That’s another five million barrels of oil a day that will have difficulty getting out.
/end
2 million barrel/day pipeline bypass for the Suez canal. Originally meant to be used if another shutdown of the canal occurred, these days used to partially/fully unload VLCC and ULCC ships to the point they can transit the canal (the canal authority is even offering discounts to encourage use of the canal by VLCC and ULCC ships). The real bottleneck is the number of shuttle tankers available to escort VLCC and ULCC ships. But if you add in redirecting Suezmax tankers you'd get pretty close to that 5 million barrels/day export.
So what is the problem. The oil is not meant for North Africa, Europe or the Americas, it is meant for Asia. This means sailing around Africa, and it looks like there aren't enough tankers available to take a route that doubles, triples if not quadruples the time spent sailing.
The US needs sour crude from somewhere if it is going to make diesel. I have to suspect not much is coming out of Venezuela these days. Canada is selling more and more of its sour crude to China - which pays a higher price. The remainder of the US reserves in the salt caverns may or may not still be available for mechanical reason. If, on top of all that, the Red Sea is closed, then we are in uncharted territory. Iran can close the Red Sea, and will, if the US continues its attacks. Bad as all that is, it is nothing compared to what happens if oil and gas facilities on both sides of the Gulf are destroyed.
You brought several factors together to weave a doomsday scenario that does not augur well. The stock market has still not received the memo. I think there is still the illusion that Trump will pull the rabbit out the hat. We shall see. As usual good analysis Bruce.
O'Hara wrote:
That’s another five million barrels of oil a day that will have difficulty getting out.
/end
2 million barrel/day pipeline bypass for the Suez canal. Originally meant to be used if another shutdown of the canal occurred, these days used to partially/fully unload VLCC and ULCC ships to the point they can transit the canal (the canal authority is even offering discounts to encourage use of the canal by VLCC and ULCC ships). The real bottleneck is the number of shuttle tankers available to escort VLCC and ULCC ships. But if you add in redirecting Suezmax tankers you'd get pretty close to that 5 million barrels/day export.
So what is the problem. The oil is not meant for North Africa, Europe or the Americas, it is meant for Asia. This means sailing around Africa, and it looks like there aren't enough tankers available to take a route that doubles, triples if not quadruples the time spent sailing.
The US needs sour crude from somewhere if it is going to make diesel. I have to suspect not much is coming out of Venezuela these days. Canada is selling more and more of its sour crude to China - which pays a higher price. The remainder of the US reserves in the salt caverns may or may not still be available for mechanical reason. If, on top of all that, the Red Sea is closed, then we are in uncharted territory. Iran can close the Red Sea, and will, if the US continues its attacks. Bad as all that is, it is nothing compared to what happens if oil and gas facilities on both sides of the Gulf are destroyed.
Excellent analysis Bruce! Thanks, stefan
Whenever I think of Mr. Trump, I can't help but remember a line from Jesus Christ Superstar:
"Every time I look at you I don't understand, how you let things get so out of hand."
You brought several factors together to weave a doomsday scenario that does not augur well. The stock market has still not received the memo. I think there is still the illusion that Trump will pull the rabbit out the hat. We shall see. As usual good analysis Bruce.
The US stock market and the US economy are both being kept aloft by the AI bubble.
Two people I really respect say that's now coming apart, Sean Foo
(https://www.youtube.com/watch?v=4upaXOHAJDk) and George Gammon
(https://www.youtube.com/watch?v=paLy21TVecw)