Strait of Hormuz
Energy War Escalates, but Iran Quietly Courts Neighbors
Iran’s attacks on energy infrastructure in Gulf countries, particularly targeting the oil terminals and gas fields of the United Arab Emirates, have pushed the IEA’s strategic petroleum stock release to the back burner, making supply disruptions the main story again.
Whilst shipping companies remain wary of transiting the Hormuz, despite the Trump administration’s claims that tankers are now ‘dribbling through’, Tehran seems to be eager to make political deals with regional neighbours.
Separate deals with Iraq and Pakistan could be the start of something bigger, OilPrice.com reports.
Daily exports of crude and products from the Arab Gulf have plunged by 60% since the US-Iran war started, with the previous flow of more than 25 million b/day shrinking to just 9.7 million b/day in the week ending March 15, tightening global oil markets.
Fatih Birol, the executive director of the International Energy Agency, has stated that the organization is ready to release more oil stocks if needed, beefing up its largest-ever joint release of 400 million barrels into the market.
After Iraq failed to persuade the Kurdish Regional Government to resume exports of crude from the country’s south via the Kirkuk-Ceyhan pipeline, Baghdad is now seeking to restart a long-halted pipeline that bypasses Kurdish territory.
One of the largest gas fields in the United Arab Emirates, ADNOC’s Shah field, jointly developed with Occidental Petroleum (NYSE:OXY), has been impacted by a drone attack and forced to shut, closing 1.28 BCf/d gas and 4.2 mtpa sulphur production capacity.
According to market reports, Japanese refiners are looking to buy Russian crude oil to soften the impact of supply disruptions driven by the closure of the Strait of Hormuz, despite having purchased only one cargo of Sakhalin oil throughout the past 3 years.
Canada’s oil producers have pledged to ramp up output by a collective 23.6 million barrels as the country has no strategic petroleum reserves, suggesting that its part of the coordinated IEA release will only materialize in 3-6 months.
US upstream firm Sable Offshore (NYSE:SOC) started pumping crude through a long-disputed pipeline system that links California’s Santa Ynez offshore platform with Golden State refineries, shut since 2015, following executive orders from President Trump.
US average retail diesel prices have jumped above $5 per gallon for the first time since December 2022 and only for the second time in history, according to data from GasBuddy, as oil markets are reeling from the closure of Middle Eastern middle distillates.
China’s state-controlled refineries Sinopec and CNPC resumed imports of seaborne Russian crude after a four-month-long hiatus driven by US sanctions on Rosneft and Lukoil, mopping up 10 cargoes of Far Eastern ESPO in the May loading cycle.
Kuwait’s long-mooted $7 billion midstream infrastructure farm-out deal might be falling apart after Australian investment fund Macquarie (ASX:MQG) decided to withdraw from bidding, citing the uncertain geopolitical outlook in the wider Gulf region.
China’s reported production of crude steel dropped by 3.6% year-over-year in January-February to 160.34 million metric tonnes, as Beijing’s export requirements slowed outgoing shipments and nationwide steel margins started to falter.
According to the NYT, the Trump administration is drafting agreements to pay nearly $1 billion to French energy giant TotalEnergies (NYSE:TTE) as compensation for the cancellation of its wind farm leases in New York and North Carolina.
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