(Lack of) US Iran Peace Agreement Part 5

I think we are talking apples and oranges here. I was talking about the process of getting Vz oil to the consumer sooner than expected. There are current talks for Vz oil (and gas in a shared field with Trinidad and Tobago) to be refined in the Caribbean, which will mean a faster delivery than eg having to be transported to a US refinery. (It also has the advantage of not needing to go through Hormuz to get to market).
As production expands, Vz products will cushion the deficit to some extent but no current country is capable of replacing all the lost ME oil. (I know you didn't suggest this). Several European oil majors are also keen to start operations in Vz and I believe that the current ME situation will be lighting a fire under the decision makers.

From AI
Using the 5–7 million barrels/day disruption figure:

• 10% of 5 million bpd = 500,000 bpd
• 10% of 7 million bpd = 700,000 bpd

@trumpredcard ,

The real issue is that strategic oil globally is being drawn down at 5-6 million barrels per day, with total storage at 2-2.5 billion barrels.

So, in under one year, it will be all gone!

Obviously, that isn’t going to happen. So, what will happen is price adjustment until oil supply is equal to oil demand. More supply will come online from expensive producers but demand will also have to fall.

Guessing where that equilibrium price lies is a mug’s game, but economists are paid to be mugs, so here is the UBS economist’s guess at around $200/barrel.

https://www.swissinfo.ch/eng/energy-transition/oil-could-hit-200-if-hormuz-stays-shut-ubs-economist-warns/92041617

With stock prices high already by most valuations and AI actively being doubted (both safety and monetisation), the results of this won’t be pretty.

As I keep saying, we are in very dangerous territory here financially and geopolitically.

And, of course, what everyone forgets and isn’t really priced, is climate change. People will burn all and any hydrocarbons to get energy, including the filthiest and highest emitters of greenhouse gases. Welcome to malaria and dengue in Europe and the UK.

Trump will certainly be remembered as a consequential president!

@OnePeppyFatball ,

That article sounds like a wish, rather than a demand.

It’s kind of what I have been saying about no easy choices.

The problem is that, unless you are prepared to put a fair few soldiers in Yemen, you can spend a lot of time and effort and interceptor missiles to push the Houthis back a few k and for a few months.

I think this war has taught us that the calculus between attack and defence has changed due to mixing in drones and ballistic missiles.

So, unless this changes back due to lasers or other cheap ways to defend, aggressors will either have to spend a lot more on defence or accept taking hits on infrastructure. The west has a very low tolerance for pain.

I would have thought reopening Hormuz would actually be less painful than stopping the Houthis, not that that is easy either.

https://www.cbsnews.com/news/new-photos-damage-u-s-kuwait-saudi-arabia-iran-drone-missile-attacks/

New photos obtained exclusively by CBS News reveal for the first time the widespread damage and destruction of buildings and vehicles at multiple U.S. positions across the Middle East, as a result of Iranian missile and drone attacks.

The images were sent to CBS News by active service members on condition of anonymity because of rigid media restrictions within the military.

"This is major damage to our bases that hasn't been communicated to the American public," one deployed service member told CBS News. "We're standing there with our eyes closed getting punched in the face."

if it can’t export oil, the Kingdom will have to shut in wells that can take a long time to restart
I can't remember where it was, but this has been discussed previously and it was pointed out, not accurate, as worker-overs, side tracks and simply drilling new wells can be done to bring a field back online fairly quickly.

@Newbutoldfather I do take your points but when I look back at how recent it was that oil had a negative price and compare it to current soaring prices, I think that predictions are a mug's game because there are so many 'ifs'. No one could have predicted the short space of time between a $-ve and a potential $200 price because noone thought Trump would be stupid/hubristic enough to attack Iran and try to wrest control of the SoH.
I've reached the stage of just sitting back and watching things unfold as I'm well beyond any arguments that rely on either past decisions to predict future actions, or speculations. What I will do though, is read all the books and articles recommended as I have learned much from info shared on the threads.

I would have thought reopening Hormuz would actually be less painful than stopping the Houthis, not that that is easy either.

Intriguing. Would you mind expanding on this? Did you mean less painful to the US, the world, or the GCC countries? What options for reopening Hormuz were you think of?
These are genuine questions and I'm not trying to be argumentative. 😄As I said, I'm just sitting back, watching things unfold.

@trumpredcard ,

‘Intriguing. Would you mind expanding on this? Did you mean less painful to the US, the world, or the GCC countries? What options for reopening Hormuz were you think of?
These are genuine questions and I'm not trying to be argumentative. 😄As I said, I'm just sitting back, watching things unfold.’

I’m just speculating, really. The U.S have already partially reopened Hormuz and at least it is a known problem which has probably already been discussed and planned for.

No one seems to want to take on the Houthis, and I assume that they have good reason for it. It would also be opening up another front.

As I said, neither are easy and both expensive, but I suspect Hormuz might be the easier of the two.

Yes. There is a thread on oil wells because Trump said they would blow up if shut down, and there was speculation they would be forever damaged. It was debunked. The Gulf geology is fine for stopping and starting.

It is how the Gulf states regulate the oil price after all through OPEC. I think it is wells in Russia that can have issues starting and stopping.

Quote "As I said, neither are easy and both expensive, but I suspect Hormuz might be the easier of the two."

How many months has it been now ? The greatest mind in the universe said 2 weeks or so... about 6 months ago ?

The Houthi said their Strait is open, just not to SA oil.

@RedTagAlan ,

If you take out Saudi Oil (obviously some is getting through) and Iranian oil due to U.S blockade, that’s 60% of the Middle Eastern oil taken out.

Saudi has traditionally been the ‘swing producer’ in OPEC and has cheap light sweet oil. The oil is really easy to get at, too, so wells can be shut down and restarted fairly quickly.

WTI is at around $104 now with oil taken from strategic storage every day. And some of the oil products are faring even worse.

I imagine this is giving the U.S pause for thought. It was rumoured that more was getting through, but seeing it in pictures really dents the U.S image of being able to fight wars without getting hit back.

www.bbc.co.uk/news/articles/c8g49e0gwxeno

As I understand the issue with the Texas oil is that while they have hundreds of new wells drilled and ready to go, the infrastructure to get the oil, and more importantly, the gas, to market is not in place yet. It all has to be planned decades in advance. And Trump jumping up and down won't do nowt, because if the oil companies do as Trump wants NOW, as soon as Saudi oil comes online again there will be over supply. Price comes down, and the Texas oil fields might be landed with hundreds of extra wells producing oil that is more expensive to produce then they get for it.

The money put in to shift the oil will be a write off.

With the gas. Apparently it is a by-product of the oil. And the some of the Texas producers are already having to pay people to take it, because they can't flare it all. And from the oil companies POV, why flare it when they can leave it be, do the infrastructure as planned, and then sell it.

It's a strange thing really. Because Trump wants the price down, big oil want it to stay up, and if Trump does get his way and oil goes cheap, then many of the sources of oil Trump is pushing for become economically non viable.

Personally, I think the solution is to nationalize the oil industry.

Personally, I think the solution is to nationalize the oil industry.

Hard disagree there. Many retirement plans hold O&G shares. For example, in the UK alone, around 85% pension plans hold BP shares. $$$$$ to compensate shareholders, just for starters. If US gov't takes over all US companies, what happens with newly nationalised companies operating in foreign countries, possibly hostile to the US gov't?
What about 'ethical' investments eg Shell drilling damaging the environment in Africa.
In many 3rd world countries, oil companies pay bribes to operate. The US gov't could find itself in several sticky situations.
Who receives the profits and who makes the production decisions?
Given the poor quality of officials in the current Trump administration...

Gov't interference isn't usually based on business needs but on political ones, and they might not align. I can only see the -ve outweighing +ve on this one.

Oil prices extend losses as fears of Middle East supply disruptions ease

Oil prices eased in Asian trade on Thursday, extending losses on reports of Saudi Arabia offering extra crude cargoes through Oman, which reduced fears of supply disruptions, but stayed above $100 on concerns about the Middle East conflict expanding.

Brent crude futures dropped 19 cents, or 0.2%, to $105.64 a barrel by 0347 GMT, while U.S. West Texas Intermediate futures were down 33 cents, or 0.3%, at $102.10. Both contracts fell about $3 on Wednesday.

"Concerns over supply tightness eased slightly following news that Saudi Arabia would ship cargo via Oman," said Hiroyuki Kikukawa, chief strategist of Nissan Securities Investment, a unit of Nissan Securities.

"Expectations of progress toward easing tensions in the Middle East ahead of U.S.-China summit next week are also capping price gains," he added.

Saudi Arabia is offering more loadings of crude oil to Asian refiners via ship-to-ship transfers off Oman's Sohar port, people familiar with the matter said, blunting some of the hit to global supply from attacks on the Saudi Arabia's East-West pipeline to the Red Sea.

However, some analysts were expecting these flows to only ease a portion of the supply loss from the kingdom's Red Sea port, capping the declines in oil prices.

www.reuters.com/business/energy/oil-prices-extend-losses-fears-middle-east-supply-disruptions-ease-2026-09-17/

With the gas. Apparently it is a by-product of the oil.

It isn't as such, but can be considered a by- product of extraction when both oil and gas are present in the same field. Where this happens, extracting the oil means that gas comes up too, hence flaring if no means are available to capture the gas.

Gas fields on their own also exist, and the world's biggest is owned by Iran and Qatar (South Pars / North Field) but Russia also has several huge gas fields.

eta
Why Trump and his naive advisers didn't see the importance of Iran in O&G production is a mystery to everyone outside the WH Regime.

Yup. I was talking about Texas though.

On privatizing oil. I know of the pensions argument. As for the oil companies not being able to bribe corrupt governments... would that not be good ?

Anyway, beyond this thread I think.

Oil is quite complex.

Firstly, it varies greatly in what it consists of. Saudi light will yield a lot of jet fuel and kerosene whereas the Canadian tar sands will hardly yield any and a lot will be residue.This can be remedied by treating it in various ways at high temperatures and pressures post refining, which is why it is so expensive (and polluting) to produce.

If you substitute light sweet crude for heavy sour crude (as is happening at the moment), it doesn’t necessarily help the price of the light fractions that much (naphtha, gasoline, diesel).

In addition, just having oil isn’t good enough. You need to get it to where it is needed. Normally, for instance, Saudi oil will cost around $2/barrel to ship to Europe. However this js currently up at $5-25/barrel.

Yup. WE know that. But all the evidence I have seen points to Trump NOT knowing that.

Do you agree ?

@RedTagAlan ,

I am not sure nationalising oil would make any difference to the decision making process. It is an international market and even governments don’t want to sell oil at a loss.

There is a much better argument (especially in the UK) to nationalise electricity due to its pricing mechanism off the marginal most expensive unit (always gas and not even very efficient gas).

This means that industry and households are hobbled whereas wind (which enjoyed subsidy to develop) makes out like bandits.

Anyway, beyond this thread I think.
True.😆
This is the point where I explain that I used to work in O&G ... and the stories I could tell about bribery at the highest levels ...

@RedTagAlan ,

Given that Trump last night sent out, after the rate hike:

‘rates "should be 1%, or less, because we are the Best Credit in the World - BY FAR".’

I think it is unlikely he understands the chemical mixture of crude oil, the refining method or the pricing mechanism.

It is an international market and even governments don’t want to sell oil at a loss.

But what many gov'ts with an O&G industry have done is subsidise the price to home consumers. Don't know why Trump has not considered doing this in the US. Too communist a move?

@trumpredcard ,

‘But what many gov'ts with an O&G industry have done is subsidise the price to home consumers. Don't know why Trump has not considered doing this in the US. Too communist a move?’

Yes, probably.

I think distorting markets isn’t normally a good thing. It can work short term to cushion people from spikes but, otherwise, it encourages inefficient decision making.

I think subsidising combustible hydrocarbons in an era of extreme climate change is probably not ideal either. Americans should at least be transitioning from monster trucks.

Honestly he doesn't care about ordinary Americans.

Trump did drain America's reserves, which worked for a while to suppress prices, just not long enough to affect the midterms (hence the $5000 bribe!).

The truth is the donor/lobby class have a lot more power than Trump and Trump could threaten them but can't force them to do anything.

That said a lot his friends (and some of his family) are making a lot of money right now. This administration is staffed with people who have obvious conflicts of interest. For example Lutnick has doubled his net worth since joining :

https://www.forbes.com/sites/saradorn/2026/09/11/how-commerce-secretary-howard-lutnick-went-from-911-hero-to-most-hated-guy-on-wall-street/

And whose former company profited greatly from Trump’s tarriffs:
https://fortune.com/2026/03/07/winners-supreme-court-tariff-ruling-hedge-funds-creating-100-billion-secondary-market-refunds-brandon-howard-lutnick/

Ordinary Americans suffering can suck it up:
"So, for you to pay a tiny, little bit more for your gasoline, just remember, you're doing it so that a very evil country cannot have… a nuclear weapon," Trump said. "So, remember that, when you have to pay a little bit more, you're at $4, it's okay."

https://www.yahoo.com/news/politics/articles/trump-tells-americans-paying-4-204008508.html