PiCK
Fallout from a Hormuz closure…Concerns Gulf oil producers’ crude storage could hit capacity
Summary
- With crude shipments through the Strait of Hormuz halted, Gulf oil producers’ crude storage facilities are reported to be nearing capacity.
- It said Iraq, Saudi Arabia, and the United Arab Emirates (UAE) are facing dwindling storage headroom, raising the possibility of production cuts and output reductions.
- International oil prices rose above $85 a barrel to the highest level in about 19 months, but then pared part of the gains to around $82 on reports of Iran’s potential peace talks.
Forecast Trend Report by Period
Crude shipments through the Strait of Hormuz have been halted due to the conflict involving Iran, and Gulf oil producers’ storage facilities are reportedly nearing capacity at a rapid pace.
According to Walter Bloomberg on the 4th (local time), Iraq has already curbed output in part, while Saudi Arabia and the United Arab Emirates (UAE) are also seen as potentially moving to scale back production in the coming weeks. With exports blocked, available storage capacity is being depleted quickly.
International oil prices have been rising, with crude futures topping $85 a barrel to the highest level in about 19 months. However, after reports that Iran signaled the possibility of peace talks, prices gave back part of the gains to around $82.
Total crude storage capacity across the Gulf region is estimated at about 100 million barrels, but usable capacity is said to be lower once facility locations and operational constraints are taken into account. Storage at key export terminals in Saudi Arabia—including Ju'aymah and Ras Tanura—are also filling up quickly.
JPMorgan warned that, absent alternative export routes, some producers could reach storage limits within about three weeks.
JH Kim
reporter1@bloomingbit.ioHi, I'm a Bloomingbit reporter, bringing you the latest cryptocurrency news.
