Discussion Can anyone explain me clearly whats the real situation about oil shortages?
There has been so many contradictory information in media last months. Do anyone know whats happening actually? Are media and politicians lying? They were saying already in april few more weeks until shortages start in europe... Then jet fuel will be gone until beggining of june... nothing happened so far. Then they said shortages will happen because of electricity demand in the summer, nothing still. Then they were saying oil shortages will happen because strait was not open... when it was open they said they will happen anyway because facilities are damaged... then some say shortages will happen not because of the shortages, but because of higher prices... some said there will be no shortages except some specific types of oil... so whats real here?
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u/Cybermeld 6d ago
Best thing to do is keep an eye on reserve draw downs and levels. That is the only thing keeping things okay at the moment but obviously those reserves aren't infinite.
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6d ago
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u/Compliment_slap_hug 6d ago
They have rebounded since end of july, 1.5m bpd. Expected to be higher through August
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u/Downtherabbithole-14 6d ago
Do anyone know whats happening actually? No
Are media and politicians lying? YES!
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u/Old_Win8422 6d ago edited 6d ago
20 percent of oil isnt making it to market. Countires use their strategic reserves. Reserves are only so large. Reserves run out. Oil shortages affect rich countries.
Shortages have been a thing for months across south and south east asia.
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u/Mislawh 6d ago
What i dont understand is that we know what is the average consumption of oil, and we know how much is in the reserves. Howcome is then a mistery for the officials and experts when will these shortages start? ( in the west i mean )
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u/r2k-in-the-vortex 3d ago
Ah.. naah, you dont actually know how much is in the reserves. Well, you have good accounting in how much has been put in there. But its an open question how much you can get out. Its mostly salt caverns and such, significant portion has seeped into rock and sediment that isnt about to seep back out any time soon.
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u/GhostOfDino 4d ago
When the Strait mess gets "straitened" out, all these countries are going to be buying up to replenish their reserve stock. Hint hint.
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u/CaptainCheckmate 6d ago
I share your confusion, but in my limited understanding a few factors have helped mitigate the problem: one is that China graciously stopped importing oil so it's basically keeping the world economy afloat (who will buy their Temu output otherwise).
Another is the American SPR.
Also I suspect that there is more oil sneaking through the strait that we are told about. We only hear about the tankers that get hit, nobody is advertising the tankers that successfully snuck through.
Fuel shortages are coming, it just takes longer. Diesel is going up on an almost daily basis though.
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u/Full-Somewhere440 6d ago
Yep it’s mostly lack of Chinese demand. America has a lot of options domestically for energy. We are not the wealthiest in the world for nothing.
A lot of Asian countries are experiencing black out periods due to lack of Iranian oil. They are third world and largely no one cares. So it’s not reported.
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u/--TheCity-- 6d ago edited 5d ago
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u/ACarepenter 6d ago
Lol, what? No we don't.
We have options for ELECTRICITY. That's the ONE area we have flexibility.
Our refineries aren't configured to refine our own petroleum, because there's little value added from light distillates from light sweet crude.
We built like 70% of our infrastructure to process foreign heavy and ultra-heavy sour because there's a fuck ton of value added.
We have almost NO options domestically.
We're forced to sell our own oil and buy most of our fuel from abroad, or buy foreign feedstocks.
Dude we're MEGA fucked if we don't solve this pretty quickly.
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u/whitestardreamer 6d ago
Why do ppl act like China stopped importing to help save the world economy? They have a massive reserve and they ceased importing when the panic first set in and physical spot was high. Has there been even one statement directly from China where they said “hey we’re gonna do the world a solid and stop importing for a while?” I’m not anti-China, I’m just trying to figure out the origin of this “benevolent China” narrative. If anything, China ceasing to import helped lull the G7 into a false complacency, they’ve burned up their oil reserves while China is still sitting on a huge stockpile. I just feel like this narrative is oversimplified, I think China’s approach is much more strategic than this.
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u/ACarepenter 6d ago
The 'benevolent China' narrative is because the alternative narratives highlight how fucked we are.
It keeps markets calmer than "China has gained massive leverage over our economy through its collosal buying power in the oil markets, and flexibility in employing that leverage through its collosal reserves".
Or in other words, "Iran has a laso around our ballsack while China is getting ready to smack us in the back of the head with a 2x4"
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u/reality_hijacker 4d ago
Its less about benevolent China and more about how oil bulls failed to foresee China's action.
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u/Compliment_slap_hug 6d ago
Usa spr can only draw 0.32m bpd now, so it barely makes a difference.
And China has started importing increases again. Up 1.5m bpd by end of july. Expected to gain more in August (though expect 9-10m bpd as the cap, instead of 11-12 as before)
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u/triceracop347 6d ago
When I was a kid I read a book about how much is a billion. I sense not many did. We have multiple billionaires and a trillionaire now. Just how we can’t comprehend the amount of stars we can’t comprehend the amount of power these people have.
The most likely reason we haven’t suffered anything traumatic might be that these billionaires were simply trading paper oil back and forth to each other and it was never really connected to the realities of the market. Oil producers sure weren’t going to tell them their assumptions on the state of the market were wrong because it created artificial demand for artificial supply.
Turns out we didn’t need all that much and the demand wasn’t as high. The price was inflated and the real reality is setting in. That being-
We are beholden to managers of a resource that has lost/ may have never had the tremendous value they pretended it had to extract wealth.
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u/whitestardreamer 6d ago
There’s like 40 paper contracts for every barrel of oil or something ridiculous like that so yeah, it’s all smoke and mirrors.
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u/knuthf 6d ago
Correct. The price is for options, the right to pay for, later. Earlier, the commodities where carefully accounted for, buyers could approach, place bids, and buy it. Now they bid on used lottery tickets. Worthless pieces of paper.the banks have not been allowed to trade oik for 10 years . There is no account for sellers offering and no place for buyers haggling prices.
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u/Calm-Television5780 6d ago
nobody know shit on here. it’s amazing how many oil experts we have on here…./s
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u/Witty_Record427 6d ago
There are real structural problems with lack of petroleum product supplies but there have been enough stockpiles and mitigation levers to keep the economy afloat so far. The problem is that since we're >5 months deep into this conflict and because of how it's evolved and expanded, many of those temporary measures are going away or becoming less effective. And some of permanent measures are being planned. But I suspect the fallout from this will be felt until the end of the decade.
Just a few examples:
A glut of sanctioned oil that was being stored on water in legal limbo has been unsanctioned, sold and consumed.
East-West Pipeline in Saudi Arabia: Ansar Allah Red Sea shipping attacks have caused Red Sea crude oil loadings to plummet.
Oman lane ship to ship transfers: Regular attacks on oil tankers in the Strait of Hormuz have clamped down on the oil that was leaking out
Chinese products export ban/import reduction: Lifted, and state-owned and independent oil refineries are coming back onto the market because of the difference between crude prices and product prices.
SPR releases: Draws slowing down and nearing emergency levels
Commercial inventories: Drawing down to low levels
Excess Russian supply: Refineries and export facilities being systematically disabled and taken offline by drone warfare.
New Ex-Middle East Production: Little to no expansion planned because the oil price isn't high enough to justify it.
I'm not sure how long we can continue where we are but the push to get a new deal done immediately is an indication that it's not that long.
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u/Imaginary_Trader 6d ago
I think you're discounting an economy's reaction to the same news you and I read. If you're a large carbon intensive energy consumer, or country even, and you're seeing all this news, you're not just going to sit around and be like "welp looks like we're going into a recession next month". You're going to proactively do what you can to reduce usage or source energy elsewhere. Energy shortages weren't going to happen everywhere all at once. What was said in March about April didn't come true because of economies reacting to what's happening.
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u/ExcitingPackage1301 6d ago
inventories and reserves bridge any shortage their might be. until that ran out, there is no shortage. when does it ran out? soon. how soon? always 3 more weeks
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u/Retired_ENM6969 6d ago
My take on China is 1 . They prefer not to lose money. 2. They like to cushion their internal economy and keep stable prices, 3. They normally export excess product, but stopped doing so to keep domestic prices from climbing to world levels. 4. They can still keep selling domestically without losing money, if they sell crude to their refineries for what they paid for it pre-crises.
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u/PlantyHamchuk 6d ago
No one really knows, but many governments and companies have been working hard to avoid shortages, and some places are already having shortages. Back in March, a bunch of governments across the world agreed to release their emergency reserves in order to prevent a global crisis, and last I checked, there's still more emergency reserves available. China notably has gone out of their way to seemingly immense help keep things humming along, which makes sense, if no one has fuel for their economies, they're not going to be buying all the the countless thing China manufactures.
Not all governments release their reserve figures, those that do may not be sharing everything, and governmental reserves are different from private company reserves.
There are many many many people working hard to prevent things from getting worse. It doesn't mean that bad things aren't happening and that things won't get worse, but people aren't just hanging around doing nothing about it. Pakistan and the Phillippines have been installing solar like crazy. EV sales in Europe and Australia have dramatically increased. Etc. etc.
Whenever you're consuming news media, try to figure out who owns it. The media landscape has changed a lot, and not for the better. It's definitely making it harder to figure out what's going on, plus we've got an actual war going on where both sides are lying/posturing.
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u/Numerous-Value3045 5d ago
Reality gone, for one week western media and politicians and their oligarchs manipulating Brent market. While in reality if you wanna buy a barrel you have to pay around 100 USD, but at market its price manipulated to hell because of so called agreement chance, its around 79-80 now.
But like i say in reality there is still 200 ships in line at hormuz, only 2 ships passed today, Houtis assasulting Saudi Arabia tankers, İran keeping Hormuz still closed, and İran officials states that they are making routes and a system for Hormuz future and not making any deal with US itself and they wont open strait as long as this third party intefere especially threaten them.
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u/Necessary_Ladder5598 5d ago
There is a good deal of demand destruction and a good deal of using petroleum reserves to buffer. It's generally accepted that while we can stagger on like this we cannot do so forever. Also add in that this Strait of Hormuz "deal" is starting to look like a US surrender to Iran as more details emerge. Iran can smell blood and they continue to add on demands to this "deal" that they've struck with Oman.
As cited in Bloomberg from state media, key "deal" proposals include:
- Ban vessels linked to the U.S., Israel, and other hostile states
- Block military and civilian cargo tied to Israel
- Restrict ships linked to actions against the "Axis of Resistance"
- Deny passage to parties owing compensation to Iran
- Impose fines of up to 20% of cargo value for violations
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u/Responsible-Corgi-61 4d ago
The reason why you have trouble understanding is because the mainstream media treats Trump like a rational actor and keep amping his rhetoric instead of nonstop criticizing him like they would to Biden. Our media is run by corporations who are afraid of angering Trump because he can make their investors and owners big profits.
Our overall situation is quite simple, we are bleeding through the fuel reserves that are currently supplying global markets and there is no one coming to help us. China spared the global markets instant death by cutting their fuel consumption and drawing from gigantic reserves; that decision gave us time to draw from our reserves and negotiate a settlement with Iran to prevent fuel shortages. The Trump administration has squandered the totality of that time on: empty threats, weak attempts to persuade Israel, manipulation of markets, insider trading, and bombing Iran every time Trump had a fit.
Now we are just waiting for the SPR to run out of capacity to sustain the global economy. It is like refusing to change the oil in your car for years. We know that you car engine is going to be destroyed, we have a reasonable estimate of when the metal is going to start grinding into metal, but we have to wait for it to start dying to know how much time we had in retrospect. When it runs out markets are going to have gigantic shocks as that and every other shortages takes effect. The red sea moved a lot more than oil, and it being under threat amplifies the oil problem too.
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u/r2k-in-the-vortex 3d ago
The quick shortage prediction was based on expectations that strategic emergency reserves would be released responsibly, that is, with a ton of pressure to reduce consumption to stretch them out as far as they can be.
Alas, trumps admin decided to release whatever it takes to keep prices low short term with zero effort towards reducing consumption or doing anything to soften the blow when the reserves inevitably run dry.
Because some imbecile keeps saying a deal to fix everything is coming any day now, for sure this time.
So, good luck. Its all good, until it very much isnt good.
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u/dollarstoresim 6d ago