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Saudis may re-route oil currently on its way to United States

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(edited)

Saudis dumping 40mm to 50mm bbls oil on U.S. market.

Bring the troops home.

Bring the Navy home.

Close the bases.  

Wish MbS good luck . .   have fun.  

Forbes article is correct.  The only way to correct the oil supply crisis is let Iran close the straights of Hormuz.  

https://www.forbes.com/sites/timtreadgold/2020/04/23/lifting-the-oil-price-is-easy-block-the-persian-gulf/#3fd1fae86c22 

Simple solution. The market would be balanced.   It would work.

https://finance.yahoo.com/news/saudi-arabia-may-route-tankers-141430393.html

There are between 20 to 30 tankers full of oil off the coast of California. Mostly from Iraq, Nigeria, Algeria, and growing.  

The same traffic will be piling up off the U.S. Gulf coast in a couple of weeks.

Trump doesn't care as he supports the oil majors and Saudi Aramco at the expense of the U.S. independents and thousands of jobs that  get pummeled.  

Edited by BLA
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Likely can't find a home for it and prices now are much lower than when the cargo left KSA.  The refiners don't need the KSA crude but dumbshit MBS hired those VLCCs at $100k/day and once his contract is up they will make him pay extra so he loses his ass on this.

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Theres "kick em while hes down " then theres this ... guess it went overboard. Doesn't matter all too much tho. Cheap oil is gonna be around till 60% of wells close? Till production is a hair below demand wherever that stands. Then working off some of the barrels. Long NG now lol. What's the % of gas from all these wells getting shut in 40%?

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1 hour ago, BLA said:

"U.S. senator Ted Cruz said on Twitter on Tuesday: "My message to the Saudis: TURN THE TANKERS THE HELL AROUND."

Greg Abbott, Ted Cruz, John Cornyn--all basically calling on Trump to ban the Saudis from berthing. 

But can the US legally do that? After all, the KSA owns Motiva lock, stock and barrel, pun intended. They have more or less permanent berthing rights at Port Arthur, unless they commit an act of war against our country. Some would say that their recent actions qualify.

And soon Trump must take a stand on this: it's getting to the silly stage. If he doesn't take a stand, or at least explain why he isn't, it's not going to pass the smell test of, are the Saudis invested in Trump Holdings. I'm not accusing, merely pointing out how it smells.

Oil futures climbed 35% on news that Trump had ordered a "fire upon and destroy" command against harassing Iranian boats buzzing around US ships in the Arabian Sea. If he were to ban Saudi VLCC'S, oil would likely close out the day about $25/barrel.

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Counter move - Saudis could close their 600k BBL/D refinery in Port A

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44 minutes ago, Gerry Maddoux said:

Greg Abbott, Ted Cruz, John Cornyn--all basically calling on Trump to ban the Saudis from berthing. 

But can the US legally do that? After all, the KSA owns Motiva lock, stock and barrel, pun intended. They have more or less permanent berthing rights at Port Arthur, unless they commit an act of war against our country. Some would say that their recent actions qualify.

And soon Trump must take a stand on this: it's getting to the silly stage. If he doesn't take a stand, or at least explain why he isn't, it's not going to pass the smell test of, are the Saudis invested in Trump Holdings. I'm not accusing, merely pointing out how it smells.

Oil futures climbed 35% on news that Trump had ordered a "fire upon and destroy" command against harassing Iranian boats buzzing around US ships in the Arabian Sea. If he were to ban Saudi VLCC'S, oil would likely close out the day about $25/barrel.

VLCCs can't berth.  They have to be unloaded at the LOOP.  No special right for Motiva to do shit.

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9 minutes ago, Thisa GuyOkay said:

Counter move - Saudis could close their 600k BBL/D refinery in Port A

Sounds good to me, don't need em anyway.  Their loss. Now Aramco is admitting that it needs to shutin production.  That looks particluarly stupid as they just spent most of March ramping up to 12.5mmbbl/day, or so they claim.  Anyway, if they now have to shut that down, it's going to cost double.  ROTFLMAO, unintended consequeunces, kind of like shooting a gun at a metal door and wondering why your eye got put out by your own bullet.

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1 hour ago, wrs said:

Likely can't find a home for it and prices now are much lower than when the cargo left KSA.  The refiners don't need the KSA crude but dumbshit MBS hired those VLCCs at $100k/day and once his contract is up they will make him pay extra so he loses his ass on this.

wrs

$100k /day ?  Not that much 

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18 minutes ago, Thisa GuyOkay said:

Counter move - Saudis could close their 600k BBL/D refinery in Port A

Lose some workers

But other refiners would be very happy.  

 

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15 minutes ago, wrs said:

VLCCs can't berth.  They have to be unloaded at the LOOP.  No special right for Motiva to do shit.

Right you are! I used the wrong terminology. Then the question is do they have a right to the LOOP? I mean, can they be banned? 

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2 hours ago, BLA said:

Good

"U.S. senator Ted Cruz said on Twitter on Tuesday: "My message to the Saudis: TURN THE TANKERS THE HELL AROUND."

https://finance.yahoo.com/news/saudi-arabia-may-route-tankers-141430393.html

 

Whether the loaded tankers are sitting in the Persian Gulf, the Gulf of Mexico, or off the California coast makes no difference to either Ted Cruz, the Saudis, or the oil glut.

What we have here is a typical political grandstanding and pandering.

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11 minutes ago, BLA said:

$100k /day ?  Not that much 

Well, actually, I think the demurrage fee is higher than the regular lease fee. I'm not entirely sure about this but I think the lease fee was $200,000 per day per vessel initially, then reset at $150,000, but the demurrage fee is back close to $200,000. That's $5M per day on the 25 Saudi-leased VLCC's. Might be a couple months to unload that unwanted cargo: $300M. Not ruinous, but still. 

Demurrage is a pretty weird construct of charges, as the big shippers usually set a fee high enough so nobody in their right mind would resort to using floating storage (like is currently being done). There are lots of vessels out there in the world's oceans, using VLCC's as floating storage. If the demurrage fee is this high, man, that's going to hurt. 

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Surely the Saudis know if they have sufficient storage in Motiva or not.

If they don't, it's their problem.

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1 hour ago, Gerry Maddoux said:

Greg Abbott, Ted Cruz, John Cornyn--all basically calling on Trump to ban the Saudis from berthing. 

But can the US legally do that? After all, the KSA owns Motiva lock, stock and barrel, pun intended. They have more or less permanent berthing rights at Port Arthur, unless they commit an act of war against our country. Some would say that their recent actions qualify.

And soon Trump must take a stand on this: it's getting to the silly stage. If he doesn't take a stand, or at least explain why he isn't, it's not going to pass the smell test of, are the Saudis invested in Trump Holdings. I'm not accusing, merely pointing out how it smells.

Oil futures climbed 35% on news that Trump had ordered a "fire upon and destroy" command against harassing Iranian boats buzzing around US ships in the Arabian Sea. If he were to ban Saudi VLCC'S, oil would likely close out the day about $25/barrel.

Production at Motiva is dropping. Around 300k bbls/day use.  Likely will go lower , much lower. 

How much storage do you think Motiva can handle ?  Not 40mm.

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(edited)

27 minutes ago, BLA said:

wrs

$100k /day ?  Not that much 

As of Friday it was $150k according to this.

https://compassmar.com/reports/Compass Maritime Weekly Market Report.pdf

Here is the report for the week they chartered them.  I thought I had read they paid $150k/day when they first did this but I wasn't able to find that article.

http://thebalticbriefing.com/tanker-report/tanker-report-week-11-4/

A week ago in the Middle East, the Saudis lowered their April crude Official Selling Price (OSP) and raised production levels by 2.6 million barrels per day (BPD), to 12.7m BPD, with an additional one million BPD coming from the United Arab Emirates. This caused the oil price to drop over 30 per cent creating a price contango which traders and oil companies alike attempted to capitalise on with storage enquiry. Over 50 ships were fixed on subjects in the first half of the week alone for voyages, many for US Gulf discharge where rates have taken a meteoric rise. 280,000mt to the US Gulf, via the Cape to Cape routing, was 400 per cent higher at WS167.5 as last done. For 270,000mt to China, rates have almost tripled to WS180. In West Africa the trip for 260,000mt to China rates have risen over 225 per cent, to WS160. The market for 270,000mt US Gulf to China has more than doubled to $15.5m level.

 

This says demurrage will be $250,000/day if they can't offload.  I couldn't find the flat rate so I don't have a way to translate what the prior article says into $ for Ras Tanura to Port Arthur.  In any case, this is going to cost them heavily because they thought they were going to get $25/bbl or so.....

https://gcaptain.com/saudi-arabia-may-re-route-tankers-if-u-s-imposes-crude-import-ban-source/

 

 

Edited by wrs
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(edited)

31 minutes ago, Gerry Maddoux said:

Well, actually, I think the demurrage fee is higher than the regular lease fee. I'm not entirely sure about this but I think the lease fee was $200,000 per day per vessel initially, then reset at $150,000, but the demurrage fee is back close to $200,000. That's $5M per day on the 25 Saudi-leased VLCC's. Might be a couple months to unload that unwanted cargo: $300M. Not ruinous, but still. 

Demurrage is a pretty weird construct of charges, as the big shippers usually set a fee high enough so nobody in their right mind would resort to using floating storage (like is currently being done). There are lots of vessels out there in the world's oceans, using VLCC's as floating storage. If the demurrage fee is this high, man, that's going to hurt. 

Another article said $250k/day demurrage and I thought I read $150k/day for them leasing on the spot market last month.  I tried to find the original stuff but I think we have a 40 day voyage at $150k/day is $6m and the value of the cargo was supposed to be about $50m if you figured $25/bbl which they won't get now if they sell it at all.  They could easily lose the full value of the cargo in one month if it can't be unloaded.  I would love to see that on all 20 tankes.

Edited by wrs
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26 minutes ago, wrs said:

As of Friday it was $150k according to this.

https://compassmar.com/reports/Compass Maritime Weekly Market Report.pdf

Here is the report for the week they chartered them.  I thought I had read they paid $150k/day when they first did this but I wasn't able to find that article.

http://thebalticbriefing.com/tanker-report/tanker-report-week-11-4/

A week ago in the Middle East, the Saudis lowered their April crude Official Selling Price (OSP) and raised production levels by 2.6 million barrels per day (BPD), to 12.7m BPD, with an additional one million BPD coming from the United Arab Emirates. This caused the oil price to drop over 30 per cent creating a price contango which traders and oil companies alike attempted to capitalise on with storage enquiry. Over 50 ships were fixed on subjects in the first half of the week alone for voyages, many for US Gulf discharge where rates have taken a meteoric rise. 280,000mt to the US Gulf, via the Cape to Cape routing, was 400 per cent higher at WS167.5 as last done. For 270,000mt to China, rates have almost tripled to WS180. In West Africa the trip for 260,000mt to China rates have risen over 225 per cent, to WS160. The market for 270,000mt US Gulf to China has more than doubled to $15.5m level.

 

This says demurrage will be $250,000/day if they can't offload.  I couldn't find the flat rate so I don't have a way to translate what the prior article says into $ for Ras Tanura to Port Arthur.  In any case, this is going to cost them heavily because they thought they were going to get $25/bbl or so.....

https://gcaptain.com/saudi-arabia-may-re-route-tankers-if-u-s-imposes-crude-import-ban-source/

 

 

Thanks

Good info

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1 hour ago, wrs said:

They could easily lose the full value of the cargo in one month if it can't be unloaded.

Correct, and if they can't unload in say three months, we're talking some serious change, even to these people. I don't know the exact number of VLCC's but I think it's somewhere around 250. If most of them are full, floating around the world's oceans, a massive amount of money is going to go down the drain. 

There almost has to be a war--I mean a real war--come out of this. Think about how stupid it was to continue with your ill-considered plan to pump full-out even when you knew almost half the world consumption had evaporated. 

The KSA was largely responsible for the last gasp of the USSR. Putin couldn't help it back then but he will not sit idly by and allow his country--the one he put back together--settle back into privation and obscurity. Add in the fact that The New York Times published a big article that China infiltrated the US with propagandists in January. And then this morning Peter Navarro said that China had promulgated the "Four Kills" on the US: 1) virus in the lab, 2) hit contagions while warehousing vast PPE, 3) allowed hundreds of thousands Wuhanians to travel abroad, and 4) sent us defective testing kits. This is growing into a world conflagration the likes of which we've never seen. 

Man, in this kind of turmoil, it would seem logical for the Saudis to head those tankers back to Rotterdam and unload, close down the Motiva refinery for repairs, and help the world rebalance. For our part, we need to just stop fracking completely and shut in 50% of production that has come on line in the last year. That would allow these old chugalongs to keep chugging along, the shale wells into heavy decline to keep going, but would take over 30% of US production off line. 

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2 hours ago, Bob_W said:

Whether the loaded tankers are sitting in the Persian Gulf, the Gulf of Mexico, or off the California coast makes no difference to either Ted Cruz, the Saudis, or the oil glut.

What we have here is a typical political grandstanding and pandering.

Cruz says what agitated Texans want to hear, riling up the support base.

But he wasn't born yesterday; even he knows his fantasy blockade won't matter, and won't bring back frantic oil shale drilling.

https://oilprice.com/Energy/Crude-Oil/Ban-On-Saudi-Crude-Wont-Rescue-US-Oil-Industry.html

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(edited)

29 minutes ago, Bob_W said:

Cruz says what agitated Texans want to hear, riling up the support base.

But he wasn't born yesterday; even he knows his fantasy blockade won't matter, and won't bring back frantic oil shale drilling.

https://oilprice.com/Energy/Crude-Oil/Ban-On-Saudi-Crude-Wont-Rescue-US-Oil-Industry.html

Every bbl helps.  If Cruz can turn around 40mm bbls that is very good

PLUS It lets the Saudis know not to try this again in the coming months.  This glut is going to be around for a while. 

I would put money on the possibility some of that oil is owned by Exxon and/or Chevron , both of which have E&P JVs in Saudi Arabia.  

Trump has still been silent on this ?  What gives ? 

Edited by BLA

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54 minutes ago, Tom Kirkman said:

Same with some U.S. frackers, if I have been tracking this correctly.

No question about it! I've been banging on that bucket for months. In fact, I could see that the Permian guys were going to swamp the whole shale concept. (Since most of my holdings were ex-Permian, that was of considerable interest to me.)

But it's not really the frackers--they're just guns for hire, doing a job and moving on. It's the "producers." Many of the frackers have been openly joking about this for at least a year . . . a train wreck about to happen. I know one guy with a few fracking fleets who paid down ALL debt because he saw storage filling up and pipelines log-jammed and a TRRC reluctant to end the party by enforcing Statewide Rule 32: may vent NG for 24 hours, flare for ten days.

Now that we're in this mess, I actually think it would be best to just let every man fiend for himself without governmental regulation on either a national or state basis. I have been VERY vocal about the need for a tariff or ban on foreign oil but that bus has left the station. Now, just let 'er rip, go collect the pieces and see if we can eventually build up something again. I love Harold Hamm--he's a fellow Oklahoman and has been a wonderful philanthropist to the OU School of Medicine--but his complaint to the CME about futures irregularities is going nowhere. This was just a damn train wreck, pure and simple, and it's been coming for quite a while.

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I don't know much about the oil business. But I just read this article:

https://oilprice.com/Energy/Crude-Oil/Ban-On-Saudi-Crude-Wont-Rescue-US-Oil-Industry.html

Another article showed that the US doesn't import much Middle Eastern oil. Tariffs and bans probably won't work.

Negative oil prices have been in the news. Is it conceivable that Saudi Arabia will sell a lot of that oil to the American strategic reserve at negative prices to get rid of the oil?

 

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29 minutes ago, pisstol said:

Is it conceivable that Saudi Arabia will sell a lot of that oil to the American strategic reserve at negative prices to get rid of the oil?

My guess is that those tankers will head to Rotterdam.   Sit over there.  

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So, the offshore platforms are shutting in production and the Gulf refineries said they'll be taking the Saudi oil sitting in tankers off the coast.  Called Cornyn and Cruz to tell them to stop the Saudi crude and got a call back from Doug Collins office - wanted to know if I wanted to have a sign or if I'd like to volunteer.  Hmmm, said, sorry, but I don't live in Georgia.  At least Gov. Abbot of Texas said the same thing that Cruz and Cornyn said, but the Trump Admin. apparently is more worried about Iran than the America First energy independence which will be gone in 2020-2021. 

The Saudi fight with Russia flooded the world with oil with zero demand, so it looks like they finally got their wish.  The oil industry is seriously contracting and the oil companies running the offshore rigs said it will take at least 2 years to bring back production, 2 million bbls.  The stripper wells have shut-in so add another 3 million bbls lost.  In 3 months, we're back in the hands of OPEC+ and all their whims and pissing matches.  

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