Latest topics
Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
5 posters
Page 1 of 1
Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
Singapore (Platts)--9Jan2012/702 am EST/1202 GMT
It would be "relatively easy" for Iran to shut down the Strait of Hormuz and disrupt some 15 million b/d of crude flows but such an event is unlikely and any blockade would not last beyond two weeks, due to a US-led military response, Societe Generale said in a research report released Friday.
"We believe it would be relatively easy for Iran to shut down the Strait of Hormuz. A credible threat from missiles, mines, or fast attack boats is all it would take for tanker insurers to stop coverage, which would halt tanker traffic," SocGen analysts said in the report.
But "we estimate the probability of this very high impact event at 5%," they said. Also, "we believe that Iran would not be able to keep the straits shut for longer than two weeks, due to a US-led military response," the analysts added.
"Although Iran may like the idea of retaliation in order to hurt its enemies, by halting its oil export revenues, it would hurt itself even more," the report said. "Moreover, Iran would do this at the cost of provoking a military response that could destroy much of its military and perhaps even its nuclear program."
However, should the vital waterway shut down, benchmark Brent crude prices could spike into a $150-200/barrel range, albeit for a limited time period, the SocGen analysts said.
Front-month ICE Brent futures were trading around $113.20/b in Asia Monday afternoon.
A disruption in the Strait of Hormuz would "definitely" result in a release of strategic oil stocks by the International Energy Agency member countries, the report said. At the same time, a severe price spike would sharply hurt economic and oil demand growth, and would thus be self-correcting, they added.
EU EMBARGO LOOKS LIKELY
Meanwhile, an EU embargo on some 600,000 b/d of Iran's medium and heavy sour crude imports looks likely, after the EU reached an agreement in principle on an embargo on January 4, the analysts said. A full ban could send Brent prices spiking to a $125-150/b range. The extent of the impact would depend on the terms of the EU embargo and how it is phased in, they added.
Iran would try to sell additional crude volumes to Asia, specially to China and India, but this is "easier said than done," the report said. Refiners in both countries have term contracts with Saudi Aramco and they would not be able to "simply tell the Saudis to reduce their exports."
Chinese and Indian refiners would have good negotiating leverage with Iran, which would have to cut its prices to Asian customers. Indeed, China might already be posturing for a negotiating position by taking significantly less Iranian crude in January and February, the analysts noted.
"Our 'guesstimate' is that Iran would only be able to sell a maximum of 200-300,000 b/d of the available EU 600,000 b/d to China, India, and maybe other countries."
Apart from the 600,000 b/d of EU imports, SocGen pegged another 200,000 b/d of Iranian exports to Turkey. Asia imports a combined 1.5 million b/d between China (600,000 b/d), India (400,000 b/d), Japan (300,000 b/d) and South Korea (200,000 b/d), it said. The report tallied another 100,000 b/d going into South Africa, making for a total of 2.4 million b/d.
Of Iran's total production of some 3.5 million b/d, 1.1 million b/d is processed in domestic refineries, SocGen estimates.
--Vandana Hari, vandana_hari@platts.com
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8774328
It would be "relatively easy" for Iran to shut down the Strait of Hormuz and disrupt some 15 million b/d of crude flows but such an event is unlikely and any blockade would not last beyond two weeks, due to a US-led military response, Societe Generale said in a research report released Friday.
"We believe it would be relatively easy for Iran to shut down the Strait of Hormuz. A credible threat from missiles, mines, or fast attack boats is all it would take for tanker insurers to stop coverage, which would halt tanker traffic," SocGen analysts said in the report.
But "we estimate the probability of this very high impact event at 5%," they said. Also, "we believe that Iran would not be able to keep the straits shut for longer than two weeks, due to a US-led military response," the analysts added.
"Although Iran may like the idea of retaliation in order to hurt its enemies, by halting its oil export revenues, it would hurt itself even more," the report said. "Moreover, Iran would do this at the cost of provoking a military response that could destroy much of its military and perhaps even its nuclear program."
However, should the vital waterway shut down, benchmark Brent crude prices could spike into a $150-200/barrel range, albeit for a limited time period, the SocGen analysts said.
Front-month ICE Brent futures were trading around $113.20/b in Asia Monday afternoon.
A disruption in the Strait of Hormuz would "definitely" result in a release of strategic oil stocks by the International Energy Agency member countries, the report said. At the same time, a severe price spike would sharply hurt economic and oil demand growth, and would thus be self-correcting, they added.
EU EMBARGO LOOKS LIKELY
Meanwhile, an EU embargo on some 600,000 b/d of Iran's medium and heavy sour crude imports looks likely, after the EU reached an agreement in principle on an embargo on January 4, the analysts said. A full ban could send Brent prices spiking to a $125-150/b range. The extent of the impact would depend on the terms of the EU embargo and how it is phased in, they added.
Iran would try to sell additional crude volumes to Asia, specially to China and India, but this is "easier said than done," the report said. Refiners in both countries have term contracts with Saudi Aramco and they would not be able to "simply tell the Saudis to reduce their exports."
Chinese and Indian refiners would have good negotiating leverage with Iran, which would have to cut its prices to Asian customers. Indeed, China might already be posturing for a negotiating position by taking significantly less Iranian crude in January and February, the analysts noted.
"Our 'guesstimate' is that Iran would only be able to sell a maximum of 200-300,000 b/d of the available EU 600,000 b/d to China, India, and maybe other countries."
Apart from the 600,000 b/d of EU imports, SocGen pegged another 200,000 b/d of Iranian exports to Turkey. Asia imports a combined 1.5 million b/d between China (600,000 b/d), India (400,000 b/d), Japan (300,000 b/d) and South Korea (200,000 b/d), it said. The report tallied another 100,000 b/d going into South Africa, making for a total of 2.4 million b/d.
Of Iran's total production of some 3.5 million b/d, 1.1 million b/d is processed in domestic refineries, SocGen estimates.
--Vandana Hari, vandana_hari@platts.com
http://www.platts.com/RSSFeedDetailedNews/RSSFeed/Oil/8774328
supergirl- Elite Member
- Posts : 449
Join date : 2011-11-29
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
NEW YORK — Oil prices started the week lower after analysts said
that nations should have ample supplies regardless of Iran's threats to
block exports from the Persian Gulf.
Benchmark crude on Monday
fell by 84 cents to $100.72 per barrel in New York. Brent crude, which
is used to price foreign oil varieties that are imported by U.S.
refineries, fell 80 cents $112.26 per barrel in London.
Prices
climbed last week on fears that Iran could try to close the strategic
Strait of Hormuz in response to international sanctions. One-sixth of
the world's seaborne oil passes through the narrow strait, and traders
feared that a conflict in the region would slow down crude shipments out
of the Persian Gulf.
Read More:
http://www.daytondailynews.com/business/oil-prices-fall-as-concerns-about-iran-retreat-1309948.html
This has to be watched even more than what Iraq is doing at the moment!! This Strait being shut will have a substantial negative effect on this investment.
that nations should have ample supplies regardless of Iran's threats to
block exports from the Persian Gulf.
Benchmark crude on Monday
fell by 84 cents to $100.72 per barrel in New York. Brent crude, which
is used to price foreign oil varieties that are imported by U.S.
refineries, fell 80 cents $112.26 per barrel in London.
Prices
climbed last week on fears that Iran could try to close the strategic
Strait of Hormuz in response to international sanctions. One-sixth of
the world's seaborne oil passes through the narrow strait, and traders
feared that a conflict in the region would slow down crude shipments out
of the Persian Gulf.
Read More:
http://www.daytondailynews.com/business/oil-prices-fall-as-concerns-about-iran-retreat-1309948.html
This has to be watched even more than what Iraq is doing at the moment!! This Strait being shut will have a substantial negative effect on this investment.
*****************
Being HAPPY doesn't mean everything is perfect.
It means that you've decided to look beyond the imperfections!
It means that you've decided to look beyond the imperfections!
Happy Life- VIP Member
- Posts : 514
Join date : 2011-11-16
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
Good article full of real logic and believable numbers--thank you.
madaussie- Active Member
- Posts : 84
Join date : 2011-10-21
Age : 75
Location : dallas tx
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
Let's get this RV done so that we can invest in the next plan....Iran Rial RV...I may need some more money in about 10 years.
*****************
SENATOR DOODOO
Support Term Limits for US Congress
doodoo- VIP Member
- Posts : 1173
Join date : 2011-10-08
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
doodoo wrote:Let's get this RV done so that we can invest in the next plan....Iran Rial RV...I may need some more money in about 10 years.
*****************
In God's timing, not a second sooner...
az-tex- VIP Member
- Posts : 883
Join date : 2011-06-18
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
I think for the Rial RV I'll become a dealer. They've made more money than you can shake a stick at over the last 9 years.
*****************
SENATOR DOODOO
Support Term Limits for US Congress
doodoo- VIP Member
- Posts : 1173
Join date : 2011-10-08
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
@doodoo I'm with ya on that one for sure!!!
supergirl- Elite Member
- Posts : 449
Join date : 2011-11-29
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
@maudaussie - you're welcome
supergirl- Elite Member
- Posts : 449
Join date : 2011-11-29
Re: Strait of Hormuz shutdown unlikely, won't last beyond 2 weeks
There is enough firepower to make Iran a sea of glass without even considering all the other "support" ships in their armada... (destroyers, cruisers, submarines, etc., etc. on just one aircraft carrier...
I am not saying that Iran wouldn't be that STUPID to "try" flexing their testes... but I am here to tell ya... the US Navy will cut them off if they do try it...
:cheers:
I am not saying that Iran wouldn't be that STUPID to "try" flexing their testes... but I am here to tell ya... the US Navy will cut them off if they do try it...
:cheers:
*****************
In God's timing, not a second sooner...
az-tex- VIP Member
- Posts : 883
Join date : 2011-06-18
Page 1 of 1
Permissions in this forum:
You cannot reply to topics in this forum
Fri May 10, 2024 5:03 pm by kenlej
» Go Russia
Sun May 05, 2024 11:37 am by kenlej
» Go Russia
Sun May 05, 2024 10:51 am by kenlej
» Textbook Tony
Mon Apr 29, 2024 4:13 pm by Mission1st
» The Rockefellers and the controllers are freaking out right about now
Fri Apr 26, 2024 11:16 am by kenlej
» Phony Tony sez: Full Steam Ahead!
Sat Apr 13, 2024 11:51 am by Mission1st
» Dave Schmidt - Zim Notes for Purchase (NOT PHYSICAL NOTES)
Sat Apr 13, 2024 11:45 am by Mission1st
» Russia aren't taking any prisoners
Fri Apr 05, 2024 6:48 pm by kenlej
» Deadly stampede could affect Iraq’s World Cup hopes 1/19/23
Wed Mar 27, 2024 6:02 am by Ditartyn
» ZIGPLACE
Wed Mar 20, 2024 6:29 am by Zig
» CBD Vape Cartridges
Thu Mar 07, 2024 2:10 pm by Arendac
» Classic Tony is back
Tue Mar 05, 2024 2:53 pm by Mission1st
» THE MUSINGS OF A MADMAN
Mon Mar 04, 2024 11:40 am by Arendac
» Minister of Transport: We do not have authority over any airport in Iraq
Mon Mar 04, 2024 11:40 am by Verina
» Did Okie Die?
Mon Mar 04, 2024 11:34 am by Arendac
» Hello all, I’m new
Wed Jan 31, 2024 8:46 pm by Jonny_5
» The Renfrows: Prophets for Profits, Happy Anniversary!
Wed Jan 31, 2024 6:46 pm by Mission1st
» What Happens when Cancer is treated with Cannabis? VIDEO
Wed Jan 31, 2024 8:58 am by MadisonParrish
» An Awesome talk between Tucker and Russell Brand
Wed Jan 31, 2024 12:16 am by kenlej
» Trafficking in children
Mon Jan 29, 2024 7:43 pm by kenlej