The front pages were ablaze Thursday with video of burning tankers off the coast of Iraq.
The footage, released by the country’s port authority, was a rather stark reminder: The Persian Gulf remains a war zone, where oil-carrying vessels will be targeted by an IRGC determined to exact a steep economic cost for the US-Israeli bombing campaign that’s left nearly 1,500 Iranians dead.
The Guards took credit for attacking one of the two flaming tankers, the Marshall Islands-flagged Safesea Vishnu, which is owned by an American company. It was struck “after ignoring the warnings of the IRGC Navy,” a statement posted to Telegram read. Insecurity in the Gulf is “the result of America’s brutal aggression,” the Guards went on.
The ships were in an area cordoned off for transfer operations when they suffered what one Iraqi security official called “a cowardly act of sabotage.” Iraq, where Iran still retains enormous political influence and operates a parallel army, halted operations at its oil terminals.
Meanwhile, Oman evacuated and closed one of its export terminals citing security worries and “someone” attacked a third ship near Dubai, where locals learned to take alerts of incoming projectiles seriously after a drone crashed into a residential tower in a glitzy waterfront enclave.
Goldman and Citi told employees in the emirate to find “a safe place away from the office” amid reports that the IRGC has decided to target American banks in the region. (Is nothing sacred?!)
Fresh off coordinating an ineffectual reserve release on Wednesday, the IEA released its latest monthly report, which employed the grim “dire straits” pun in the course of describing “the largest supply disruption in the history of the global oil market.” Here’s the only excerpt that matters:
With crude and oil product flows through the Strait of Hormuz plunging from around 20 mb/d before the war to a trickle currently, limited capacity available to bypass the crucial waterway, and storage filling up, Gulf countries have cut total oil production by at least 10 mb/d. In the absence of a rapid resumption of shipping flows, supply losses are set to increase. Global oil supply is projected to plunge by 8 mb/d in March, with curtailments in the Middle East partly offset by higher output from non-OPEC+ producers.
WTI and Brent were higher Thursday. Both traded near $100.
In a sheepish interview with CNBC, Trump’s Energy Secretary Chris Wright — who earlier this week mistakenly said the US Navy had escorted a ship through the Strait, only for Karoline Leavitt to “correct” him a few hours later — said the military isn’t ready to provide escort services.
“It’ll happen relatively soon but it can’t happen now,” Wright told Joe Kernen. Why not now? Because, as Wright went on to explain, “all of our military assets are focused on destroying Iran’s offensive capabilities and the manufacturing industry.”
See? This makes total sense. The US Navy can’t protect oil tankers from Iranian attacks because the Navy’s too busy attacking Iran which is responding by attacking tankers. Asked about a timeline on the escorts, Wright suggested they could be available “by the end of this month.”
(I don’t know any tanker operators, but if they’re anything like bankers and politicians, they don’t want to wait around for three weeks when they call an escort service.)
Suffice to say the oil market tumult isn’t over, and for now at least, Iran has stopped responding to Donald Trump’s threats.
Oh, and if you’re an American taxpayer curious as to how much this is costing beyond the enormous war tax reflected in soaring pump prices, the Pentagon told Congress earlier this week that the military blew threw more than $11 billion in the first six days of the war.
As The New York Times helpfully noted, “the estimate did not include many of the costs associated with the operation, such as the buildup of military hardware and personnel ahead of the first strikes.” That, in turn, means the cost estimate will “grow considerably” in more comprehensive accounting over the coming days and weeks.
Think about that when you write your check to Treasury on April 15.
“(I don’t know any tanker operators, but if they’re anything like bankers and politicians, they don’t want to wait around for three weeks when they call an escort service.)”
Bing bing bing!!
?
Yeah, I laughed out loud at this one.
Likewise…
No worries, it’s all under control because that’s what War Czar Pete told everyone. So he’s obviously planned for a complete shutdown of the Strait of Hormuz. I’m sure he’s done the math on how many tankers can be escorted daily versus the normal volume. And because the US controls all the terms of this war, he knew the Iranians real nuclear deterrent was the Strait. He’s got everything so under control that his chief concern now is to make sure the press only uses flattering pictures of his warmongering face.
Burning ships off the coast of Iraq highlights another issue: while the Straits of Hormuz might be the main choke point, the entire thousand-mile coastline of Iran is exposed to attack. So really, the whole Persian Gulf is in range. Under normal circumstances over 100 ships/day would be passing through there. Is the US Navy going to deploy 100 destroyers to escort each and every one of them?
I mean, that shouldn’t really be a problem, we just have to build 25 more destroyers right quick. End of the month seems doable.
Trump shat the bed for the rest of the world with this nonsense.
The stupidity to even claim that their navy would be able to escort 400+ tankers daily through the straight is unfathomable.
The Center for Strategic & International Studies calculates average shipping volume at ~150/day, including both tankers and regular container ships, not that that invalidates your point.
https://www.csis.org/analysis/no-one-not-even-beijing-getting-through-strait-hormuz#:~:text=Automatic%20identification%20system%20(AIS)%20data,roughly%2088%20percent%20of%20traffic.
He was thinking about drug boats at the time.
Also, who wants to be the first captain to sail into the strait to escort tankers? They will have a bigger bullseye painted on them than the Japanese carriers in WW2.
How will these vessels hold up against 300 shaheds and a few missiles to go with it? 15m worth of drones might take down 1bn+ frigates, plus the Iranians have all the time in the world.
US either needs to negotiate in good faith or go scorched earth to get itself out of this mess.
And how much is Iran itching to get footage of a US Navy ship on fire too? I’m sure back in the states we’ll just blow that off like the Iranian girls school, but everyone else in the world will take note.
Don’t forget the $90 million Hegseth spent on snow crab, prime rib and a $100,000 Steinway piano for a staffer.
https://www.newsweek.com/pete-hegseth-spent-millions-steak-crab-legs-lobster-report-11658295
Check out this video, “empire strikes back on piano” https://share.google/8GYoA7FTj9bi1Cc8G
As Machiavelli said, wars begin when you will, but they do not necessarily end when you want them to.
I am curious how the closure of the Strait of Hormuz affects the total petroleum exports from the gulf countries. There is the Yanbu pipeline with its terminal on the Red Sea. Maximum pipeline capacity is 7 million bpd plus another much smaller pipeline. The full 7 million bpd was not being used until the Trump excursion. Two million bpd was for domestic use. There’s also an LNG pipeline parallel. There are two terminals at Yanbu with a 3 million bpd chokepoint. There’s also the pipeline in the UAE, the Habshan–Fujairah Pipeline, with a 1.8 million bpd capacity, of which about 1.1 million bpd was in use before the excursion. There are other considerations: the restrictions on VLCCs and ULCCs passing through the Suez Canal; the capacity limits of the SuMed pipeline used to offload VLCCs and ULCCs in order for them to be able to use the Canal; the Houthi control or lack thereof of the Bab al-Mandab Straight. We hear a lot about the Strait of Hormuz, but how does it all net out after maxing out the alternate routes?
SCIS estimates a net decrease of 8mb/d decrease in crude supply: 10mb/d decrease from Gulf exports partially offset by a +2mb/d increase by non-OPEC+ sources.
What I’ve read:
Current oil exports from Gulf about 5.0 mbpd
– Iran 1.2 through SoH headed to China
– Saudi 2.0 via East-West pipeline to Red Sea
– UAE 1.8 via Fujairah port
Saudi will ramp up pipeline flow to 7.0, so flow will be 10.0
Take out Iran’s 1.2 to get 8.8 . . . since China needs to be pressured
Add 1.2 from reserve releases (estimate of reserve flow, could be a bit higher), that’s 10.0
Which is a shortfall of 5.0 from pre-war 15.0, which is about 5% of global consumption
All assuming US and Gulf states can protect terminals, storage, pipelines, ports, floating storage
Another big issue is loss of Qatar LNG, 20% of global supply
Don’t know how much Australia or US can flex up LNG output in short term
The UAE just called – They want their plane back.