A loosely worded ceasefire signed by America and Iran in June recognised Iran’s right to help “define the future administration” of the strait. So each time America facilitates the passage of tankers in a channel Iran does not control, Iran takes that as a breach, and some tankers are attacked. Other shipowners take fright, as do insurers. War-risk insurance premiums can now reach 12% of a ship’s value, up from roughly 0.25% before the war, says a trader. The result is a severe slowdown in traffic, which struggles to rebound even after the fighting ebbs. Just nine ships crossed the strait on July 28th, down from a peak of 60 in late June. Flows of oil have shrunk by nine-tenths, to 800,000 barrels per day (b/d). The tankers that do cross almost always have their transponders off. Only 8m barrels offered by the Emirati national oil firm in mid-July were awarded to refiners in South Korea, Taiwan and Japan, compared with 20m per tender in June. Iran seems unlikely to release its chokehold before America makes serious concessions. Gulf countries that
had begun cranking up output are cutting it again, which may delay a return to normal flows to the start of 2027. Of the new threats, the more serious is a blockade on Saudi exports declared by Yemen’s Houthi rebels on July 20th, in retaliation for Saudi Arabia’s own blockade of ports they control. The Iran-backed group has since struck some Saudi oil facilities and several ships that were ferrying Saudi crude in the Red Sea, or were en route to pick up some. The Houthis’ actions have opened a new front in the Iran war and fixed traders’ anxieties on a second chokepoint. Since April Saudi Arabia, unable to export through Hormuz, has sent an extra 2.5m-3.5m b/d of crude— around half its daily exports in 2025—via a pipeline to Yanbu, a port on the Red Sea which used to handle just 700,000 b/d, and then on to Asia via the Bab al-Mandab strait. Japan and South Korea have become especially dependent on these supplies. But Saudi exports through Bab al-Mandab have fallen by three-quarters since early July, to less than 1m b/d, according to Kpler, a data firm (see chart 1). That worries Asian refiners, which face delays on deliveries they were expecting in August. Some are cancelling shipments from Yanbu or switching them to the port of Sidi Kerir on Egypt’s Mediterranean coast, to
which some Saudi oil can be re-routed via pipeline, at a cost. Omani crude has grown pricier as buyers bid higher for the Gulf supplies that remain available. In the Black Sea, Ukrainian strikes on the Caspian Pipeline Consortium terminal knocked out roughly 1.8m b/d of Kazakh and Russian exports for a week in mid-July. Loadings at Russia’s Sheskharis terminal, which normally handles 650,000 b/d, were also halted. Both facilities have since restarted but could be struck again. The market’s protective buffers—reductions in demand and drawdowns from stocks—cannot absorb much more. China’s crude imports have dropped by more than 5m b/d since February. Demand there, and in many poorer countries, has been cut to the bone. America’s strategic reserve, from which 108m barrels have been released since March, is at its emptiest since 1983 (see chart 2), and commercial stocks are near their practical minimum.
The headline Brent number masks rising worries: the futures curve, which briefly sloped upwards at the start of July, has flipped again, a sign that traders expect shortages soon. The crunch is worse in refined products: petrol is $150 a barrel in America, jet fuel the same in Asia and diesel is over $170 a barrel in Europe (see chart 3). Other commodities are affected too. Gas prices in Europe are near their highest since January 2023 as the bloc competes for supplies with Asia. Qatar, which usually provides a fifth of the world’s liquefied natural gas, is warning it may not honour some commitments before mid-October. If it drags on, countries other than America will have to dip deeper into shrinking stocks. Analysts warn that each extra month of disruption would add $7-10 to the price of a barrel. Add a higher risk premium, and crude consistently above $110 a barrel by the end of summer looks credible. That would push American petrol prices towards $4.50 a gallon, weeks before the midterm elections. Mr Trump’s efforts to manage oil markets through tweets —you might call it “truce social”—cannot defy physical reality for ever. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/07/30/oil-prices-remain- highly-flammable
Finance & economics | Freude, schöner Banknoten How to design paper money that represents
The euro gets a makeover Jul 30th 2026 In the eyes of many of its citizens, the European Union is more than a technocratic bloc. Besides Europe’s unity, it symbolises a shared culture and way of life. In the eyes of the euro area’s leaders, an upgrade of its banknotes—used by 21 of the EU’s 27 member states, and more than 20 years old—is a chance to show confidence in the continent. The original notes, issued in 2002 and given a facelift in 2013, display imaginary bridges, doorways and windows—intended to reflect Europe’s openness and connectedness, but also to avoid rubbing any country up the wrong way. Each denomination shows a European architectural style, from
Romanesque to rococo. But they were a dull, soulless choice. The novelty of the euro provided most of the excitement. The European Central Bank and its classical-music-loving president, Christine Lagarde, want the new notes to represent more. The bank has narrowed the field to two thematic options. The first is to charm users with beautiful birds and rivers on the front of the notes, while hiding buildings hardly anyone will recognise—the EU’s principal edifices, including the ECB tower—on the reverse. The other is a more confident attempt to show off European culture. On the front are great scientists and artists, such as Maria Sklodowska Curie, who won Nobel prizes in physics and chemistry, or Ludwig van Beethoven, whose final symphony concludes with “Ode to Joy”, the EU’s anthem. The reverse shows everyday spheres of culture, such as choirs, libraries or city squares (though these are hardly peculiar to Europe).
Bravely, the ECB has asked for public feedback on ten sets of mostly well- crafted designs. On social media Europeans are taking the opportunity to provide their own images of what is truly European: disused barriers at borders; an open plastic bottle with an attached cap; two Italian DJs on a balcony, oblivious to the world’s troubles, making music while smoking and drinking Campari. Another idea is to print an out-of-office reply on notes, saying “Back in September”. The Economist’s favourite, though, is for a note bearing half a dozen famous faces: Britain’s prime ministers since Brexit. ■ This article was downloaded by zlibrary from https://www.economist.com/finance-and-economics/2026/07/27/how-to-design-paper- money-that-represents-europe
Finance & economics | Joint and separate A common European safe asset is still unlikely For that, blame high national debts Jul 30th 2026 Germany’s chancellor, Friedrich Merz, flew to Dublin on July 28th just to hand-deliver a four-letter message: Nein. The recipient, Micheál Martin, his Irish counterpart, took over the rotating presidency of the Council of the European Union at the start of the month, and a new seven-year EU budget needs to be hammered out. Embattled at home, in part because of spending cuts and tax increases, Mr Merz insisted that the current proposal, around €1.7trn ($2trn), was unacceptable. “We need a budget draft that cuts across the board—to the tune of several hundred billion euros.” The cuts have to be even larger if the EU also has to start repaying its debt. The bloc has issued €840bn (worth about 4.5% of GDP) in the past, mostly to back its post-pandemic recovery fund (see chart). Servicing and repaying