Mojo
EV, Semiconductor & Driver-Assistance Commentary
Crude oil's physical market is tightening because Hormuz disruptions are draining inventories and constraining tankers, per Nikkei. Physical Brent topped $154 on Oct. 5, and its premium to futures exceeded $50 last week, per the report. Futures have risen much less because the market still expects Hormuz flows to recover, even as tanker availability remains low. x.comÂ
Daily attacks on Saudi energy installations, seemingly at will, are a bigger driver of oil's rise than Hormuz. If they escalate and meaningfully damage Saudi production, $200 oil isn't impossible. x.comÂ
Crude oil faces a structural repricing of energy risk, not a one-week spike, as both Saudi export routes are compromised at once. Drone strikes took out Petroline, the Hormuz bypass pipeline moving about 4 million barrels a day, while the Houthis seized Perim Island in the Bab el-Mandeb strait and Saudi output sits at a 30-year low. Brent rose 8.7% to $104.61 as the Fed hiked into it. Barrels stuck behind a strait are worth zero, favoring producers that avoid chokepoints. x.comÂ
Crude oil's latest drop reflects real Gulf export capacity coming back, which erodes Iran's Hormuz leverage. Saudi Arabia resumed loadings at Yanbu, with the East-West Pipeline at 2-2.65m barrels a day and seen by Kpler rising to 3-4m soon. Saudi and UAE shuttle tankers under US escort have restored at least 60% of pre-war flows. The risk: Qatar's mediation is stuck, per Axios, and a squeezed Iran may escalate against ports, refineries, pipelines or Red Sea shipping. x.comÂ
Oil stays above $80 well past the midterms because the supply problem persists despite peace headlines. Ships are still attacked near Saudi Arabia, Yemen and the UAE; a reported US strike on Iran's Konarak Naval Base ended nearly seven weeks without US strikes. There is nobody in Iran who can sign a deal and end the conflict. x.comÂ
An imminent Israeli strike on Iran puts Gulf oil infrastructure at unusually high risk over the next three months, supporting a near-term rise in crude oil. Large trades are betting on oil reaching $115 again. x.comÂ
Crude oil's geopolitical risk premium is bleeding out as Saudi Arabia's East-West Pipeline reopens. Piping crude straight to the Red Sea bypasses the Strait of Hormuz and vulnerable Gulf shipping lanes, removing a major supply bottleneck. That recovery erases the premium added after the September 10 attacks and stabilizes energy flows when macro markets needed it most. x.comÂ
Crude oil looks set to rise sharply in the short term as Saudi supply disruptions worsen. Per @KobeissiLetter, citing Reuters, Saudi Arabia suspended loadings at Yanbu, its main Red Sea port exporting up to 5 million barrels a day, after attacks on its East-West pipeline, with Brent near $110. Per @HormuzLetter, Saudi Aramco cancelled its September European allocations, with no Saudi cargoes to Europe until November. The big move likely comes within the next couple of days. x.com x.com x.com … Show more
Oil transport and refining face renewed disruption risk, making crude oil look ready for another leg up. The Hormuz Letter relays an Iranian announcement that a tanker hit a naval mine while leaving the Strait of Hormuz; @news_9x says Ukraine vowed to destroy all Russian refineries. AP reports an official said a missile struck a passenger terminal in Riyadh. x.comÂ
Crude oil should go lower as Houthi leaders in Yemen declare a maritime embargo. x.comÂ
Crude oil supply is tight and US military action would push it higher. Refinery capacity is offline in Russia and the Gulf, and Iran controls two straits, straining the hydrocarbon economy, while both conflicts look set to continue. A US airstrike on Sana'a in the next two months looks likely, making US shipping a target and inviting escalation by Iran and its proxies. Any US action should add about $10 to Brent and $2 to gasoline and diesel, whose supply damage is irreversible near term. x.comÂ