If business cannot be done that way, then the strait won’t be repeatedly closed. Even horrible nations find ways to live with their neighbors and other countries doing business near them.
I genuinely don’t understand this argument. Carter was voted out because voters didn’t approve of his presidency, including (but not limited to) the handling of the hostage crises. You’ll note that such disapproval didn’t lead to them agitating for an invasion of Iran (unsurprising, so soon after Vietnam). It simply led to massive political displeasure, which Carter wasn’t able to dodge and he got crushed in the election.
The same is what’s likely to happen here. The American voters will be intensely unhappy if gas (and other) prices skyrocket as we reach physical shortages in petroleum products. That’s going to manifest in extreme displeasure at what the Administration is doing. They’ll need to change. But they won’t be able to change to invading Iran with ground troops, because Congress is so massively unlikely to authorize the funding for it. So they’ll have to solve the problem a different way. And that way will be an agreement to open the Strait. Whether it’s permanent, whether it’s breached from time to time, whether it’s imperfect or not - we’ll do that rather than invade with ground troops. We’re not rerunning Iraq 2.0, regardless of whether you think that’s the better choice.
The Persian Gulf nations have a strategic reserve. If the Strait opens up in a reasonable enough amount of time, then much of the oil can come back on the market right away. For around 2 months, things would be back to normal, but it takes longer than 2 months now to get the pumps and refineries back up and running in total. There is some breathing room.
No. No they don’t. They have oil “in the pipeline” (euphemism) which they can use to balance supply to customers, but in total it amounts to about 100 million barrels.
For point of reference, the worldwide consumption of oil is about 100 million barrels daily.
And no, zero chance we will put boots on the ground. Less than zero, if such a thing is possible.
Don’t forget that the Obama plan was also heavily opposed by Netanyahu because it didn’t jibe with his military ambitions. He was even invited to speak to the GOP-controlled Congress in a State of the Union like event designed to embarrass Obama.
The real embarrassment is that Israel and Cuban exiles in Miami have so much influence over US policy to the detriment of middle-class Americans
It is something different, not exactly storage, not exactly a strategic reserve. But proven oil within “reach”.
The figure of 1.2 billion barrels actually refers to the collective emergency stockpiles held by International Energy Agency (IEA) member nations, not OPEC. [1]
The confusion likely stems from two overlapping global oil statistics:
IEA Strategic Reserves (1.2 Billion Barrels): The 32 member countries of the IEA—which includes the U.S., European nations, and Japan—collectively hold over 1.2 billion barrels in public emergency stockpiles. These are the reserves currently being tapped to stabilize markets amidst the Strait of Hormuz disruptions. [2, 3, 4]
OPEC Proven Reserves (1.2 Trillion Barrels): In contrast, OPEC nations hold roughly 1.24 trillion barrels of proven, unextracted underground reserves, which accounts for about 80% of the world’s total oil supply. [5, 6]
OPEC nations do not maintain a 1.2 billion barrel surface storage reserve. Their strategy relies on keeping oil in the ground as underground wealth, utilizing a combined 5.3 million barrels per day of spare production capacity to adjust global supply when needed. [7, 8]
If you would like to look closer into these market dynamics, let me know:
Do you want to see how the IEA emergency release is impacting current oil prices?
Would you like a breakdown of which countries hold the largest chunk of the 1.2 billion barrel IEA stockpile?
Getting the pumps and refineries going again won’t work with this strategy no matter how close the surface the oil is in SA. This is a trading strategy. When there is little to trade it does not work.
@bjurasz - Thanks for the heads up on the SpaceX IPO rule modifications. I had not really followed the SpaceX developments as closely.
Seems like, while the stock market will be impacted, the QQQ will see a bigger impact (at least, short term). My move for next week, make some adjustments on certain names. I just perused the QQQ’s Top 10 holdings, and note that I have direct investments in three (Nvidia (NVDA), Apple (AAPL) and Advanced Micro Devices (AMD)). Good candidates to trim, especially if owned in a Roth ac (applies for the three names in my case). Have some QQQ also. So that can be adjusted in the interim.
Will SpaceX IPO investors roll over the morning of 6/13 to realize they’ve made a huge mistake? Things are pretty dang fugly once you look under the covers.
Musk will retain full control over the company due to his class B voting shares. Naming all the board members, yada, yada, yada. Everything that requires shareholder approval will be controlled by one person.
Most of the proceeds from the IPO are already spoken for - paying down debt, debt, debt, and more debt.
SpaceX’s current profitability is negative.
The starting valuation is too high to make money longer term.
“Today, the enterprise posting the largest sales in the S&P is Amazon at $743 billion over the past four quarters. The biggest earner: Alphabet at $160 billion. SpaceX would have to beat both by around 50%. Trainer concludes that even if you’re willing to relinquish all your power as a shareholder, put up with the likes of mandatory arbitration, and it doesn’t bother you that most of what you pay for the shares goes to slashing debt, think about the feats needed to achieve numbers never before seen. Starting from below zero. The simple math shows that the climb’s virtually impossible. That alone is plenty of reason to stay away.”
Fidelity has lowered their IPO participation eligibility requirements so that anyone with at least $2000 in a brokerage account can participate. They’ve also put limits on “flipping” within 15 days, with a 3-strike policy leading to a lifetime ban on IPO participation through Fidelity.
All signs point to retail investors being targeted. No doubt they will be scrambling desperately to find a chair when the music stops.
Yes. And this is a sign to me that the smart money is too smart to buy this IPO. So if they can’t get the little guy and the passive index investors, they are screwed. Not a good look at all.
Yep, but as @bjurasz is saying, the index funds are the real target. A little bit of sugar makes the medicine go down. The entire thing is a loser. If space wins later, there will be better entries anyway.
Why will a deal happen? What motivation does Iran have to enter a deal? I don’t see one. They can keep going as they are, inflicting a lot of pain with very little effort on their part. And especially, why would they make a deal with this administration? They made a deal with Obama (whether you liked the deal or not) because he was deemed trustworthy. I think it safe to say the current administration does not have that same respect or reputation on the world stage.
Because Iran has goals that can be achieved through a deal to open the Strait. Narrowly, Iran would prefer not to get bombed any more, and they would prefer to be able to conduct their own international trade through the Strait as well. More broadly, they’d like to recover frozen assets and get relief from international sanctions. They probably don’t want to make a deal with the current Administration, who they won’t trust at all, so there’s not much likelihood of a broader framework. But if there was a deal on the table to end the war and the blockade in exchange for Iran allowing commercial traffic to resume transiting the strait without being attacked, Iran would have a significant interest in taking it.
The Administration doesn’t want to cut that kind of deal, of course, because it would end the war without achieving any of their stated goals. Which is another reason why Iran might want to take it.
It does take two. I can see why Iran would take a deal you outlined. But this administration would never go for it. And what they want would be unacceptable to Iran. And there still is the matter of trust for this administration (i.e. why would anyone enter a “deal” when it’s a coin-toss whether the other side will follow-through).
Or three if we include Israel. Maybe four if we include Lebanon, or possibly 5 if we count Hezbollah in. Ugghh, I forgot about the Houthis…It takes six to make a thing go right, it takes six to make it outta sight!
The administration won’t go for it right now. But they will face continually increasing pressure to find some way to bring the closure of the strait to an end. It’s one thing to want to hold out to try to save face, another to endure a global economic recession rather than falsely declare victory and cut your losses. At some point, lots of countries start to run out of physical oil - and run short on natural gas, helium, fertilizer, and other products.
I think that it’s clear that none of the current governments of the three primary belligerents in this conflict can be trusted to hold up their end of any bargain. And they don’t trust each other either. So even if one of the factions in Iran, for example, saw an opportunity to strike a bargain to end the conflict in exchange for, as an example, unfreezing assets or reducing sanctions, there’s no way they would offer anything up significant until they had substantial evidence that the other side was actually taking action.
I fear that there’s the potential for this to become a frozen conflict for some time to come.
I don’t think that matters. This administration is guided by extreme narcissism. I can’t imagine a world where they would accept anything that could generate a whiff of “loser”. And Iran has no incentive not to make that label stick to him, since -so far- that is what has been happening (i.e. we’re losing this war in almost every sense of that word).
If the VP would take over (e.g. POTUS died in office), maybe something could shake loose. But POTUS really only cares about his image. He can’t abide “loser”.
So, I expect lots of ramifications like the ones you mentioned, and a global recession because of it. And, as a side benefit to Putin, he can sell what little oil he has (Ukraine is destroying lots of it) at an extremely high price to fund his war.
