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Why is Strait of Hormuz the World's Most Important Oil Artery

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On 5/13/2019 at 11:11 AM, RuudinFrance said:

Waiting and hoping Mr. Rouhani, please press the button.

Why would you hope for such a thing? 

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5 hours ago, ronwagn said:

Biblical prophecies may be panning out soon. 

They're well on their way in Alabama, I read this morning. The regression in USA society is alarming to the rest of the Western World. Even after rape and/or incest, no more abortions. The "poor" will face the consequences. The rich have the possibility to go and purchase abroad. The "underprivileged" will face the music with more "underprivileged" filling the country. This is the way to go to build a prosperous nation, where the "haves" will fill their protected enclaves and the poor will eventually slaughter them there.

The USA gets as bad as any over the top religious governments e.g. the much admired Iran.

A good start of the day 💪, but some reflection might be required,

Have fun.

 

 

 

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5 hours ago, ronwagn said:

Stock Market up the last two days. I say let's compete fiercely and find new sources other than China. This is a major priority. We have been letting ourselves be taken advantage of for decades. Even Senate Majority Leader for the Democrats, Chuck Schumer agrees.

Greed! The USA didn't HAVE TO purchase all these nice goodies from China. Much of what the USA imported was rubbish and without much value. OK there were serious items as well. Mostly the "underprivileged" will have to do without fluffy things and for the essential things, Americans will have to pay more now.

This wonderful upswing in economy is permanent, many will believe. LMAO.

So you'll find different sources and the trade deficit will be spread out among other cheap nations. However, a deficit it will remain.

Have fun.

 

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6 hours ago, ronwagn said:

Why would you hope for such a thing? 

An up-vote for this question. It's a good one.

We can sprinkle about the pot as we like, but at some moment Mum is getting so upset that she'll force us to piss IN it. Happened to all of us boys, don't say you don't remember as you will be lying or (as this is much about oil) we're not talking about backwardation but retardation.

Anyone wants to make an extended list of USA "successes" in bombing a country to hell and then make billions out of restoring the country. A good business model it is. That's what Bolton's got in mind for Iran. It's got little to do with any danger from Iran, or the "suppressed" people there. Religious creeps anywhere (USA++ and Iran++ alike) run a business, there's money to be made and anything is allowed. I don't mind people being religious, it should be  a free choice. Very often it is not (peer pressure and such), but in principle it's anyone's choice.

So, what would be a good thing is that this "business model" would be held against the light, in order to determine the immorality of it (lives for money, more lives for more money). Best way to do that is have the model break down. Close the Straights of Hormuz and let oil go to $150/bbl. Sure, Iran will suffer as the hawks will not be able to stop doing stupid things without thinking first (they're not good at thinking things through anyway).

World economy will suffer and all nations with it. Peoples of the world will not remember the closing of the Straights, but the atrocities executed by the "leader" of the Free World. It's a good thing that much of the Western World is slowly taking their distance from the USA. Don't forget that with Allende we did not have the internet, today we have. Hundreds of thousands of videos will swarm the net and the USA will become a paria in the world for decades to come. America First, but all alone and failing, becoming Balkanized from the world at large. Well off Americans will flee and the poor will become a nation of "deplorables" (thanks Hilary, nice wording), no education, substandard living and crime galore. 

I do not really want that to happen, but at some time in the pretty near future, the USA will be stopped from bullying the world. I can see Europe and Russia sorting out their differences (MH17, Crimea, Donbass), I can see Russia supplying China with all the energy (gas/oil) they can possibly consume. China/Russia are bigger in Africa (a.o. foodstuffs) than USA is. India/Pakistan are no friends of the USA, or do you think they are?

What does the "average" American know about the proxy war in Yemen? Do they even care? Believe me, even though drone attacks may fail, dedicated guerrilla warfare will not. Big country SA is, long pipelines they have and is the Red Sea port safe from dedicated suicide attackers?

Nah, the current path of the USA is one of self destruction. Let Iran close the Straights and have it done with.

I hope this answers the question.

Have fun.

P.S.: Wanna learn about the USA and it's society? Read "Travels without John" by Geert Mak. I'll do some work of translating sections when I find the time. It's enlightening.

 

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10 hours ago, ronwagn said:

I hope we are now billing OPEC since we no longer need their oil. The EU and others should take over, or maybe they can protect it by themselves?

Bulk of that oil flows east. Perhaps China and Japan should be the ones to pick up that tab.

 

oil flows.jpg

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On 5/13/2019 at 10:26 AM, rainman said:

The waterway separates Iran and Oman, linking the Gulf to the Gulf of Oman and Arabian Sea. The Strait is 21 miles (33 km) wide at its narrowest point, but the shipping lane is just two miles (three km) wide in either direction. The U.S. Energy Information Administration estimated that 18.5 million barrels per day (bpd) of seaborne oil passed through the waterway in 2016. That was about 30 percent of crude and other oil liquids traded by sea in 2016. About 17.2 million bpd of crude and condensates were estimated to have been shipped through the Strait in 2017 and about 17.4 million bpd in the first half of 2018, according to oil analytics firm Vortexa. With global oil consumption standing at about 100 million bpd, that means almost a fifth passes through the Strait.  Most crude exported from Saudi Arabia, Iran, the UAE, Kuwait and Iraq — all members of the Organization of the Petroleum Exporting Countries — is shipped through the waterway. During the 1980-1988 Iran-Iraq war, the two sides sought to disrupt each other’s oil exports in what was known as the Tanker War. The U.S. Fifth Fleet, based in Bahrain, is tasked with protecting the commercial ships in the area. 

 

image.png.e52c826c1d93679239f34a58d927c89c.png

The Straights is the most important oil channel in the world for this reason it’s also the most protected however the Straights is not where the trouble will come from initially, only if Iran is dragged into a conflict will the narrow channel be affected. The initial problems will come from the vast open waters of the Indian Ocean specifically the Gulf of Oman, Gulf of Aden and the Arabian Sea this is where we will see the initial attacks. This scenario of shutting the Straights plays well into the hands of the smaller splinter groups who are either supported or sympathize with Iran. Also Yemen are a key proponent with a vast coast line leading into the Straights who are already ready to cause KSA and the UAE problems. In short the Straights is the final act in this theatre which has been playing the same show for many years.

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4 hours ago, RuudinFrance said:

We can sprinkle about the pot as we like, but at some moment Mum is getting so upset that she'll force us to piss IN it. Happened to all of us boys, don't say you don't remember as you will be lying or (as this is much about oil) we're not talking about backwardation but retardation.

Say what, now?

4 hours ago, RuudinFrance said:

P.S.: Wanna learn about the USA and it's society? Read "Travels without John" by Geert Mak. I'll do some work of translating sections when I find the time. It's enlightening.

Another idea for leaning about US society: live here.

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5 minutes ago, Rodent said:

Say what, now?

Another idea for leaning about US society: live here.

Been there, done that, got the proof.

> 2 years. No thanks. I'll stay on this side of the pond.

Still, please enjoy yourself.

 

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Just now, RuudinFrance said:

Been there, done that, got the proof.

> 2 years. No thanks. I'll stay on this side of the pond.

Still, please enjoy yourself.

 

Indeed I shall! Cheers.

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(Bloomberg) -- Saudi Arabia restarted its main cross-country oil pipeline after a drone attack by Iran-backed rebels that halted the link and escalated tensions in the world’s largest oil-exporting region.

Saudi Aramco resumed operations at the pipeline after a halt Tuesday, the state-run oil company said in an emailed statement.The drone attack claimed by Houthi rebels in neighboring Yemen on Tuesday had targeted two pumping stations along the link, which crisscrosses the Arabian peninsula, carrying crude, natural gas and refined products.

The risks of conflict in a region that exports more than 16 million barrels of oil a day -- enough to supply all of Europe’s demand and more -- have risen since the U.S. revoked waivers this month that allowed Iran to continue selling oil to some customers despite American sanctions. Saudi Arabia and the United Arab Emirates -- Iran’s regional foes -- reported on Monday attacks on several vessels including Saudi oil tankers. Houthi rebels on Tuesday claimed they had used drones to damage Saudi oil-pumping stations.

The targeted pipeline carries crude 1,200 kilometers (746 miles) between the Persian Gulf and Red Sea, enabling the Saudis to ship oil from both sides of the country. Saudi Aramco, the world’s biggest oil exporter, said Tuesday that supplies of crude and refined products continued without interruption despite the attack. Iran denounced Sunday’s maritime incident near Hormuz and warned against attempts to destabilize the region.

It’s not the first time oil infrastructure has been targeted in Saudi Arabia, a country that pumps 10 million barrels a day, or about 10% of global production. In 2005, security forces foiled a suicide attack on the Abqaiq oil-processing center, which handles about two-thirds of the country’s production.

An uninterrupted supply of Saudi oil is crucial right now because the nation is almost alone in having enough spare production capacity to compensate for the slump in Iranian exports. After the U.S. earlier this month ended sanctions waivers for a handful of buyers of Iranian oil, Tehran responded by threatening to block shipments through Hormuz, through which about 17.5 million barrels of oil passes every day.

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On 5/15/2019 at 5:02 AM, RuudinFrance said:

 

So, what would be a good thing is that this "business model" would be held against the light, in order to determine the immorality of it (lives for money, more lives for more money). Best way to do that is have the model break down. Close the Straights of Hormuz and let oil go to $150/bbl.

 

Its been forecast that Brent would rocket past $300/bbl if that were to happen. 

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10 hours ago, Wallace907 said:

Its been forecast that Brent would rocket past $300/bbl if that were to happen. 

So, what would be a good thing is that this "business model" would be held against the light, in order to determine the immorality of it (lives for money, more lives for more money). Best way to do that is have the model break down. Close the Straights of Hormuz and let oil go to $150/bbl.

 

Another good reason to start switching all ICE engines to natural gas CNG and LNG. It would stop a lot of oily reasons for war in the Mideast etc. 

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On 5/13/2019 at 11:38 AM, Jan van Eck said:

During one of the wars between Egypt and Israel, the Israeli Army managed to push Egypt back to the West side of the Suez Canal.  A number of ships were sunk inside the canal, so that no one could transit.  It sat that way, blocked, for a considerable time, I recall year(s).  Eventually, some peace was restored and the wrecked and sunk ships were removed by salvage teams. 

Now, if the same scenario plays out in the Straights of Hormuz, what would be the Western response?  You cannot send in dive teams to salvage ships in a hot, fire zone.  I suspect the solution will be to construct pipelines from the terminals in the Persian Gulf overland to new loading points on the West side of the Arabian Peninsula, over in the Red Sea. The place that gets into trouble is Qatar, as they are not getting along with MbS.  As for the Iraqis, they would be charged a transit fee for the use of the new pipelines and loading terminals.  There is typically a solution out there, you may have to scramble for it, though. 

How quickly could that be done? 

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23 hours ago, Wallace907 said:

Its been forecast that Brent would rocket past $300/bbl if that were to happen. 

Doubtful.  Governments would release strategic reserves and coordinate to solve the problem long before that happened.  Industry would also respond rapidly.  E.g. consider past oil crises.  US oil consumption plummeted over a few short years. 

image.png.ad28a753be3ac5e855057d2d5c2f6108.png

That was in the US alone.  It was also the demand response before shale oil, alternative fuels (natural gas, ethanol, biodiesel), electrification, emerging market demand, and the end of the Cold War.  At $100+/bbl, how quickly would:
- US shale production accelerate?
- Russian production increase? 
- Canadian oil sand production increase?
- Traders sell existing stocks to lock in profits? 
- Small car purchases displace fuel-guzzling SUVs? 
- Old, inefficient vehicles be scrapped in favor of new, efficient vehicles?
- Emerging economies slow from the cost burden?
- Consumer behavior change to reduce consumption?
- Voter sentiment around the world change to favor energy projects?
- Global deep water projects get planned & executed?
- Commercial vehicle operators transition to CNG/LNG?
- Land transportation shift from trucks to trains?
- Commercial shipping slow as manufacturers switched to local suppliers
- Old, inefficient ships be scrapped in favor of new, LNG models. 
- EV production be accelerated
- Oil pipelines be built to circumvent the Strait of Hormuz
- Plastic production decrease as manufacturers sought alternatives
- Asphalt consumption be replaced with concrete

You get the picture.  Oil demand could shift rapidly in a single year just from behavioral/market changes.  In 3-5 years - a time for which the world has sufficient reserves - the supply shortfall would disappear entirely.  You might see a brief spike to $300/bbl as traders panicked, but it wouldn't last beyond world governments' decisions to release reserves.  I would be surprised if oil sustained $150/bbl for even a year. 

The above chart also tells us why the US is being so aggressive in the Middle East: even when we were dependent on Middle Eastern oil, we had market power.  Every price spike was met with severe demand destruction, threatening the Middle East's revenue.  They quickly realized they must behave.  Today, the world is no longer dependent on Middle Eastern oil.  There's plenty of oil to be had from elsewhere, and new technologies are destroying demand even at modest oil prices.  There's no benefit to sending wealth to the Middle East. 

On top of that, the world would be better off without Middle Eastern influence.  There would be less violence, oil prices would be more stable, and political/military costs would decline.  Most importantly, powerful nations would enjoy a boost in oil revenue along with geopolitical advantages.  These advantages are particularly important as the US and Russia seek to contain China. 

The remaining question is, "Would it be better to let the Middle East decline naturally, or actively nudge it into destruction?  The US and Russia would earn a lot of money on spiked oil prices even as China - the largest importer in the world - suffered.  As advanced economies, they would also benefit from the acceleration of new technologies, manufacturing, etc needed to cope with an oil shortage.  And of course, the US and Russia need to seize these advantages quickly to stay ahead of China.  Despite its impact on consumers, spiking oil prices could end up being the least risky, least costly option.  Temporarily expensive oil - with all of that "cost" funneled into your own economy as investment - is a small price to pay.  I'm not seeing a downside to intervention. 

All things considered, I would say developed nations have nothing to lose and much to gain from quickly destroying the Middle East.  Thus, that's exactly what I expect them to do. 

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2 hours ago, BenFranklin'sSpectacles said:

How quickly could that be done? 

Building pipelines across the desert sands would be a lot faster than you might think. Heavy pipe can be brought on-line from pipe plants at great speed.  The West has the engineering talent to put it together.  The labor force is out there.  For just one example, line pipe can be turned out in volume by Algoma Steel in Canada. The larger bottleneck might be in the shipping and trucking.  But if you threw enough money and manpower at it, you could build pipelines quite rapidly, considering that there is no rock blasting involved. Cheers.

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On 5/15/2019 at 10:52 AM, Rodent said:

Another idea for leaning about US society: live here.

Unfortunately, US society does not make me lean.   I do try, however. The diet starts tomorrow!

[Put an "R" in it, Rodi!] 

OK, in all seriousness, living in rural America is a real pleasure.  I had a cable guy working on putting in a new line to the school down the road a few miles; it was a big project.  He really needed some flat land onto which to make a big coil of line, six thousand feet, to feed through the trees in one piece.  He asked nicely if he could use my front lawn;  I said sure, help yourself.   I was outside chatting with him the other day while his crew was knocking themselves out climbing poles, he mentioned that he noticed some fallen trees from the winter storms on the side, and said he would chain-saw them up for me into firewood. Those guys carry well-oiled chainsaws for the work they do.  Now, that was a really nice offer.  Yet typical for rural Americans.  

A railroad locomotive the other year came around a turn and was confronted by a rockslide onto the tracks; no chance to stop.  The locomotive derailed and went down the embankment. The only way out was to cut a wide path through the abutting homeowners' woods and out onto the road, then to be placed on a monster flatbed, one of those with hundreds of tires. the RR had to cut lots of trees to do that.  The homeowners had the wood cut into firewood and donated to the poor, for winter heat.   Now, that was seriously altruistic of them.  Americans; ya gotta love them. What nice, generous, decent people.  [I am not American.  I just live here.] 

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(edited)

7 hours ago, Jan van Eck said:

 Americans; ya gotta love them. What nice, generous, decent people.  [I am not American.  I just live here.] 

I traveled a fair amount around the states and the only random a-holes I came across were in Chicago.   I was only there a week for work and met several...

Edited by Enthalpic

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4 minutes ago, Enthalpic said:

I traveled a fair amount around the states and only the only random a-holes I came across were in Chicago.   I was only there a week for work and met several...

Well, you are going to get that in large cities.  In travels in Canada, and I have been from Cape Breton to the far north Yukon, up to the silver mines, the only total jerks I have run into were in large cities, including Toronto (of course) and Hamilton.   For the rest, especially in the Maritimes, perfectly nice people.  For reasons that are not fully understood, large cities seem to develop some seriously bad behaviour in a smaller number of people. 

Now, having said that, there are substantial indicators that Thunder Bay, Ontario, is a total pit.  The relationships there with the First Nations peoples are just appalling.  Thunder Bay needs the old Brimstone scorched-earth resolution, I am sad to say.  Interesting that the towns fifty miles away on either side don't have those social problems.  Cheers. 

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4 minutes ago, Jan van Eck said:

Well, you are going to get that in large cities.  In travels in Canada, and I have been from Cape Breton to the far north Yukon, up to the silver mines, the only total jerks I have run into were in large cities, including Toronto (of course) and Hamilton.   For the rest, especially in the Maritimes, perfectly nice people.  For reasons that are not fully understood, large cities seem to develop some seriously bad behaviour in a smaller number of people. 

Now, having said that, there are substantial indicators that Thunder Bay, Ontario, is a total pit.  The relationships there with the First Nations peoples are just appalling.  Thunder Bay needs the old Brimstone scorched-earth resolution, I am sad to say.  Interesting that the towns fifty miles away on either side don't have those social problems.  Cheers. 

 

Oh there are plenty of jerks in Canada all right.

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Exclusive: Insurer says Iran's Guards likely to have organized tanker attacks

 

LONDON/OSLO (Reuters) - Iran's elite Revolutionary Guards (IRGC) are "highly likely" to have facilitated attacks last Sunday on four tankers including two Saudi ships off Fujairah in the United Arab Emirates, according to a Norwegian insurers' report seen by Reuters.

The UAE, Saudi Arabia and Norway are investigating the attacks, which also hit a UAE- and a Norwegian-flagged vessel.

A confidential assessment issued this week by the Norwegian Shipowners' Mutual War Risks Insurance Association (DNK) concluded that the attack was likely to have been carried out by a surface vessel operating close by that despatched underwater drones carrying 30-50 kg (65-110 lb) of high-grade explosives to detonate on impact.

The attacks took place against a backdrop of U.S.-Iranian tension following Washington’s decision this month to try to cut Tehran's oil exports to zero and beef up its military presence in the Gulf in response to what it called Iranian threats.

The DNK based its assessment that the IRGC was likely to have orchestrated the attacks on a number of factors, including:

- A high likelihood that the IRGC had previously supplied its allies, the Houthi militia fighting a Saudi-backed government in Yemen, with explosive-laden surface drone boats capable of homing in on GPS navigational positions for accuracy.

- The similarity of shrapnel found on the Norwegian tanker to shrapnel from drone boats used off Yemen by Houthis, even though the craft previously used by the Houthis were surface boats rather than the underwater drones likely to have been deployed in Fujairah.

- The fact that Iran and particularly the IRGC had recently threatened to use military force and that, against a militarily stronger foe, they were highly likely to choose "asymmetric measures with plausible deniability". DNK noted that the Fujairah attack had caused "relatively limited damage" and had been carried out at a time when U.S. Navy ships were still en route to the Gulf.

Both the Saudi-flagged crude oil tanker Amjad and the UAE-flagged bunker vessel A.Michel sustained damage in the area of their engine rooms, while the Saudi tanker Al Marzoqah was damaged in the aft section and the Norwegian tanker Andrea Victory suffered extensive damage to the stern, DNK said.

The DNK report said the attacks had been carried out between six and 10 nautical miles off Fujairah, which lies close to the Strait of Hormuz.

SENDING A MESSAGE

Iran has in the past threatened to block all exports through the Strait of Hormuz, through which an estimated fifth of the world's oil passes.

According to DNK, it was highly likely that the attacks had been intended to send a message to the United States and its allies that Iran did not need to block the Strait to disrupt freedom of navigation in the region.

DNK said Iran was also likely to continue similar low-scale attacks on merchant vessels in the coming period.

Iranian officials and the Revolutionary Guards' (IRGC) spokesman were not available for comment.

Tehran had already rejected allegations of involvement and Iranian Foreign Minister Mohammad Javad Zarif had said that "extremist individuals" in the U.S. government were pursuing dangerous policies. No one claimed responsibility for the attacks.

DNK's managing director Svein Ringbakken declined to comment, except to say that "this is an internal and confidential report produced to inform shipowner members of the DNK about the incidents in Fujairah and the most likely explanation".

The UAE has not blamed anyone for the attack.

Two U.S. government sources said this week that U.S. officials believed Iran had encouraged Houthi militants or Iraq-based Shi'ite militias to carry out the attack.

In a joint letter seen by Reuters and sent to the U.N. Security Council on Wednesday, the UAE, Saudi Arabia and Norway said the attacks had been deliberate and could have resulted in casualties, spillages of oil or harmful chemicals.

"The attacks damaged the hulls of at least three of the vessels, threatened the safety and lives of those on board, and could have led to an environmental disaster," the letter said.

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On 5/13/2019 at 9:38 AM, Jan van Eck said:

 I suspect the solution will be to construct pipelines from the terminals in the Persian Gulf overland to new loading points on the West side of the Arabian Peninsula, over in the Red Sea.

Pipelines already exist for both SA and UAE...

Now are they big enough for 100%?  No.  ~5Mbbl SA and 1.5Mbbl for UAE

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20 hours ago, BenFranklin'sSpectacles said:

Doubtful.  Governments would release strategic reserves and coordinate to solve the problem long before that happened.  Industry would also respond rapidly.  E.g. consider past oil crises.  US oil consumption plummeted over a few short years. 

image.png.ad28a753be3ac5e855057d2d5c2f6108.png

That was in the US alone.  It was also the demand response before shale oil, alternative fuels (natural gas, ethanol, biodiesel), electrification, emerging market demand, and the end of the Cold War.  At $100+/bbl, how quickly would:
- US shale production accelerate?
- Russian production increase? 
- Canadian oil sand production increase?
- Traders sell existing stocks to lock in profits? 
- Small car purchases displace fuel-guzzling SUVs? 
- Old, inefficient vehicles be scrapped in favor of new, efficient vehicles?
- Emerging economies slow from the cost burden?
- Consumer behavior change to reduce consumption?
- Voter sentiment around the world change to favor energy projects?
- Global deep water projects get planned & executed?
- Commercial vehicle operators transition to CNG/LNG?
- Land transportation shift from trucks to trains?
- Commercial shipping slow as manufacturers switched to local suppliers
- Old, inefficient ships be scrapped in favor of new, LNG models. 
- EV production be accelerated
- Oil pipelines be built to circumvent the Strait of Hormuz
- Plastic production decrease as manufacturers sought alternatives
- Asphalt consumption be replaced with concrete

You get the picture.  Oil demand could shift rapidly in a single year just from behavioral/market changes.  In 3-5 years - a time for which the world has sufficient reserves - the supply shortfall would disappear entirely.  You might see a brief spike to $300/bbl as traders panicked, but it wouldn't last beyond world governments' decisions to release reserves.  I would be surprised if oil sustained $150/bbl for even a year. 

The above chart also tells us why the US is being so aggressive in the Middle East: even when we were dependent on Middle Eastern oil, we had market power.  Every price spike was met with severe demand destruction, threatening the Middle East's revenue.  They quickly realized they must behave.  Today, the world is no longer dependent on Middle Eastern oil.  There's plenty of oil to be had from elsewhere, and new technologies are destroying demand even at modest oil prices.  There's no benefit to sending wealth to the Middle East. 

On top of that, the world would be better off without Middle Eastern influence.  There would be less violence, oil prices would be more stable, and political/military costs would decline.  Most importantly, powerful nations would enjoy a boost in oil revenue along with geopolitical advantages.  These advantages are particularly important as the US and Russia seek to contain China. 

The remaining question is, "Would it be better to let the Middle East decline naturally, or actively nudge it into destruction?  The US and Russia would earn a lot of money on spiked oil prices even as China - the largest importer in the world - suffered.  As advanced economies, they would also benefit from the acceleration of new technologies, manufacturing, etc needed to cope with an oil shortage.  And of course, the US and Russia need to seize these advantages quickly to stay ahead of China.  Despite its impact on consumers, spiking oil prices could end up being the least risky, least costly option.  Temporarily expensive oil - with all of that "cost" funneled into your own economy as investment - is a small price to pay.  I'm not seeing a downside to intervention. 

All things considered, I would say developed nations have nothing to lose and much to gain from quickly destroying the Middle East.  Thus, that's exactly what I expect them to do. 

Just because governments can release strategic reserves does not mean prices will go down-but perhaps they would keep them from going any higher. The man who predicted over $300/bbl is one of the worlds biggest traders, but he did not mention for how long in his projection. Having said all that, I would tend to agree that a spike of that magnitude would be somewhat short lived. Although, traditional deep-water and on-shore drilling takes quite a while for investment to pay-off, years even.  Conventional shale production can quickly complete wells already drilled and make more quickly, but we've seen bottlenecks in midstream that would surely limit the take-away capacity.

I also believe that oil has shown to be quite resilient and an inelastic product. We've been producing higher efficient vehicles and finding alternative fuel sources with increasing intensity, yet our consumption continues to grow. Add to that the growing economies around the world and the prospect of lower demand seems scarce. 

I do think saudi arabia could manage to build pipelines quicker than we could, however that may be limited to outbreaks of sabotage and war in the region. China has shown to be able to quickly change policy and build infrastructure at a breakneck pace. But, their economy is one that continues to thirst for more energy. Russia also benefits from government controlled entities, yet they do not have the burdens of a fast growing economy.

To the world's largest energy producers and consumers, Venezuela has a worrisome amount of proven reserves. I think this is why we have a triad of nations vying for influence. I also think the trump administration has set the table for US energy expansion and independence, perhaps in order to prepare for disruptions in oil imports.

I agree that some devastating confrontations are about to go down. I think oil could stabilize but still be over $100/bbl throughout the next decade. Electric cars and LNG are getting some major investment, but scaling it up has shown to come at great cost--further limiting its impact of oil demand. At the end of the day, I think developed countries are prepared to evolve from ICE and growing economies will suffer the greatest. The rich get richer and the poor get poorer from inelastic demand for crude.

 

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Take away the oil from Asia and Europe and Iran gets bombed back into the stone age without US help.

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6 hours ago, Wastral said:

Pipelines already exist for both SA and UAE...

Now are they big enough for 100%?  No.  ~5Mbbl SA and 1.5Mbbl for UAE

image.png.4fe15bc402b6b12980fbb4b84c89ebbc.png

 

Saudi Aramco to expand capacity of east-west pipeline by end-2018

State oil giant says expanded pipeline will produce 7 million bpd up from current level of 5m barrels
State oil giant says expanded pipeline will produce 7 million bpd up from current level of 5m barrels
 

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