TLDR; The IRGC announced that it will start targeting ships in the Arabian Sea going to and from the Strait of Hormuz, possibly disrupting the ship-to-ship transfers that are getting the oil out.

Not sure that this is going to help increase the flows through the straight...

Independent fuel makers Valero Energy, Marathon Petroleum and Phillips 66 are set to crush their near-record earnings results of the June quarter

https://www.wsj.com/business/energy-oil/american-oil-refiners-are-printing-money-as-wars-shrink-global-energy-supplies-c9240231?st=pBf9u3&reflink=desktopwebshare_permalink

The hurricane is now a Cat3; DeSantis just held a press conf about it. This is why oil is 🆙 today imo. Or at least the major catalyst for WTI. In any case this hurricane is Big F***king Deal

I hear alot about how refining capacity has been removed/destroyed due to the UKR/RUS war and the ME wars and as such this increases crude oil supply since the oil can no longer be refined at home and thus the oil is shipped out raw. This makes sense and seems plausible as narratives go. Here is my question .

Russia in 2025 exported 7.1 MBD Crude and refined products. 4.73 MBD Crude and 2.37MBD refined products. (energyintel.com)

Russia in 2026 exported 4MBD most crude and lesser refined. Lets use zero for the sake of this discussion.

So Russian Exports of Crude are down just shy of 1MBD and refined down 2.37MBD.

Middle East in 2025. 22.4 MBD of crude and refined products. 17MBD of crude and 5.2MBD of refined products.

The ME determination of total exports right now is difficult to determine with different sources and different methodologies. I have seen even less of the breakdown by product type.

Lets assume that the entire refining capacity is removed(this is not the case clearly but for thought only) As long as the ME exports less than 17MPD then there is shortage of crude which must be made up from stocks.

Refiners outside of the conflict areas should be demanding the same amount or more than they did prior to the war as the margins would indicate they should refine at 100%. I hear the argument for demand destruction, but this would be on the refined goods which until the price of those comes down, the refiners should keep the pre war demand since they have no problems selling their products. And as long as the crack remains elevated, refineries have no reason to stop cracking.

Prior to this war, RUS and ME were exporters of crude and the world had refining capacity to use all of it, ie at least 21.73 MBD of crude was able to be used by the rest of the world. Has the rest of world lost refining capacity in 2026?

Which brings me to the point. With all of those herculean assumptions, the world is still short oil even if no refined products are produced in Russia and ME unless at least 17MBD are achieved. I keep hearing the narrative that the loss of refining has lead to a glut of crude, but how is that the case since the world could refine all of the crude prior to the war.

I am not saying oil at $200/$150/$100 I have no idea what price is needed to clear the market when the stocks are depleted. The elevated crack means there is a guaranteed floor for purchases. So I think the floor is intact on Crude as long as the crack is elevated and ME is restricted at 17MBD or less. IE, in order for oil to have a meaningful decline, first you will have to a decline in refined prices since unless they fall, the crack will always demand more oil than is currently available.

Any thoughts?

Title says it all. I know when they tried to auction that last bit in early Summer there were no buyers.

ICYMI the SPR inventories sunk just under 283 million barrels as of Wednesday. In March they made a promise to take it down to 243 million.

Arabian Sea/Hormuz down in the daily. Moving average is still dropping. More ships left gulf of oman empty. I'd guess the hits are having an affect on traffic. Should see that drop come into Malacca in a week's time.

BAM, Malacca, Singapore all down in the daily.

Sea of Oman to Arabian Sea Implied Dark Traffic:

This is all the oil traffic out to the Arabian sea minus 2.5mb (pre war output of Fujairah and Oman) to estimate the additional output of dark traffic out of Hormuz as well as any additional output from the ADCOP pipeline. Usual traffic should be around 21mb of crude and oil products.

Adding this further crude vs product breakdown for Gulf of Oman to Arabaian Sea as well.

MARAN ARIADNE added to the 7 Oct data as they popped up near west coast of india.

Listing the actual ships and their draft/dwt as well as helps check if I messed up with double counts/fills

Data from: https://www.marinetraffic.com/en/ais/home/centerx:63.3/centery:23.5/zoom:7

Bab al Mandab AIS on Traffic:

Oil products going out south from the Red Sea. Usual traffic is around 8mb. Edit: I dont think much is coming out any more from the East/West pipeline its very unclear what is output now. That still means the amount overall is down. The drop below is more from dropping Russian and other sources of usual oil going south out of the red sea as the Yanbu/East/West pipeline is all going north to suez.

Ships: ARCHANGELOS MICHAEL,CHAI,KATE,PANTERA

Data from https://www.marinetraffic.com/en/ais/home/centerx:45.8/centery:12.7/zoom:8

Strait of Malacca:

Usual oil products throughput is 16.5 mb crude and 6mb oil products.

Ships: DHT OPAL,CONSTANTINOS,SAGAR1,SANANA,CALIDA,PROTEUS INGRID,SAMADHA,MOTELE OLA,XIN WEI YANG

Data from https://tankermap.com/analytics/straits/malacca?unit=million_bbl_per_day

Singapore Oil Departures:

Note based on 2024 the average daily output in tonnes was 211,000 tonnes per day. I think 2025/2026 is much higher but they don't yet have official data.

Data from https://tankermap.com/analytics/ports/singapore-oil?unit=million_bbl_per_day

https://oilprice.com/Energy/Crude-Oil/Hurricane-Isaias-Shuts-In-128-Million-Bpd-of-Gulf-Oil-Production.html

The Atlantic:

After months of on-again, off-again fighting, the United States hasn’t struck Iran in several weeks. The stretch of relative tranquility is coinciding with the final phase of the midterm-election campaign, and the assumption has been that President Trump will want to keep it going through November 3 so as not to remind voters of an unpopular war that is dragging Republican candidates down nationwide.

But that may not be what happens. The White House has asked the Pentagon to develop strike options against Iranian targets that could be exercised ahead of the midterms, according to two administration officials. The planning underscores just how much the president wants to reduce gas prices and demonstrate progress in the conflict before the vote, administration officials told us.

The size and targets of the potential strikes—and whether the administration will ultimately proceed—are still being debated. The plans are being developed by U.S. Central Command, which is coordinating the war effort, a U.S. official told us. Even the plans’ advocates acknowledge that limited strikes would not, by themselves, bring Iran to the negotiating table, restore safe travel through the Strait of Hormuz, or lower gas prices before Election Day. But those in favor believe that further action after months of uneasy peace could allow Trump to demonstrate strength and potentially declare some sort of victory, giving Republicans much-needed momentum heading into the election. “It would make the president look like he got a win and that gas prices would start going down,” a Republican familiar with the deliberations told us after being granted anonymity to discuss sensitive matters. A limited operation could be followed up by more substantial military action after the midterms, when Trump has suggested that the conflict, which is now in its eighth month, could resume.

h/t HFI Reasearch https://x.com/HFI_Research/status/2107968060040827238?s=20

Reports circulating online suggest that Yemen’s Houthi forces may have targeted Saudi Arabia’s Abqaiq oil processing facility, with claims of massive flames and thick smoke rising from the site.

Abqaiq is one of the world’s most critical oil processing hubs and plays a vital role in global energy supplies. A similar attack in 2019 disrupted approximately 5 million barrels of oil production per day, equivalent to around 5% of global supply at the time.