The Red Sea challenge (tankers)

Just in time for Christmas …
If one has plans to move refined fuel from the Persian Gulf to Europe, that cargo will likely be via LR (Long Range) tanker around the Cape.
“The longer voyages via the Cape command a premium and it has more than doubled in the last few days, sources said.”

Note: The rate has not been exercised too frequently. But, the fact that it is present suggests it has a ripple effect on other rates

(with positions in INSW, STNG, FRO & TRMD - who each own LR2s and/or LR1s)


The bits and pieces of reports I am hearing on NPR, the US, and others have created a joint force to stop this.

I have to think the positions in Yemen are smaller than imagined.

Iran is getting into a deep problem with Israel. The Israeli hackers are threatening or acting out plans to cripple Iran’s economy further. Matters like this are on Israel’s shopping list. Iran needs to consider if they want the computer systems they have to even function. Supplying the Houthis is not the ideal right now for Iran.


The US removed the Houthis from the list of terrorist organizations back in early 2021. That would seem to have been premature.



Iran desperately needs to show the world that it is a serious world power. I suspect that to accomplish this, they will detonate a nuclear bomb as a test sometime in the next few years.

Heard on some radio show, if someone needs to talk to Iran, a good candidate would be China. My reading suggests that even OOCL, a subsidiary of China’s container shipping giant, Cosco, is routing their vessels around the Cape.


Yes and no. We had to pull the plug on the Saudis murdering all the Yemenis for the oil on the border. The diseases during the war in Yemen were catastrophic. Now they are terrorists. But who cares what they are labeled?

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The Western navies are all over this.

If we know it…it has almost past?

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Careful do the math. The 15% hike in cost is not the heart of it.

For an extra ten days, the supply of goods is missing. Look at this quote below. It means the interruption of supplies is one ten-day blip. No one cares much about the extra fuel cost. It is less than the insurance cost right now of going through the canal.

The quote is from Singapore to Rotterdam

The Suez Canal route is around 8,500 nautical miles long, which equals a 26-day trip. The South Africa route is about 11,800 Nautical miles, which equals a 36-day trip. Graphic by Reuters Staff for Reuters on December 19, 2023.3 days ago,equals%20a%2036-day%20trip.&text=Graphic%20by%20Reuters%20Staff%20for%20Reuters%20on%20December%2019%2C%202023.

Remember we are past the holiday wholesale importing of goods. The same amount of oil and gas will arrive in Europe and elsewhere.

A hot time in the old town tonight…

“On Jan. 9, at approximately 9:15 p.m. (Sanaa time), Iranian-backed Houthis launched a complex attack of Iranian designed one-way attack UAVs (OWA UAVs), anti-ship cruise missiles, and an anti-ship ballistic missile from Houthi-controlled areas of Yemen into the Southern Red Sea, towards international shipping lanes where dozens of merchant vessels were transiting.

“Eighteen OWA UAVs, two anti-ship cruise missiles, and one anti-ship ballistic missile were shot down by a combined effort of F/A-18s from USS Dwight D. Eisenhower (CVN 69), USS Gravely (DDG 107), USS Laboon (DDG 58), USS Mason (DDG 87), and the United Kingdom’s HMS Diamond (D34).“

…Houthis group sent an unmanned surface vessel (USV) loaded with explosives into international shipping lanes. The USV eventually detonated near multiple ships, including both merchant and U.S. Navy vessels, but no damage was reported.



Meanwhile, the price of gas has started to sneak up around casa del Steve. Last time I gassed up, $2.79 was easy to find. Motoring along today, I passed a Marathon: $2.90 (bork). Passed a Mobil $2.97 (doublebork). Passed an Exxon $2.89. Next Mobil was still at $2.79 (zip, glugglugglug)

In the early 2000s, I could make a couple bux every year, buying oils at the end of January, and selling around Memorial Day. Oils are still taking a drubbing from the Saudi action a few days ago. Approaching mid January.



The United States and Britain have started carrying out strikes against targets linked to Houthis in Yemen, four U.S. officials told Reuters on Thursday, the first time strikes have been launched against the Iran-backed group since it started targeting international shipping in the Red Sea late last year.




I have no sympathy for a military person who over-believes. May they meet their maker. Meanwhile they won’t be shooting at ships soon enough.

And the response in oil prices is immediate. As luck would have it, I opened a small position in COP yesterday. Had been planning to scale back into oil over the next couple weeks. As noted in my post above, I gassed up the car on Wednesday.

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That is to risky for a 2% fleeting climb to make a trade. Just my quick take.

The Saudis and UAE have fought the Houthis for years. They have a lot more oil than Iran. If this goes well for the US the oil goes through the Suez which means you may see the trade unwind against you very quickly.

Iran has no real forward offensive power. The Houthis are just trying to hit a ship. That seems to either have happened once or not at all so far.

The tanker can be freed depending on how the taking of it is read by intelligence, Biden, and the public. Iran can not stop us from taking that tanker.

Iran is really in our face. We can get in theirs and I think they would understand that better.

I made the buy before the news of the air strikes. I was basing my opening a position on years of history of “something happening with oil in the spring”, which made buy in January/sell around Memorial Day, a viable trade. I have also noticed gas prices sneaking up over the last couple weeks. A widening war in the ME just adds to the volatility.



Oct 7

The war began really about two to three weeks later. or whatever.

It has been a little over 2 months and more than 70% of the homes are in ruins. Pretty soon there will be next to no homes.

Then the war stops. Maybe a few battles running with Hamas gunmen.

The Gazans at some point after that just have to leave. Regardless of who wants to blame who this war will end it.

People are saying things forcefully now. When Palestinians later leave a few years from now this won’t be a raw issue. Yes, it won’t be forgotten. Nothing is now forgotten. Muslims in power do not want to resolve Islam’s problems. Everyone else gets hit by it. This could have been resolved otherwise. The Muslim violence among Muslims is far worse.

I’d be wary of a rise in fossil fuel prices going into spring. It might be very soft this year. Things are changing for fossil fuel usage. It is not rising much any longer. China is out of it. EVs are pushing gasoline aside.

In 2022, approximately 23.56 million passenger cars and 3.3 million commercial vehicles had been sold in China. Passenger vehicle sales regained growth in 2021 after three consecutive years of decline.Jan 3, 2024

All told, Chinese automakers are expected to have sold about 9.4 million electric vehicles and hybrids last year, an increase from 6.9 million in 2022, according to the China Association of Automobile Manufacturers. The group said it expected sales in 2024 to rise again, to 11.5 million.Jan 1, 2024

China Number of Registered Vehicles was reported at 311,844,370 Unit in Dec 2022 . This records an increase from the previous number of 294,185,906 Unit for Dec 2021.

My comment three percent of the total this year added will be EV.

The chart is too in the middle of the action to make a strong odds-on call either way. But it looks riskier than you think.

Germany might also help out…

The Captain

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The U.S., alongside four other countries, hit nearly 30 Houthis positions Thursday night after the Iran-backed militant group escalated its attacks on commercial ships in the Red Sea.