Less seasonal demand for oil right now...no real cold weather yet, summer driving season over. Also more supply from places like Venezuela.
Didn’t think about seasonal demand tapering off. I did think that by now possibly others are beginning to fill the void, like Venezuela. Lots of money to be made, good incentive.
Eventually as the threat persists, land routes to circumvent the threat will become a greater factor. The Gulf states surely want to bring product to the market.
Russia is a key player in all of this, IMHO. Something ignored by our MSM which declared them bankrupt and impotent in the face of our sanctions post Ukraine war before these even took effect.
Truth is, Russia is 2.5 times the oil production, 3.5 times the refining capacity and even a greater role in natural gas compared to Iran. Many, like the Euro’s sort of screwed themselves economically, all while running victory laps in their media in how they will crush the Russian economy with sanctions post 2022.
Today, no one is really reporting on the role of Russia in all of this, since it’s doesn’t fit the narrative (The narrative: we’re winning, Russia is losing, our sanctions are crushing them, they have no impact on us). https://media.licdn.com/dms/image/v2/D4D22AQEa2vhSLonXjg/feedshare-shrink_800/B4DZj2zFtTGsAg-/0/1756487249573?e=2147483647&v=beta&t=QR7h2DiTxWzUw-ZtAxVAOG9yGf8GOOsP6sLhNQYY1JY
This will be very unpopular with our Ukraine cheerleaders: https://www.cfr.org/articles/trumps-russian-diesel-deal-explained
We can call it election politics, and spin it that way, but the truth is it has a larger macro level economic consequence. The US economy is being stifled by high energy costs, and Russia is playing a role in that, by (((OUR))) past decisions. IMHO, it is also important to normalize relations with Russia in order to peel them away from Iran. Russia is no true friend of the Iranian regime, and Russia has faced off with Islamic terror before us, to a greater extent than us, even to a greater extent in warfare. They understood this threat long before we did, when we were still lecturing them (pre-911, Condoleeza Rice) about Chechnya and how Muslim jihadists there should have greater autonomy... The increased level of Russian Iranian cooperation was out of a “necessity,” we created.
IMHO, Iran unlike Russia, really did screw themselves when they closed Hormuz and we reacted by blockading them. Russia has a sovereign war industrial base, industry, true R&D capabilities, a larger domestic market... Russia can keep going and circumvent our sanctions or have substitutions through China and others to a great degree. Iran cannot. Iran doesn’t build much, and if they have no money, plus a blockade... good luck with that.
Iran must have thought that since much of their oil goes to China we wouldn’t do this? Who knows.
But this I am fairly sure about, in an economy where nearly 30% of the entire nations GDP is wrapped around oil, where 50-60% of their governments revenue is from oil, shutting them down like we are will cause problems for them, and the longer this lasts, the worse it gets for them. Even IRGC members want to have food on the table and when things get really bad, ideology takes a second seat to basic needs (Maslow’s hierarchy).
30% of an economy is Great Depression levels: https://www.stlouisfed.org/the-great-depression/curriculum/economic-episodes-in-american-history-part-3
Hormus is 20% of the worlds oil supply, there are ways around Hormuz (pipelines) and it’s not air tight with ships getting through. But our blockade on Iran is nearly air tight and for them this is near 100% of their oil exports. They hurt us, and the world economy, a little. But we are hurting them in a really significant way.