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

[Jan van Eck + 7,558]

5 hours 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?

Unlikely.  But "berthing" is not the purpose.  The idea is to have huge supplies right there, ready for purchase, so that if and when some Buyer needs oil, it is available instantly at an attractive price, and that keeps Cushing all bottled up.  If the refiners are taking oil from ships offshore, who is going to buy from Cushing?   And if Cushing is jammed, then where does shale oil go?  

The answwer is that shale, and Cushing, remains clogged.  So, next month, when the futures contracts roll to expiry, once again there will be no place for the contract oil, and it goes negative again, that time at a huge loss, say  Minus $100 or more.  And the game continues. 

If the Saudis need to unload, they will sell the oil into Rotterdam.  Even with tankers sitting in Rotterdam, that wash of fresh oil will continue to depress the market, and Cushing stays jammed.  A Buyer has to consider: how fast can oil from Rotterdam, sitting in a ship, reach his refinery in say New Jersey?  Ten days?  OK, so then that oil is in play, same as if it were sitting right there one hundred yards from his dock.  Oil is not bought and sold on some instantaneous use transaction, it is always "scheduled oil."  The onluy "hot oil" is the oil in the futures contracts. 

[Club 0]

3 hours ago, Gerry Maddoux said:

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. 

( 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. )

 

Surely it would be far cheaper and simpler to just dump the stuff out at sea and cause a shortage !

 

 

[Gerry Maddoux + 3,627]

1 hour ago, JoMack said:

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.  

Well stated, sir!

You are so right.

[Rob Kramer + 696]

It's funny last year I kept getting frustrated at the us spr sales any time oil came up. And on the stock boards everyone was saying oh it's just a days demand a drop in the bucket at 15M barrels a pop. Now its let's re fill the spr and let's get some better prices. Now we have 16M barrels keeping cushing full. Well you can only effect something so much before the side effect. 

[James Regan + 1,776]

14 hours ago, Tom Kirkman said:

^

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

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. 

This can also be said in Arabic....

Edited April 23, 2020 by James Regan

[James Regan + 1,776]

5 hours ago, Rob Kramer said:

It's funny last year I kept getting frustrated at the us spr sales any time oil came up. And on the stock boards everyone was saying oh it's just a days demand a drop in the bucket at 15M barrels a pop. Now its let's re fill the spr and let's get some better prices. Now we have 16M barrels keeping cushing full. Well you can only effect something so much before the side effect. 

With total respect, I consider what DT said to be kicking a man while he is down, he said it was a good time to fill the SPR with prices so low, he also said he would do this weeks ago when it was in the low 20s, this is not a good signal to send to your beloved Industry, taking advantage of the same situation as the rest of the oil traders. Bad man should think before opening mouth sometime.

[James Regan + 1,776]

To be fair the se tankers were filled an on the way before the last OPEC+ cut was agreed, we should be clear about these points before we start wars...

 

[RSD + 41]

18 hours ago, Thisa GuyOkay said:

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

No - Saudi would just walk from the OPEC++ deal and the oil price would totally crash then.

[RSD + 41]

17 hours ago, BLA said:

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.

Motiva has a storage capacity of 42 million barrels of crude,and currently processing 320k bbls/day so that's using 2.2 million bbls a week (just over one full VLCC).  Don't believe that Motiva can slow much lower than 320k bbls day.

Not all of the VLCC's are for Motiva though - some are for EM at Baytown, some for Marathon at Texas City and some are going to P66.

[RSD + 41]

14 hours ago, BLA said:

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 ? 

EM, MP and P66 - none is for Chevy

[RSD + 41]

13 hours ago, Jan van Eck said:

Unlikely.  But "berthing" is not the purpose.  The idea is to have huge supplies right there, ready for purchase, so that if and when some Buyer needs oil, it is available instantly at an attractive price, and that keeps Cushing all bottled up.  If the refiners are taking oil from ships offshore, who is going to buy from Cushing?   And if Cushing is jammed, then where does shale oil go?  

The Aramco oil in the VLCC's currently bound for the U.S. is all sold - was sold before it was loaded at RasTan.

[Jan van Eck + 7,558]

9 minutes ago, RSD said:

The Aramco oil in the VLCC's currently bound for the U.S. is all sold - was sold before it was loaded at RasTan.

Not all of it was; there was that tanker that was diverted from Egypt and instead of unloading there, was headed to the USA. The point, illustrated by the Egypt diversion, is that if the shore tanks cannot accept more product, then the crude either "sits" or goes to some other place.  I suspect that when the Saudi tankers arrive in the US Gulf, they will be unable to unload, as there is no room.  If that refinery cannot sell and ship out the finished product, because no one is taking gasoline, diesel and jet-fuel, then the refinery cannot run, and if it cannot run, then it cannot take in more crude. 

My personal guess is that the crude will end up in Rotterdam.  Why over there?  First, the Netherlands has converted its electricity generating plants from coal to oil - as have other generators n Europe.  Nobody is using less electricity, other than some industrial customers with shut-down plants. Second, that is a place where marine fuels are manufactured, and as a huge port, it always has marine demand.  But either way, it is going to be a slog. 

Edited April 23, 2020 by Jan van Eck
typing error

[RSD + 41]

11 minutes ago, Jan van Eck said:

Not all of it was; there was that tanker that was diverted from Egypt and instead of unloading there, was headed to the USA. The point, illustrated by the Egypt diversion, is that if the shore tanks cannot accept more product, then the crude either "sits" or goes to some other place.  I suspect that when the Saudi tankers arrive in the US Gulf, they will be unable to unload, as there is no room.  If that refinery cannot sell and ship out the finished product, because no one is taking gasoline, diesel and jet-fuel, then the refinery cannot run, and if it cannot run, then it cannot take in more crude. 

My personal guess is that the crude will end up in Rotterdam.  Why over there?  First, the Netherlands has converted its electricity generating plants from coal to oil - as have other generators n Europe.  Nobody is using less electricity, other than some industrial customers with shut-down plants. Second, that is a place where marine fuels are manufactured, and as a huge port, it always has marine demand.  But either way, it is going to be a slog. 

The entire Rotterdam storage hub is full, with a lot of tankers at anchor waiting to unload.  The Tanker that diverted from Egypt is a Suezmax not a VLCC from memory?  Motiva has plenty of storage available for refined product as well as 42 mbbbls of crude storage.  As I mentioned the rest of the Aramco VLCC's are taking orders to EM, MP and P66 - if they can't take what they have ordered then that's their problem... and preesure from them is probably partly why DT hasn't imposed tariffs on the Saudi oil.

Edited April 23, 2020 by RSD

[Jan van Eck + 7,558]

1 minute ago, RSD said:

The entire Rotterdam storage hub is full, with a lot of tankers at anchor waiting to unload.

WOW!   (Did not know that).   Real problems, then.  Rotterdam has historically always been able to take product.   Amazing. 

[RSD + 41]

4 minutes ago, Jan van Eck said:

WOW!   (Did not know that).   Real problems, then.  Rotterdam has historically always been able to take product.   Amazing. 

Certainly is - the entire ARA hub is full (Amsterdam-Rotterdam-Antwerp).  Fujairah is full and not taking orders, and I believe that Singapore will be putting the "no vacancy" sign up on Saturday.  Fujairah is in the middle of an expansion to triple its capacity but it will be opening 12 months too late.

Edited April 23, 2020 by RSD

[wrs + 893]

56 minutes ago, Jan van Eck said:

Not all of it was; there was that tanker that was diverted from Egypt and instead of unloading there, was headed to the USA. The point, illustrated by the Egypt diversion, is that if the shore tanks cannot accept more product, then the crude either "sits" or goes to some other place.  I suspect that when the Saudi tankers arrive in the US Gulf, they will be unable to unload, as there is no room.  If that refinery cannot sell and ship out the finished product, because no one is taking gasoline, diesel and jet-fuel, then the refinery cannot run, and if it cannot run, then it cannot take in more crude. 

My personal guess is that the crude will end up in Rotterdam.  Why over there?  First, the Netherlands has converted its electricity generating plants from coal to oil - as have other generators n Europe.  Nobody is using less electricity, other than some industrial customers with shut-down plants. Second, that is a place where marine fuels are manufactured, and as a huge port, it always has marine demand.  But either way, it is going to be a slog. 

Woah, that's not green at all..........

[nsdp + 449]

21 hours ago, Thisa GuyOkay said:

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

Not s disastrous as if Saudi Arabia unloads tankers at their refinery which is in a FREE TRADE ZONE and tariffs don't apply until the product leaves for US markets for those of you who don't know. Then refines the crude and loads the refined product onto the next tanker to unload shipping the product to markets US refiners currently export to in Central and South America.  That damages US producers two ways. First it locks US crude and refined product exports out of the western Hemisphere market and two it effectively reduces the available storage in the US by backing crude and product up into existing US storage.   That is about a 45 million barrel reduction to US Storage.

Edited April 23, 2020 by nsdp
typos

[nsdp + 449]

20 hours ago, BLA said:

Lose some workers

But other refiners would be very happy.  

 

Other refiners would not be happy and it is other refiners workers who lose. It would back up all of the oil on them as their refineries are not as modern as the Motiva refinery and there fore not as flexible as Motiva.  There isn't a refinery in the western hemisphere that can can compete with Motive on flexibility of crack spread and cost to crack.  They can produce 40% diesel and 5% jet and 55% gasoline in stead of the usual 3:2;1 which is 66% gasoline, and 33% distillate (jet 7-8% and diesel).  That 15% advantage in diesel crack is a killer for competing refineries on profits right now and they don't have to reconfigure to do that or lose efficiency since they are refining the crude that he refinery was designed for. .

Every one start your brain first then type.

Edited April 23, 2020 by nsdp
correct typing

[James Regan + 1,776]

12 minutes ago, nsdp said:

Every one start your brain first then type.

This is a fundamental problem, not only restricted to this forum, its one of those things that makes discussion possible, if we were all correct life would be boring- Go with the flow

[nsdp + 449]

2 hours ago, RSD said:

The entire Rotterdam storage hub is full, with a lot of tankers at anchor waiting to unload.  The Tanker that diverted from Egypt is a Suezmax not a VLCC from memory?  Motiva has plenty of storage available for refined product as well as 42 mbbbls of crude storage.  As I mentioned the rest of the Aramco VLCC's are taking orders to EM, MP and P66 - if they can't take what they have ordered then that's their problem... and preesure from them is probably partly why DT hasn't imposed tariffs on the Saudi oil.

Let's hope that they have explained to DT the consequences of a dumb stunt like tariffs. KSA could take it all to Motiva which can store, refine, it and reexport to central/south America wiping out the US Light crude exports and US refinery other than motiva exports.

[nsdp + 449]

6 minutes ago, James Regan said:

This is a fundamental problem, not only restricted to this forum, its one of those things that makes discussion possible, if we were all correct life would be boring- Go with the flow

If you know the story of Lt Henry T Herick in the Ia Drang, you might understand  why  as  Nam vet  I go off when someone hauls and does something without thinking.

[BLA + 1,666]

39 minutes ago, nsdp said:

Other refiners would not be happy and it is other refiners workers who lose. It would back up all of the oil on them as their refineries are not as modern as the Motiva refinery and there fore not as flexible as Motiva.  There isn't a refinery in the western hemisphere that can can compete with Motive on flexibility of crack spread and cost to crack.  They can produce 40% diesel and 5% jet and 55% gasoline in stead of the usual 3:2;1 which is 66% gasoline, and 33% distillate (jet 7-8% and diesel).  That 15% advantage in diesel crack is a killer for competing refineries on profits right now and they don't have to reconfigure to do that or lose efficiency since they are refining the crude that he refinery was designed for. .

Every one start your brain first then type.

Yes, Exxon just completed major upgrade. 

"It would back up all of the oil on" what a stupid knucklehead statement !  LOL

TURN THE SAUDI TANKERS AROUND ! 

Trump sucking up to the Saudis. Chevron, Exxon, Marathon at the expense of the independents.  

Motiva can have a good crack spread on gasoline and diesel THAT NOBODY WANTS TO BUY.

WE DONT NEED YIUR FOREIGN OIL  . . .  WE DON'T WANT YOUR FORIEGN OIL.  

Mohammed bin Salman is dumping 40 to 50 million bbls on the U.S.  to destroy our oil industry. 

OPEC threstened U.S.  shale industry at Cerraweek dinner in 2018.

DONALD TRUMP, WHY ARE YOU AFRAID OF MOHAMMED BI SALMAN.

WHY THE SILENCE MR. PRESIDENT.

GROW A PAIR.

SAUDI ARABIA NEEDS TO DIVERSIFY  ECONOMY BEYOND OIL  PRODUCTION AND MANUFACTURING MEDICAL BONE SAWS.  BRING THE U.S. TROOPS HOME.  

 

Just what we don't need, another Saudi toady.

 

Edited April 23, 2020 by BLA

[nsdp + 449]

16 minutes ago, BLA said:

Yes, Exxon just completed major upgrade. 

"It would back up all of the oil on" what a stupid knucklehead statement !  LOL

TURN THE SAUDI TANKERS AROUND ! 

Trump sucking up to the Saudis. Chevron, Exxon, Marathon at the expense of the independents.  

Motiva can have a good crack spread on gasoline and diesel THAT NOBODY WANTS TO BUY.

WE DONT NEED YIUR FOREIGN OIL  . . .  WE DON'T WANT YOUR FORIEGN OIL.  

Mohammed bin Salman is dumping 40 to 50 million bbls on the U.S.  to destroy our oil industry. 

OPEC threstened U.S.  shale industry at Cerraweek dinner in 2018.

DONALD TRUMP, WHY ARE YOU AFRAID OF MOHAMMED BI SALMAN.

WHY THE SILENCE MR. PRESIDENT.

GROW A PAIR.

SAUDI ARABIA NEEDS TO DIVERSIFY  ECONOMY BEYOND OIL  PRODUCTION AND MANUFACTURING MEDICAL BONE SAWS.  BRING THE U.S. TROOPS HOME.  

 

Just what we don't need, another Saudi toady.

 

Pretty much every one in the MERCOSUR block will buy from KSA rather than the US because of our relations with them as 'banana republics" in the past.  That w teh justification for the Aruba refinery 20 yearsago. Motiva can replace Aruba.

Edited April 23, 2020 by nsdp
forgot somehting

[Tom Kirkman + 8,860]

How about letting the Saudi tankers sit in the dock for a year.  Or two.  Or three.

[nsdp + 449]

9 minutes ago, Tom Kirkman said:

How about letting the Saudi tankers sit in the dock for a year.  Or two.  Or three.

Why , KSA has markets in Central South America that would rather not deal with American oil companies and can  use 100% of Motiva's capacity. Aruba and St Croiz (Hess) is closed. . Chevron's (actually old Texaco) refusal to clean up oil spills in Peru and Ecuador hasn't made us any friends.  Nor has DT in Venezuela.  I lived south of the border twise . Once in Mexico and once in Ecuador. Yanqui go Home on T-shirts with Che's picture.

Edited April 23, 2020 by nsdp