The biggest missing piece is China. Assuming actual delivered price is not subsidized by Western countries, you need to put in what if China demands that reflect the current price. Chinese in reality don't consume that much oil as what we thot they do from the oil purchases in the past. I assume Chinese just ramp down the purchase even though their consumption is well below that. Plus the hidden supplies from Iran and Russia to China via land route.
Show HN: I simulated closing the Strait of Hormuz on real oil trade data
71–80 of 136 posts
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#72OP, please add India as a shock target option if possible. It imports close to 80+% of its crude oil and gas requirements and is highly vulnerable to oil flow shocks.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#73Tangentially related but just watched this pretty interesting youtube mini-doc-thing about the recent moves China has been making regarding oil (and its bigger picture): https://www.youtube.com/watch?v=BkA0bkb6ZO0
That video was masterfully done, and it’s shocking how quiet the mainstream and financial media has been about this topic. Everything is an AI chip story, and the looming oil crisis is completely under discussed because we have goldfish memories and can’t appreciate what a massive move China made.
Not quiet, it's on the front page of reuters and other reputable news for the past two weeks essentially.
People are not noticing/caring to notice.
And yes the youtube video is masterfully done IMO. I'm happy I caught it when It was first uploaded.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#74Earlier quoted context omitted.
Can't Iran be selective and only allow Chinese ships through?
The USA could block Chinese ships. Or maybe disable the loading jetties.
I have been hoping China would force this issue. Send an oil tanker through and see if the US has the balls to stop it. Either the US does and everyone gets peeved or the US lets it float away and look incredibly impotent.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#75An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur) crude oil. The sweet stock makes up about 1/3 of the reserve and hardly varies at all. This is because US refineries are virtually all configured for sour crude: due to a mistaken belief in the 1990s that sweet crude was running out, the industry bet the farm…
Isn't this the reason why they specifically targeted Venezuela, to get their oil?
No, the two interventions are unrelated. Every indication is that they thought Iran would be a quick war with minimal impact on oil markets. Even if they did think the Strait of Hormuz would be closed for a long time, controlling Venezuela's oil does not help — it takes much longer than two months for Venezuela to meaningfully increase oil production. (And oil is ~fungible, so it doesn't really matter if the US is involved with production and sale. All that matters is that it's produced and sold by anyone.)
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#76An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur) crude oil. The sweet stock makes up about 1/3 of the reserve and hardly varies at all. This is because US refineries are virtually all configured for sour crude: due to a mistaken belief in the 1990s that sweet crude was running out, the industry bet the farm…
I think the reserves have more complex dynamics. The law requires 250 million barrels to be kept but the pumping rate decreases as more is pumped. Also, there's various estimates that indicate that the storage areas will lose structural integrity and start to collapse at levels higher than 250M barrels. I'm not sure anyone really knows about the levels for sure and the best estimates are probably kept secret for secu…
Not that the administration is trustworthy, but they recently announced that the structural floor is ~70M barrels. Which is significantly lower than other public estimates. Which strikes me as an attempt to ease the market that there is significantly more breathing room.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#77Earlier quoted context omitted.
Isn't this the reason why they specifically targeted Venezuela, to get their oil?
Venezuela and Iran are strategic targets to control China's supply of crude oil. That's pretty much it. USA can produce all the oil/energy it needs for itself. Everything else is about controlling the energy supply to adversaries.
As the parent comment explains, the US can't produce all the oil it needs, because it's refinery capacity isn't aligned with the type of oil it pumps from the ground.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#78Earlier quoted context omitted.
I think the reserves have more complex dynamics. The law requires 250 million barrels to be kept but the pumping rate decreases as more is pumped. Also, there's various estimates that indicate that the storage areas will lose structural integrity and start to collapse at levels higher than 250M barrels. I'm not sure anyone really knows about the levels for sure and the best estimates are probably kept secret for secu…
Not that the administration is trustworthy, but they recently announced that the structural floor is ~70M barrels. Which is significantly lower than other public estimates. Which strikes me as an attempt to ease the market that there is significantly more breathing room.
That seems a bit optimistic to me. I'm no expert, but a relevant and recent examination of the physical SPR facilities (published just last month) is available at https://www.gao.gov/assets/gao-26-106918.pdf
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#79Earlier quoted context omitted.
The USA could block Chinese ships. Or maybe disable the loading jetties.
I have been hoping China would force this issue. Send an oil tanker through and see if the US has the balls to stop it. Either the US does and everyone gets peeved or the US lets it float away and look incredibly impotent.
China can get what they want, a weakened USA, just by sitting back and doing nothing. There's probably no incentive to get involved more directly.
Re: Show HN: I simulated closing the Strait of Hormuz on real oil trade data
#80Why do reserves deplete with 100% of the strait open?