Jan 10, 2020

How an escalation in the Iran conflict could help Russian oil

Photo: Kirill Kudryavstev/AFP via Getty Images

Russia would emerge as a winner if the U.S.-Iran conflict — which has cooled off — greatly escalates, argues Anna Mikulska, a senior fellow with UPenn's Kleinman Center for Energy Policy.

The big picture: That could result via the unlikely — but not impossible — event that Iran shut down oil tanker traffic through the Strait of Hormuz, a critical shipping lane for Middle East oil and nearly 20 million barrels per day pass through the narrow channel.

The intrigue: If there's a shutdown, "Russia could become a crucial market stabilizer deriving significant financial, strategic, and diplomatic benefits," she writes.

  • "Not only does Russia produce the 'right' quality of crude (a substitute for the crude potentially locked in by the Strait of Hormuz), but according to a Russian government statement, it holds spare capacity of 500,000 barrels per day."
  • Elsewhere Mikulska notes that an Iranian blockade "could potentially strengthen Russia’s position vis-a-vis energy-hungry Asia since about three-fourths of the crude that passes through the Strait lands there."

Go deeper...What Middle East crisis? Why oil prices aren't rising

Go deeper

The U.S. is not energy independent

Reproduced from EIA; Chart: Axios Visuals

A new Energy Information Administration report shows that while late last year the U.S. became a consistent net exporter of petroleum (that is, crude oil and refined products combined), regions outside the Gulf Coast remain importers.

Why it matters: While it's not discussed in the EIA analysis, President Trump boasted in this week's State of the Union that the U.S. is "now energy independent."

OPEC considers production cuts as coronavirus impacts China's oil demand

Photo: Ryad Kramdi/AFP via Getty Images

OPEC's possible responses to the spreading coronavirus that's hurting oil demand and prices are starting to come into view.

Why it matters: Besides killing more than 360 people so far, the outbreak is severely curtailing airline and economic activity in China, the world's largest oil importer and second-largest oil consumer.

Dissecting Trump's State of the Union energy claims

Photo: Yasin Ozturk/Anadolu Agency via Getty Images

President Trump talked up the U.S. energy boom and sought to make it into a political asset during Tuesday night's State of the Union.

Why it matters: Energy has been prominent in the 2020 White House race.