In case of heart attack of the oil trade in the Middle East, represented by the chiusura with the Strait of Hormuz, also an bypass, if not conclusive, can be a good alternative to smooth out the peaks of the Oil prices.
This morning Saudi oil giant Aramco announced that in a few days will be able to fully power a oil pipeline able transport crude oil to the Red Sea, on the western coast of the kingdom, thus bypassing Hormuz, where in peacetime approximately 20 million barrels of crude oil and refined products pass through per day, equal to a fifth of global consumption.
The East-West oil pipeline It cannot compensate for the entire supply. But it can provide an alternative solution for up to 5 million barrels a dayThis is a conduit long 1.200 kilometers which crosses the Arabian Peninsula from the Persian Gulf to the Red Sea that was it built by the Saudis 45 years ago precisely thinking that, one day, Tehran would succeed in doing what was unthinkable at the time: blocking shipments through the narrow canal.
Then there is another oil pipeline owned by the United Arab Emirates which offers a bypass option towards the Gulf of Oman for 1,5 million barrels. In an emergency, the United Arab Emirates can probably increase it to nearly 2 million.
Together, these pipelines can transport up to 7 million barrels per day: not a solution to the problem, but at least a way to slow the surge in oil prices if both countries can get enough tankers to the loading ports where the oil ends up. Currently, about 25 supertankers, each capable of carrying about 2 million barrels, have diverted from their original destinations and are heading to new collection points. It remains to be seen how the ports will manage these fleets.
The loss of supply after the first attacks on Iran was so severe that oil prices jumped. well above $100 a barrel As soon as the energy market reopened at the end of the weekend, it surged 20% in a matter of seconds. Perhaps the pipeline bypasses can delay further increases, buying Trump time. The White House continues to bet that it can put an end to the war before oil pressure becomes unsustainable. “We thought oil prices would go up, and they did,” Trump told reporters Saturday night. “But they will go down. They will go down very quickly. And we will have gotten rid of a very, very serious cancer on the face of the Earth.” As recently as last night, Trump said that war with Iran could be nearing the end.
Bets and dangers on the horizon
However, there are huge bets still open for the US administration. The Trump's strategy To be successful, it would first need the bypass pipelines between Saudi Arabia and the United Arab Emirates to make a difference, for the war to end in days rather than weeks, or at least for it to be able to get a few supertankers in and out of the Strait of Hormuz, and for the area's oil production, refining, and loading facilities to emerge from the war relatively unscathed, allowing for a rapid resumption of exports.
The state oil company Saudi Aramco has started simultaneously loading three large crude oil tankers, so-called VLCCs, at its terminals in Yanbu and Al Muajjiz on the Red Sea: the evidence, according to industry experts, that is deviating as much oil as possible from the Hormuz route. Adnoc, the state-owned manufacturer in Abu Dhabi, was loading another VLCC in Fujairah, outside the strait.
There are also new dangers. Saudi Arabia and the United Arab Emirates are walking a tightrope on the issue of of your digital ecosystem. . Diverting oil through alternative pipelines is part of their effort to keep energy markets supplied and helps Washington, but it could cause further military retaliation by TehranAs more and more oil tankers head to new loading points outside the Persian Gulf, there is nervousness among industry officials in Riyadh and Abu Dhabi over fears that pipelines, pumping stations or even ports can be attacked by drones.
The Sunni Arab states of the Persian Gulf have long had tense relations with Iran, a Shiite-majority country. Yet, in recent years, Riyadh and Abu Dhabi have sought to improve relations. Before the hostilities, they were eager for Tehran to reach a diplomatic agreement with the United States through Omani-mediated talks. Oil is now dragging them into the conflict, with uncertain consequences.
Oil prices still far from previous peaks in 2022 and 2008
Following Trump's comments yesterday, suggesting a quick end to the war, oil prices reacted this morning with a sharp decline from their peaks. Crude oil futures Brent It also fell 11% to lows of $88,05 a barrel, before narrowing its decline to 7%, trading just above $92 after rising to nearly $120 on Monday. U.S. West Texas Intermediate (WTI) crude oil fell 6,8% to $88,36 a barrel.
Although the increases have triggered quite a few concerns for possible reflections on 'inflation, On 'saving and on monetary decisions of central banks, in real terms, adjusted for the cumulative impact of inflation, the Petroleum it's still well below previous peaks.
The 139 dollars a barrel reached in March 2022 after the Russian invasion of Ukraine is equivalent to about $157 a barrel in today's money. The $147,50 a barrel of July 2008 (when the financial crisis linked to the Lehman Brothers bankruptcy occurred) is equivalent to about $205 a barrel today. Furthermore, the impact on prices has so far been short-lived, measured in days, rather than months or quarters. For an oil peak to turn into a full-fledged crisis, the price must rise and remain there for a certain period.
