This, from my buddy Termite, who is in the oil industry and (unless I am mistaken) is currently riding an oil rig somewhere in the Gulf.
WTI crude is $95, Louisiana light crude is $98. Western Canadian is $89. Mexican Basket is $92. Meanwhile, Brent is $108, Dubai is $135, DME Oman is $153. https://x.com/zerohedge/status/2034035587464761706/photo/1 This article is very interesting. https://gcaptain.com/the-hormuz-hypothesis-what-if-the-u-s-navy-isnt-in-a-hurry-to-reopen-the-strait/
Yeah, if you follow the links, you will learn that the Strait of Hormuz is a vital lifeline in the global oil market. When you have a rogue, terroristic regime causing havoc with global shipping, it makes sense that prices are going to fluctuate wildly.
Many of you don't remember the oil crunch of the late 1970s. We here in the US had high prices, rationing, gas lines, and severe shortages. That was Iran, too. At that time the United States was not energy independent. We actually relied on Mid East oil for our daily driving.
It could be a whole lot worse, but if we get the Iran problam solved, it could get a lot better.
4 comments:
I read gcap’s article yesterday. He has a point, as we see very little anything that ships through the Gulf. This is why India is sending its navy; it’s their main gateway.
And Saudi Arabia has started using both pipes in their pipeline from the Gulf to the Red Sea. They read the tea leaves in 1979 and in 1981 with the Iraq/Iran War and did something about it. Very smart. But they should have built 8 pipes instead of 2 ( 1 was for natural gas) and built the Red Sea terminal 5x larger.right now they can pipe 7m bpd but the terminal can only load 4. SuezMax tankers are 1m barrels.
Yes, that link is 'interesting' to put it mildly!
What's happening is extremely interesting.
Crude prices are fracturing. The current divergence between physical Middle Eastern oil and Western oil futures is the widest in history.
The USA gets very little of our oil from the Middle East. Our prices are spiking not from actual supply issues, but from the usual fear and speculation that drives the world oil market.
The USA does not have a crude shortage, we are a net exporter of oil products, and we are currently producing about 13 million barrels of crude per day.
Think about this: What world leader was just removed from power by the US military, in the country with the largest proven oil reserves(although it is mostly heavy crude)?
Madura, former Pres of Venezuela.
The gal that took his place shows signs of wanting to refresh relations with the USA. With any luck, Venezuela and the USA can return to the good trade relationship we had during the 1980s, when Venezuela sold the US a lot of their heavy crude, and we sent them refined products like gasoline and diesel. And we trained quite a few Venezuelan troops.
Consider that a VLCC tanker only has a 2000 mile trip from Venezuelan waters to the Louisiana Offshore Oil Port https://www.loopllc.com/, versus from the Persian Gulf, and Louisiana and Texas have several refineries designed to crack heavy crude.
Speaking of U.S. oil producers - when are they going to kick it back into gear ? Or is something else behind the scenes giving them hesitation ?
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