#USRefinersFaceLoomingCrudeSupplyDrop
The value of U.S. oil is around $86.30 to $87.80 per barrel. Its value has risen due to recent tensions with Iran and threats of economic warfare. These geopolitical tensions have caused American crude to surge abroad, unlike domestic consumption, which has low demand.
West Texas Intermediate (WTI) prices have increased due to the lack of agreements with Iran, and as a result, volatility has played in the favor of the U.S. U.S. exports have risen by 32%, showing a difference from internal exports, which have fallen. All of this is driven by the need to supply globally the demand of each country that is facing a gap because one of the oil producers—like Iran—is missing.
Competitor countries besides the U.S., such as Saudi Arabia, the United Arab Emirates, and Venezuela, see a major opportunity to increase production and fill the empty portion left by Iran. But this also means that prices will be higher within oil-importing countries when selling fuel domestically, such as China and other countries.
However, if Iran decides to act and block the Strait of Hormuz—which is a maritime channel controlled by Iran—and if it does block it: a fifth of liquefied gas and crude would be stranded there. Countries like Iraq, Kuwait, and Saudi Arabia that use that channel to move their crude through it would have no way to get it out, triggering a real global energy crisis since the U.S. alone would not be able to meet the high demand for crude.
Shale oil is the oil extracted by the U.S. It is very complex and difficult to extract, but it is good-quality with low sulfur content and ideal for making gasoline and diesel. It is “sweet” and light. To extract it, horizontal drilling is used, and it is also extracted through hydraulic fracturing of the rock. It is costly compared to conventional oil.
The value of U.S. oil is around $86.30 to $87.80 per barrel. Its value has risen due to recent tensions with Iran and threats of economic warfare. These geopolitical tensions have caused American crude to surge abroad, unlike domestic consumption, which has low demand.
West Texas Intermediate (WTI) prices have increased due to the lack of agreements with Iran, and as a result, volatility has played in the favor of the U.S. U.S. exports have risen by 32%, showing a difference from internal exports, which have fallen. All of this is driven by the need to supply globally the demand of each country that is facing a gap because one of the oil producers—like Iran—is missing.
Competitor countries besides the U.S., such as Saudi Arabia, the United Arab Emirates, and Venezuela, see a major opportunity to increase production and fill the empty portion left by Iran. But this also means that prices will be higher within oil-importing countries when selling fuel domestically, such as China and other countries.
However, if Iran decides to act and block the Strait of Hormuz—which is a maritime channel controlled by Iran—and if it does block it: a fifth of liquefied gas and crude would be stranded there. Countries like Iraq, Kuwait, and Saudi Arabia that use that channel to move their crude through it would have no way to get it out, triggering a real global energy crisis since the U.S. alone would not be able to meet the high demand for crude.
Shale oil is the oil extracted by the U.S. It is very complex and difficult to extract, but it is good-quality with low sulfur content and ideal for making gasoline and diesel. It is “sweet” and light. To extract it, horizontal drilling is used, and it is also extracted through hydraulic fracturing of the rock. It is costly compared to conventional oil.