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Scenario Analysis: Israel Gaza War

Oct. 27, 2023

The tension in the Middle East has driven up crude prices on risk premiums, kickstarting heightened oil trading which in turn supported tanker ton-mile demand.  We are still in the middle of the conflict and there are multiple scenarios that could play out in the near future. An oil embargo against Israel, a disruption in the Strait of Hormuz by Iran, or a Suez Canal closure would have significant consequences in tanker demand and freight levels.

Scenario 1: oil embargo administered on Israel

According to Platts, Israel currently imports around 300,000 b/d of crude, with 60% of the ...

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Easing of Venezuelan Sanctions

Oct. 20, 2023

Weekly Highlight: Easing of Venezuelan Sanctions – 10.20.2023

On Wednesday, US officials announced the removal of sanctions against Venezuela’s oil and gas sector in response to a deal between Venezuela’s President Maduro and the country’s opposition in the 2024 presidential election.  Under the new guidelines, which extend for a 6-month period, American and foreign companies will be allowed to produce and export Venezuelan oil and gas and conduct business with state-energy company Petróleos de Venezuela (PDVSA). 

From a historical perspective, between 2010 and 2016 (pre-US sanctions), Venezuelan crude oil production ranged between 2.0 and ...

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Conflict in the Gaza Strip

Oct. 13, 2023

Weekly Highlight – 10.13.2023

There is concern that military clashes between Israel and Palestinian Islamist group Hamas could escalate into a broader conflict.  While Israel produces very little crude and has a total refinery capacity of about 297,000 b/d, markets are worried the conflict could expand and disrupt wider Middle Eastern supply, worsening a deficit expected to last into the end of this year.  At the time of writing, we have not seen notable disruption in traffic through the Suez Canal and the Hormuz Strait, nor increased war premium in these chokepoints.  However, if a wider conflict ...

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Imbalance in Refinery Runs

Oct. 6, 2023

European refiners have struggled to build diesel stocks over the summer due to the outages at the Pernis, Bilbao and Donges refineries and most recently the unexpected haul of Shell’s Hycon plant in Rotterdam due to a gas leak.  Similarly in the US (especially the Atlantic Coast), we have captured a capped crude intake in the summer months.  According to US EIA, crude input in PADD 1 refineries sharply dropped from 803,000 b/d in April to an average of 719,000 b/d in June/July despite the healthy margins. The lower refinery run could be explained ...

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