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by matthewdgreen 10 days ago
It's a lot more interesting to actually look at the mechanisms, then just to play "I'll believe it when I see it." Right now there are huge drawdowns of storage capacity in the US and Europe and China. Those have finite lifespans, although China has a lot of storage (120 days at 2025 rates.) Also, Chinese refiners have stopped processing as much fuel. Lastly, there's been a big reduction in consumption of transport fuels (again, mostly in China). These have combined to reduce prices in the US and take China off the buying market, so we're seeing lower prices than you might expect.

But this stuff won't last forever. If the Hormuz blockage doesn't resolve, things will get bad. You're seeing a patient that's a little more resilient than we thought, but who is mostly being carried through by massive blood transfusions. This buys time, but does not heal the patient.
2 comments
pkulak 9 days ago
> It's a lot more interesting to actually look at the mechanisms

Yes, and that's why I read TFA. And it was interesting. My point still stands, however, that every previous doom prediction has been wrong.

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0cf8612b2e1e 9 days ago
All of the predictions I see are of the type, “If nothing changes and reserves are depleted, prices will spike to very high levels.” We have yet to bottom out reserves, so yeah, prices have yet to hit record levels, but we are moving there day by day. There was a lot of slack oil in the system before this started, but it can only last so long.
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pkulak 9 days ago
Well, the markets sure don't think so, and they are betting with their money, not words. WTI is about 80 bucks right now. Barely above average.
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wilkommen 9 days ago
How is China reducing the consumption of transport fuels? Is that driven by changes in individuals' fuel consumption patterns or by a change on the industrial side?
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vannevar 9 days ago
Another article from the other day contains this:

And even more importantly, China has slashed its crude imports, turning instead to massive stockpiles. (https://www.cnn.com/2026/06/09/business/oil-strait-of-hormuz...)

Sounds like they're burning through their reserves as well. But since China's economy is more centrally controlled, it's likely they keep bigger reserves.

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RetroTechie 9 days ago
China's agressive ramp-up of EVs has progressed to where it causes a noteable dent in gasoline demand. Which iirc peaked a while ago.

Of course there's plastics & other uses. But China has gone big on renewables & battery tech as you know. It definitely helps.

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