Oil Spikes as Gulf Crisis Disrupts Supply — Russia Benefits
(00:00.686)
The latest on oil and Russia wins. Yeah, this morning, what do we have about $86 a barrel futures, oil futures are up significantly. And I’m also looking at minor markets as well. You’re taking a look at the price of jet fuel in various different parts of the world and it is absolutely skyrocketed.
breakdown, I’ve gotten questions from people, well, why, you know, why can’t they ship the oil across Saudi Arabia and then unload the ships there? I don’t think you understand, quite frankly, how much oil is in a tanker, and how much oil can actually fit on a truck. And how many trucks would be necessary, it’s an absolutely impossible thing to do. The reason why the Strait of Hormuz Persian Gulf
that area is so important is because that’s where the oil fields are. Don’t have pipelines big enough to actually transfer the oil and putting them on trucks and moving it to a different spot. It’s just not going to work. Our hand is being forced right now. I don’t think most of the media fully understands that. You’ve got various
various different people in the region, refineries have been shut down. Factories around various different parts of Asia are also instituting force majeure. If you’re not familiar with that is, it’s a legal ease when it comes to contracts, basically giving you an out. And refineries, oil company, you name it, they’re all force majeure, basically an act of God.
or an act of war, contract, null and void. Many of these refineries in the in the region are just saying we’re shutting down. And once they shut down, it’s not so easy to start them up, it’s going to take some time. Qatar’s energy minister basically coming out
(02:20.002)
told the Financial Times that the Gulf conflict could trigger a global economic shock warning that continued fighting would force all Gulf energy exporters to halt output and could set Brent crude prices north of $150 a barrel. I’ve seen ridiculous points being made by certain people saying, it’s okay. We pump our own oil here in America. Doesn’t matter. It’s a global oil market.
It does matter. Your prices are going up too. Unless of course, which again, this is a possibility. The government steps in and puts in price controls, which would be an absolute disaster. I want to go back to when Russia invaded Ukraine and the price of oil, it’s not that long ago, went above $120 a barrel. Remember what the Biden administration did, they tapped the strategic
petroleum reserve. We were supposed to refill that. We haven’t done that. That has not been refilled. You’ve got without a doubt. You’re to have a chaotic situation. Might be some respite for China in the sense that Iran, I guess, is speaking with China saying, Hey, we’ll let ships go through to you. Interesting. The winner.
right now winner winner chicken dinner Russia and this is embarrassing. Quite frankly, we got sanctions on Russia, right? Big oil sanctions on Russia. Can’t buy their oil coming down hard because of the war. Well, we gave them a reprieve. We gave Russia license to sell its oil to India.
yeah. And listen, they’re going to unload. OK, they’ve got stockpiles of the stuff. They’ve got ships full of the stuff. And believe you me, it’s not going to just go to India. It’s going to go to other places as well. And most certainly, that is going to benefit Putin. And again, another CI told you so moment. But but but but but Trump said that we’re going to have insurance. Yeah. Yeah. The U.S. Development Finance Corporation
(04:50.126)
There are about 200 billion dollars short of the capacity needed to underwrite insurance policies for ships going through the Strait of Hormuz. Yeah, they need about 352 billion. They have 154 billion if they want to underwrite insurance policies. Now, again, the traffic is down almost 95 percent. There is obviously reserves when it comes to food.
in that region, but after a period of time, it’s going to get worse instead of better. Not to mention the fact that Russia is going to be empowered by this. And they could also say, hey, you know, maybe we’re going to cut off some of our gas to certain areas of the world to do various different things. They can make matters worse very, very easily.
Or they could be Mighty Mouse. Here we come to save the day and end up being a good guy. It is what it is. The situation right now is a disaster simply because they didn’t think it was going to go this long. They didn’t. They weren’t. They weren’t planning on this. If you think that they were this was all part of the game. This is part of 3D chess allowing Russia to start shipping all these things. It’s not. It’s not. They thought it was going to go quickly. It hasn’t.
Okay, that’s in the past now. How are we going to go about dealing with this? I don’t know.
I don’t know, but I most certainly would expect for energy prices to rise quite a bit, unless of course, we get an easy off-ramp. And I’ll talk about that in another podcast. Watchdog on wallstreet.com.
