July 9, 2018
US President Trump criticized OPEC for the recent rise in fuel prices, citing that the US pays for defense for many of the groups’ members and therefore, OPEC should make an effort to increase crude supply to pressure global pricing. Additionally, Iranian President Rouhani hinted at the idea that Iran could disrupt the flow of crude exports out of the Arabian Gulf, while an Iranian Revolutionary Guard commander explicitly stated "If they want to stop Iranian oil exports, we will not allow any oil shipment to pass through the Strait of Hormuz."
A disruption of this magnitude would result in a monumental shift for both the global oil and oil transportation markets as 979 million tons of dirty and clean cargo passed through this region last year. Roughly one third of global crude exports would be removed from the market, sending crude prices well over US $100/bbl into uncharted territory. Refiners around the globe will look to alternative regions for feedstock requirements after severe drawdowns of existing inventories. However, it’s unlikely that would offset the negative impacts of a lack of Arabian Gulf flows. For the tanker space, this would result in a significant fall in tanker demand as Arabian Gulf tanker exports account for well over 5.0 trillion ton-miles annually.