MelvinUdall said:

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tysker said:

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WOW AMAZING 1.25 MILLION BARRELS A DAY???!!! THAT CHANGES EVERYTHING!!!

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It's a step in the right direction with a country like Venezuela which has a ton of oil.

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Exactly! There are 2 posters on this thread that have been "doom and gloom the world is gonna end and we are gonna run out of oil soon" ever since this situation started. They won't be happy unless the world runs out.

Some people can do math and know that globally we are consuming far more oil than is being produced and shipped and that storage reserves are not infinite. It's not an emotional or "hope" thing, it is a math thing.

superaggie73 said:

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MelvinUdall said:

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tysker said:

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WOW AMAZING 1.25 MILLION BARRELS A DAY???!!! THAT CHANGES EVERYTHING!!!

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It's a step in the right direction with a country like Venezuela which has a ton of oil.

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Exactly! There are 2 posters on this thread that have been "doom and gloom the world is gonna end and we are gonna run out of oil soon" ever since this situation started. They won't be happy unless the world runs out.

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You're talking about me?
Do you have any evidence or math to dispute my posts? Feel free to provide anything you have; I am more than willing to discuss openly and in good faith.

The sky is falling, the sky is falling.

5Amp said:

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The sky is falling, the sky is falling.

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I wouldn't say that personally, but we live in a world of limited resources.
Crack spreads (3-2-1 crack spreads if you will) are above $40, indicating stress and well above historical averages. Just because the US is experiencing lower spread prices than other regions (and let's be honest, crack spreads in the US are well above historical levels) doesn't mean other areas of the globe aren't being severely impacted.

tysker said:

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5Amp said:

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The sky is falling, the sky is falling.

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I wouldn't say that personally, but we live in a world of limited resources.
Crack spreads (3-2-1 crack spreads if you will) are above $40, indicating stress and well above historical averages. Just because the US is experiencing lower spread prices than other regions (and let's be honest, crack spreads in the US are well above historical levels) doesn't mean other areas of the globe aren't being severely impacted.

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Do not care if other parts of the world are experiencing high crack spreads, most of these other countries bet on green energy, now having to purchase oil from the USA or our new partner Venezuela.

ErnestEndeavor said:

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Some people can do math and know that globally we are consuming far more oil than is being produced and shipped and that storage reserves are not infinite. It's not an emotional or "hope" thing, it is a math thing.

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Well said.

Trump took a huge gamble with the world economy when he decided to do a hot war on Iran. That is a fact, and it is why us data analysis types watch the actual numbers instead of trusting the messaging of an Administration known coast to coast and throughout the world for its lying, false claims, and unreliability.

Trump's promised "Drill Baby Drill" did not happen in 2025. There are very few signs it will happen in 2026 or in future years, either.

Unless an unforeseen new enormous technological breakthrough in oil extraction occurs, U.S. domestic oil production is probably near its peak. Most industry analysts say it will decline in the coming years.

Regarding the SoH closure and its effect on current world oil prices, substantial demand destruction has been increasing around the world for the past 60 days. That, plus the use of strategic reserves, have thus far kept the increase in gasoline and diesel prices to "only" 50% higher.

One of the reasons people aren't too worried about the Strait of Hormuz being closed is the major players have found other routes to get their oil to market. The Saudis have a backup pipeline, UAE and Iraq have fast tracked new ones. New railroads are coming online in the ME too.

One of the biggest positive outcomes of all this will be eliminating the strait as a choke point for oil via Iran or anyone else.

https://www.msn.com/en-us/money/markets/the-hormuz-squeeze-is-redrawing-the-oil-map-for-good/ar-AA24MMxb

5Amp said:

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tysker said:

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5Amp said:

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The sky is falling, the sky is falling.

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I wouldn't say that personally, but we live in a world of limited resources.
Crack spreads (3-2-1 crack spreads if you will) are above $40, indicating stress and well above historical averages. Just because the US is experiencing lower spread prices than other regions (and let's be honest, crack spreads in the US are well above historical levels) doesn't mean other areas of the globe aren't being severely impacted.

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Do not care if other parts of the world are experiencing high crack spreads, most of these other countries bet on green energy, now having to purchase oil from the USA or our new partner Venezuela.

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What countries exactly?
Texas produces more "green energy" than California but I wouldn't say the state has "bet on green energy." Many countries in Asia, for instance, have tried to diversify their energy sources and be less reliant on oil from the Middle East and Russia.

The US doesn't have the spare refining capacity to fill the gap needed in Asia. Maybe not even its own needs. Venezuela is a drop in the bucket.

techno-ag said:

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One of the reasons people aren't too worried about the Strait of Hormuz being closed is the major players have found other routes to get their oil to market. The Saudis have a backup pipeline, UAE and Iraq have fast tracked new ones. New railroads are coming online in the ME too.

One of the biggest positive outcomes of all this will be eliminating the strait as a choke point for oil via Iran or anyone else.

https://www.msn.com/en-us/money/markets/the-hormuz-squeeze-is-redrawing-the-oil-map-for-good/ar-AA24MMxb

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Is this good for US oil producers and refiners? It seems directionally good for shale at nat gas producers. But oil producers and refiners are still bound by global prices and export constraints.

tysker said:

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techno-ag said:

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One of the reasons people aren't too worried about the Strait of Hormuz being closed is the major players have found other routes to get their oil to market. The Saudis have a backup pipeline, UAE and Iraq have fast tracked new ones. New railroads are coming online in the ME too.

One of the biggest positive outcomes of all this will be eliminating the strait as a choke point for oil via Iran or anyone else.

https://www.msn.com/en-us/money/markets/the-hormuz-squeeze-is-redrawing-the-oil-map-for-good/ar-AA24MMxb

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Is this good for US oil producers and refiners? It seems directionally good for shale at nat gas producers. But oil producers and refiners are still bound by global prices and export constraints.

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I think it's good the other players in the ME are finding storage and shipping solutions that bypass Iran. Can't help but think that will ultimately be good for everybody.

I wonder if this will be the new benchmark of a successful operation against Iran. Unspoken: we didn't stop their nuclear aspirations [even though we said we did last summer] and we didn't effect regime change, but spoken: we now no longer have to worry about Iran as a bottleneck to the oil market.

ErnestEndeavor said:

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Oil stocks have not moved much during the conflict. Whatever gains might be made by exporting from elsewhere aren't necessarily offsetting the losses they are experiencing from their operations in the middle east. The oil companies are not hugely profiting from this conflict despite what may be assumed.

And the Exxon CEO was talking about global stock shortages. Again, we have not yet seen demand destruction. We are consuming oil globally at a high rate, higher than the rate it's coming out of the ground and shipping. Alternative sources are not making up for the shortfall coming out of the Strait, so globally that difference is being made up in drawdowns from storage. Asia and Europe are going to feel a huge pinch once they're less able to obtain existing oil from storage.

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So who is making the money? Supply Chain: Oil Wells to Oil Refineries, Refineries to Gas Stations, Gas Station to my Pickup. The cost per gallon was $2.15. Now its $3.65. Who pockets that extra 1.50?

Quote:

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So who is making the money?

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Micro effect is distributed across players based on their variable costs and pricing power. Macro effect is probably a net negative as it's a drag on productive activity and eventually GDP

jeremy said:

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ErnestEndeavor said:

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Oil stocks have not moved much during the conflict. Whatever gains might be made by exporting from elsewhere aren't necessarily offsetting the losses they are experiencing from their operations in the middle east. The oil companies are not hugely profiting from this conflict despite what may be assumed.

And the Exxon CEO was talking about global stock shortages. Again, we have not yet seen demand destruction. We are consuming oil globally at a high rate, higher than the rate it's coming out of the ground and shipping. Alternative sources are not making up for the shortfall coming out of the Strait, so globally that difference is being made up in drawdowns from storage. Asia and Europe are going to feel a huge pinch once they're less able to obtain existing oil from storage.

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So who is making the money? Supply Chain: Oil Wells to Oil Refineries, Refineries to Gas Stations, Gas Station to my Pickup. The cost per gallon was $2.15. Now its $3.65. Who pockets that extra 1.50?

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Don't confuse the price of gasoline with the cost.

Everybody in that value chain buys a product/service from somebody else. It's their cost and the other guy's price.

Oil itself has moved from $60/barrel to $93, or 55%. That is most of the movement. The rest gets spread around other folks in the value chain. But I wouldn't assume that's all profit. There are extra costs being incurred to get oil from alternate sources, ship it, etc.

Conventional wisdom held for a long time that the sweet spot for oil was somewhere between $60 to $80/barrel, enough to incent investment in extraction and refining, and still reasonable enough to avoid sticker shock at the gas pumps. That's an old data point, probably 15 years old. I suspect that sweet spot has moved up to $80 to $100/barrel, or $3 to $4 gasoline. On an inflation-adjusted basis, that's actually kind of flat to $2 gas twenty years ago.

Queso1 said:

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I wonder if this will be the new benchmark of a successful operation against Iran. Unspoken: we didn't stop their nuclear aspirations [even though we said we did last summer] and we didn't effect regime change, but spoken: we now no longer have to worry about Iran as a bottleneck to the oil market.

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Yes lol

We could openly surrender and sign a worse deal than Obama did and it would still be an insanely succesful Not a War because Trump did it.