Energy Sector

[SharperDingaan]

Sure, Marines could seize the Kharg Island oil at any time, and empty the storage tanks; but its oil that was already flowing out of the SOH. The Iranians just turn off the taps refilling the tanks; and let the 1.2 M boe/d squeeze drive crude prices higher 

 

Marines could also try to de-populate the coastal caves to stop missile launches on shipping transiting the SOH; but there's a lot of 'them', few of 'you', and they only need a few 'successes'; Toyota's with truck-mounted 'ship-killers' are ubiquitous.

 

Houthis vs the Saudi's is often mocked; but the Saudi's have had to pay the Houthis, twice, to give them back the key city at the entry to the Red Sea. Toyota's with truck-mounted 'ship-killers; and a 5-7 M boe/d squeeze on crude prices even if only partly successful 

 

SD

 

 

     

[Hektor]

5 hours ago, Blake Hampton said:

If the Houthis manage to close the Bab al-Mandab Strait, that would be an additional 5 million barrels a day of restricted supply

It will also affect other non oil transportation via the Red Sea and Suez Canal. How will the rest of the world respond this time, particularly with the Houthis losing the support structure they had the last time?

[Spekulatius]

So, the Iranian charge $2M for a large tanker passage , ain’t that a bargain? A large tanker VLCC  carries ~2M brl, so it’s just a $1b brl surcharge - sort of like a traffic ticket. Oil fetches more than $20/ brl more then just a few week ago, why don’t the producers  pay the small fine and call it a day - serious question? I suspect that’s what Japan and other countries are doing. If the IRGC had McKinsey advising them, they would charge 10x more. No wonder Iran got nowhere economically, they don’t even know how to run a racket.

https://www.abc.net.au/news/2026-03-29/strait-of-hormuz-iran-control-oil-gas-us-war-israel/106491634

 

Edited March 28 by Spekulatius

[Gamecock-YT]

14 hours ago, Hektor said:

https://www.wsj.com/livecoverage/iran-war-middle-east-news-updates/card/thailand-says-iran-agrees-to-let-its-tankers-transit-strait-of-hormuz-JYAGIUa0ucCxBaHnNdFf

 

Will this make any difference?

 

Looks like tankers from a number of countries are moving through the strait.

 

I think I read that at this point it is 2 Thai flagged ships that have made it out. So guess we will see if that holds up or if anymore can make it out, especially with more soldiers arriving. 

 

News this weekend is haulage rates are going up 10% on April 1 (Happy Liberation Day to all that celebrate)

 

and 

 

20 new items have been added to the price control list, including:

 

Pork; chicken; eggs; rice; paddy; wheat; garlic; fresh coconut; oil palm seeds; latex
Dried food and seasoning; canned fish; instant noodles; palm oil; sugar; salt; fresh milk and powdered milk
Fertiliser; pesticides; animal feeds; farm machinery
Fuel; LPG
Cement; iron rods, sheets and structural iron; electrical cables; PVC pipes, floor and wall tiles; sanitary ware
Tissue paper; printing and writing paper; detergent; soap; shampoo; sanitary towels; diapers
Face masks; hand sanitisers; medicines and medical services; rubber gloves; antigen test kits

 

 

https://world.thaipbs.or.th/detail/truckers-to-raise-haulage-charges-by-10-from-april-1/60828

 

https://world.thaipbs.or.th/detail/commerce-ministry-adds-20-items-to-price-control-list-amid-oil-crisis/60797

[UK]

 

https://www.reuters.com/world/asia-pacific/helium-shortage-has-started-impacting-tech-supply-chains-execs-say-2026-03-26/

 

https://www.reuters.com/business/energy/iran-war-chokes-petrochemical-supply-sends-plastic-prices-soaring-2026-03-26/

 

Not so bad for US indeed.

[Spekulatius]

13 hours ago, Gamecock-YT said:

 

I think I read that at this point it is 2 Thai flagged ships that have made it out. So guess we will see if that holds up or if anymore can make it out, especially with more soldiers arriving. 

 

News this weekend is haulage rates are going up 10% on April 1 (Happy Liberation Day to all that celebrate)

 

and 

 

20 new items have been added to the price control list, including:

 

Pork; chicken; eggs; rice; paddy; wheat; garlic; fresh coconut; oil palm seeds; latex
Dried food and seasoning; canned fish; instant noodles; palm oil; sugar; salt; fresh milk and powdered milk
Fertiliser; pesticides; animal feeds; farm machinery
Fuel; LPG
Cement; iron rods, sheets and structural iron; electrical cables; PVC pipes, floor and wall tiles; sanitary ware
Tissue paper; printing and writing paper; detergent; soap; shampoo; sanitary towels; diapers
Face masks; hand sanitisers; medicines and medical services; rubber gloves; antigen test kits

 

 

https://world.thaipbs.or.th/detail/truckers-to-raise-haulage-charges-by-10-from-april-1/60828

 

https://world.thaipbs.or.th/detail/commerce-ministry-adds-20-items-to-price-control-list-amid-oil-crisis/60797

Oh boy. The Thai economy is in trouble. These shortages are not going to be great advertisement for tourism either.

Again, the rich economies will be dented but not damaged all that much. However, when you have 10-20% less crude available, the demand destruction is occurring somewhere and that somewhere are the poorer countries. Some goods there will simply not get produced which leads to results from inconvenience to people starving.

 

In Europe or the NA, you simply pay 20-30% more at the gas pump, shrug and call it a day.

[Gregmal]

54 minutes ago, Spekulatius said:

In Europe or the NA, you simply pay 20-30% more at the gas pump, shrug and call it a day.

Yup. All good in the ivory towers. 

[Spekulatius]

3 hours ago, Gregmal said:

Yup. All good in the ivory towers. 

Nothing to do with ivory towers but the world is not going to end here or in Europe. The main hit is going to be felt in emerging economies .

 

I follow this Money and Macro channel for economic analysis. He is pretty good. Doesn’t look that great if he is right

 

[UK]

15 hours ago, Spekulatius said:

Oh boy. The Thai economy is in trouble. These shortages are not going to be great advertisement for tourism either.

Again, the rich economies will be dented but not damaged all that much. However, when you have 10-20% less crude available, the demand destruction is occurring somewhere and that somewhere are the poorer countries. Some goods there will simply not get produced which leads to results from inconvenience to people starving.

 

In Europe or the NA, you simply pay 20-30% more at the gas pump, shrug and call it a day.

Norway/Canada etc>US>EU/Japan etc>India/Thailand/Philipines etc. Something like this? The last ones could feel actual shortage and pain if this goes on because richer countries will outbid them.

[frommi]

12 hours ago, Spekulatius said:

Nothing to do with ivory towers but the world is not going to end here or in Europe. The main hit is going to be felt in emerging economies .

But over time we will feel it also because its the base for all plastic and the whole transportation sector. And than it trickles down into services. 
Whats interesting to me is that prices were even a bit higher in the beginning of 2008 and that was also a pretty sharp rise, even though it was demand driven and not supply. But interest rates at that time have gone down not up, because the economy was already in recession mode. We have a pretty similar situation right now, even if this time a banking crisis is unlikely. But since all the risky lending is now in private credit, maybe we will see a big hit from there? The cracks are already there.

Edited March 30 by frommi

[Gregmal]

A 20% supply disruption for a few weeks or months is not an existential crisis. Further, that 20% supply, is not all just turning into poof, nothing. Additionally, other spigots from other areas have temporarily been turned back on. Not every soup de jour needs to have a scenario where it turns into “the Big One”….

[hasilp89]

18 minutes ago, Gregmal said:

A 20% supply disruption for a few weeks or months is not an existential crisis. Further, that 20% supply, is not all just turning into poof, nothing. Additionally, other spigots from other areas have temporarily been turned back on. Not every soup de jour needs to have a scenario where it turns into “the Big One”….

and now they're talking about raising rates... go ahead and kill the economy for main street...

[Gregmal]

9 minutes ago, hasilp89 said:

and now they're talking about raising rates... go ahead and kill the economy for main street...

Only podcasters and day traders looking to create short term headlines. No one with a brain or an incentive to just honestly analyze things takes that seriously because everyone knows energy/oil being high is itself restrictive and has nothing to do with monetary policy relating to inflation. But yea, lotta sensationalism right now.

Edited March 30 by Gregmal

[SharperDingaan]

35 minutes ago, Gregmal said:

A 20% supply disruption for a few weeks or months is not an existential crisis. Further, that 20% supply, is not all just turning into poof, nothing. Additionally, other spigots from other areas have temporarily been turned back on. Not every soup de jour needs to have a scenario where it turns into “the Big One”….

 

+1 

 

Whether WTI spikes to USD 120/bbl tomorrow, or stays < USD 100/bbl (courtesy of the US Treasury), isn't relevant unless you are trading crude futures. Reporters need to verify stories against the trading community, and the community spins according to the trading book of the day. It's a great system 

 

For mere mortals .... damage to date, and how long it may take to get back to 'normal', is much more relevant. Supply chains are getting squeezed, knock-on effects magnified by seasonality, are creating opportunities; straight forward commodity supply/demand forecasting. Macro not worth considering, as the +/-  is so wide as to make any kind of nearer term prediction useless 

 

The reality is that crude WILL freely transit both the SOH and the Red Sea; we just have no idea as to how that eventually prevails. Uncertainty = volatility = opportunity. 

 

SD

Edited March 30 by SharperDingaan

[Gregmal]

1 minute ago, SharperDingaan said:

 

+1 

 

Whether WTI spikes to USD 120/bbl tomorrow, or stays < USD 100/bbl (courtesy of the US Treasury), isn't relevant unless you are trading crude futures. Reporters need to verify stories against the trading community, and the community spins according to the trading book of the day. It's a great system 

 

For mere mortals .... damage to date, and how long it may take to get back to 'normal' is much more relevant. Supply chains are getting squeezed, knock-on effects magnified by seasonality, are creating opportunities; straight forward commodity supply/demand forecasting. Macro not worth considering, as the +/-  is so wide as to make any kind of nearer term prediction useless 

 

The reality is that crude WILL freely transit both the SOH and the Red Sea; we just have no idea as to how that eventually prevails. Uncertainty = volatility = opportunity. 

 

SD

Yup. Think the real bid/ask on outcomes is now pretty limited. Short term, ie 2-3/4 weeks from now there’s resolution and nothing burger status confirmed, or that window passes and much like with Covid, powers that be realize they can turn the screws to Trump, maybe manufacture a shallow one quarter recessionary print, and then sleep thru midterms and wake up with more favorable political terms.

[Sweet]

Really depends on how long this middle east stuff rumbles on.  Like many others I assume it will be weeks / months, but you never really know.

[backtothebeach]

I have never traded a futures spread, and probably will not do it this time either, but this is kind of interesting. The contrarian in me wants to start shorting it.

[SharperDingaan]

59 minutes ago, backtothebeach said:

I have never traded a futures spread, and probably will not do it this time either, but this is kind of interesting. The contrarian in me wants to start shorting it.

 

Aaaaah, the dark side .....   If you don't work in the treasury of a commodity trader, this is a really bad idea.

 

Mere mortals hope for fireworks, and progressively sell into it at hopefully ever rising prices. Find a place for all that cash, wait for victory to be declared, the boats to go home, and quietly buy it all back for a lot less  

 

Bastards recognise that fireworks lower the price of parking spots, and victory speeches elevate them. Terrible shame to waste the opportunity 

 

SD

 

 

Edited March 30 by SharperDingaan

[backtothebeach]

30 minutes ago, SharperDingaan said:

 

Aaaaah, the dark side .....   If you don't work in the treasury of a commodity trader, this is a really bad idea.

 

Mere mortals hope for fireworks, and progressively sell into it at hopefully ever rising prices. Find a place for all that cash, wait for victory to be declared, the boats to go home, and quietly buy it all back for a lot less  

 

Bastards recognise that fireworks lower the price of parking spots, and victory speeches elevate them. Terrible shame to waste the opportunity 

 

SD

 

The day I understand your cryptic messages will be the day I trade my first commodity futures spread

[SharperDingaan]

17 hours ago, backtothebeach said:

The day I understand your cryptic messages will be the day I trade my first commodity futures spread

 

Mortals hold common stock; margined, if you want extra excitement.

The very good, work for the commodities traders; the other side of your trade ...... feeling lucky ??? 

The bastards, are just opportunists ..... my kind of scum!

 

SD

Edited March 31 by SharperDingaan

[Spekulatius]

11 hours ago, frommi said:

But over time we will feel it also because its the base for all plastic and the whole transportation sector. And than it trickles down into services. 
Whats interesting to me is that prices were even a bit higher in the beginning of 2008 and that was also a pretty sharp rise, even though it was demand driven and not supply. But interest rates at that time have gone down not up, because the economy was already in recession mode. We have a pretty similar situation right now, even if this time a banking crisis is unlikely. But since all the risky lending is now in private credit, maybe we will see a big hit from there? The cracks are already there.

Totally agree that these negative issues snowball over time, but we are still a bit protected in the developed world. however, In Thailand, you may have no gas so you can’t even do your job potentially and then it immediately becomes an existential issue.

 

The demand destruction always occurs with the poorest first and then chews itself into the better to do as well over time.

Edited March 30 by Spekulatius

[SharperDingaan]

Have to think this is part 1 of the exit ramp:

https://english.almayadeen.net/news/politics/tehran-approves-new-hormuz-plan-with-major-restrictions

• The bill reinforces Iran’s sovereign authority over the strait, granting a central role to the country’s armed forces in its implementation.
• It also emphasises coordination with the Sultanate of Oman in shaping the legal framework governing the waterway.
• Vice President Mohammad Reza Aref earlier stated that the management system of the Strait of Hormuz “has changed and will not return to what it was”, as Tehran works to convert recent gains into concrete economic and security guarantees that affirm its sovereign interests.

The obvious part 2 is renegotiation of the legal framework with Oman. Obvious changes are (1) some type of UN sovereign authority replacing Iranian (2) Rotating UN escorts based at some of the existing US bases within the Gulf; replacing the US in some cases (3) A per barrel transit toll in Euro/Yuan paid to the UN authority, that is in turn paid out to the various Gulf states as damages reimbursement (4) A per ton transit toll on all other freight going in/out of the SOH, processed the same way as the oil transit toll, and (5) Expansion over the Red Sea as well as the SOH. Trade freely flows through the choke points again, ongoing protection, and the US/Israel go home.

 

Thereafter, the tolling legal infrastructure applied to the other maritime choke points in the world, via an amendment to the International Law of the Sea. Existing tolling precedents taken from both the Suez Canal, and the Panama Canal. Elegant, and simple.  

 

Orange Boy gets a way out.

 

SD

Edited March 31 by SharperDingaan

[Gamecock-YT]

Yeah, but those are man made.

 

 

Get this: natural straits used for international navigation are governed by the United Nations Convention on the Law of the Sea (UNCLOS)

[SharperDingaan]

34 minutes ago, Gamecock-YT said:

Yeah, but those are man made. Get this: natural straits used for international navigation are governed by the United Nations Convention on the Law of the Sea (UNCLOS)

 

Hence the amendment.

 

Principle: User toll charged to the world to pay for the defence and safe passage of shipping through choke points.

 

(1) Tolls exist at private choke points, they have enabled more efficient transits, are routinely paid by shippers worldwide, and have been a common custom for decades (Suez, Panama, etc). This simply extends existing private practice into the public space, as best serves the purpose. 

 

(2) Global shipping routes has been exposed to piracy for centuries, with defence costs voluntarily born by the major navies of the world. This is simply modernisation; that transfers the defensive responsibility, and recovery of costs, to a different recovery mechanism.

 

(3) Responsibility for enforcement of The Law of the Sea, becoming a collective shared user responsibility, alongside a mechanism to pay for it. 

 

Elegant.

 

SD 

Edited March 31 by SharperDingaan

[Pelagic]

Something I was thinking about should Iran end up turning the Strait of Hormuz into a tollbooth is how Russia used the Nord Stream pipeline in the months after their invasion of Ukraine before the pipeline was destroyed. At any point they could, and did, throttle gas supply in an attempt to bend Europe (mainly Germany) to their will. Remember the criticism of Germany only sending helmets and blankets as aid early in the war? How much that's attributable to fear of disrupted gas flows vs. broader German handwringing in the first few months is debatable but Russia clearly thought flow through NS was a source of influence. Russia even shut down flow due to "maintenance" as natural gas prices peaked in the summer of 2022.

 

Similarly, Iran with a toll regime in place will use its leverage over the Strait to protect its allies in the region. Say Israel wants to cross into Lebanon to deal with Hezbollah, Iran threatens to close the Strait in response. We're at basically peak political capital for re-opening the Strait right now and the desire from anyone other than the Gulf states to do so seems extremely limited - for good reason. A new US admin takes over in '28 that has no appetite for getting involved in re-opening the Strait and the can gets kicked further down the road.

Best case scenario for energy supply if the Strait isn't re-opened by force or through regime change, is Iran re-opens it with a toll in place for a couple years, Saudi Arabia twins or triples the E-W pipeline which brings the toll down and the Strait, and Iran's influence, becomes less relevant. Probably a $10B or so project which is in the ballpark of what Iran stands to collect in toll fees yearly.