Commentary
-
Our commentary partners will help you reach your own conclusions on complex topics.
Hi, everyone, Peter Zion here coming to you from home in Colorado. And today’s topic is Russian crude. There were a lot of efforts early on in the war, especially by the Europeans to shut Russian crude oil out of the market all told roughly six to 7 million barrels a day of Russian crude and product goes west, to Europe, they’re by far the primary consumer. And they are primarily in control of the infrastructure that allows delivery, so it’s really hard to send it anywhere else. What you can do, however, is put it on the tanker and ship it around Africa and run through CSX Suez and get all the way to India, in China. And that is what is happening. In the early weeks of the war, we did see about a million barrels a day of Russian output shut in was a very good start. But then these longer haul tankers came into play, and the Russians are more or less back where they were in terms of volume of output. They’re having to give discounts of 30 barrels $30 a barrel, but they’re still getting the crude out and the Indians in particular are very happy to buy it. Now for the Indians, this is a little obtuse, and perhaps not the best long term play are trying to enter into a informal alliance with Japan, Australia, and the United States, three countries that are participating in the sanctions in order to counter China and instead the Indian seem to be working towards building a China centric Asian economic system. So it’s not going to fly for the long term. That is a topic we will deal with another day, back to oil. This past week, the week of June 12. The Europeans have put into place a new set of sanctions, these not just targeting oil, specifically, but some of the support infrastructure that goes into it, most notably, maritime insurance. Now I’m sure some of you just like insurance, really, we’re gonna talk about insurance, how boring, but it’s a critical issue. If you can’t get insurance, your ship can’t go into port. If you can’t get insurance, you can’t go through Suez, you can’t go into Turkish straits. If you can’t go through Malacca, you can’t dock to pick it up or drop stuff off. And if something happens to your vessel, you’re out the entire cost of the vessel, as well as whatever it happens to be carrying. So it is kind of the sinew that links global shipping together, it’s critical. And if you can’t get it, you can’t play. Well, the Europeans and the Americans combined control 95% of the market. And now anyone who wants to ship Russian crude has to use a Russian state company, by the name of a Russian national reinsert reinsurance companies are in our See, it’s not a company that has a lot of expertise. And it’s not a very large one, they’ve massively increased the amount of cash it has to work with. But it only brings it to about $5 billion. According to their own policies, that’s only enough to provide indemnities to five ships at a time, although they’re obviously going to stretch that. So we’re now going to be in a situation, we’re gonna have long haul tankers, which are some of the more expensive maritime vessels that are out there, transporting 2 million barrels of crude which is now in an elevated price environment, past NATO countries to do an end run around NATO sanctions to get to countries that are willing to run the sanctions, primarily Indian China. This is like the perfect setup if your goal is to crush the Russian state budget, because one super tanker loaded with crude at today’s prices, that’s about $300 million. And if a NATO country grabs it, for whatever reason, the Russian state has to pay that out. So all of a sudden, we’re in this really interesting situation where if the West wants to cause a few international incidents, it seems to be in favor at the time, they can absolutely destroy the Russian budget in absolutely no time flat, while at the same time introducing a risk premium to anyone who wants to buy Russian cargo of any type in any market at any time. So this next month is going to be a lot of fun to watch. Now, if Russian crude does go off the market, it’s not like there are no consequences because you know, we’re already in a tight market environment. This has the potential to shut in four to 5 million barrels a day for an extended period of time that will easily send oil prices above 170. And if it’s happens, because the United States, supposedly the guarantor of all maritime shipping is starting to interfere with maritime shipping, you’re also going to see higher freight rates and insurance rates on everything. So this is potentially a very inflationary move that will then trigger a lot of secondary outcomes from many, many, many other countries. It’s time to start thinking more aggressively about the United States, for example, barring the export of crude oil in order to keep its own market under control from inflation point of view. We’re now getting to the environment where that is coming up very fast, and it’s gonna be fun.
Okay, for liquid I got the book finally published
out this week. It is shipping to everyone. Right now there are sections on energy there are short sessions on transport through sessions on insurance. Every economic sector that you can imagine is dealt with in some way from manufacturing to agriculture and everything in between.
-
US may need to find new sources of uranium
Russia is the world’s largest producer of enriched uranium, presenting a problem for U.S. supply chains as Western sanctions against Russia continue to escalate in response to Putin’s invasion of Ukraine. In addition to uranium’s use in nuclear weapons, nuclear power provides around 20% of domestic American energy. Straight Arrow News contributor Peter Zeihan explains…
-
China’s Fujian aircraft carrier is nothing to worry about
A number of U.S. commentators have raised alarms over China’s rapid construction of naval military vessels — and about China’s supposed ability to outproduce the United States in any long, protracted conflict. Recently, China unveiled a new aircraft supercarrier named the Fujian. These developments coincide with increasingly aggressive Chinese naval behavior. Straight Arrow News contributor…
-
Russia unveils drone-resistant ‘turtle tanks’
The Russian military has unveiled a new drone-resistant tank, which has gained the nickname “turtle tank” due to its heavy shell-like armor and low mobility. While heavy artillery can stop the advance of these turtle tanks, Ukrainian forces have run desperately low on artillery and heavy munitions. Straight Arrow News contributor Peter Zeihan dives into…
-
Texas heat challenges a strained energy grid
As May begins, much of the country is experiencing the gradual onset of warmer weather. Texas is already feeling the full force of it, with temperatures in many areas reaching the 80s and 90s. During this time of the year in Texas, power grids can become strained due to increased demand spurred on by early…
-
Japan’s navy gets an upgrade
Following their defeat in World War II, the people of Japan pursued a largely pacifist foreign policy. Today, following Russia’s invasion of Ukraine and with near-daily news regarding China’s threatening activities throughout the greater Pacific, the Japanese are reinvesting in military defense and reaffirming their alliances with Pacific partners like Australia and the United States.…
Latest Stories
-
Partisan media coverage portrays Al Jazeera ban from different angles
-
With TikTok ban, US raises stakes in US-China tit for tat
-
TikTok, ByteDance fight back, sue US government over potential ban
-
Ukraine mixes ancient weapon with drone tech to take out Russian forces
-
US officials concerned over China's floating nuclear power plant plans
Popular Opinions
-
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum.
Latest Opinions
In addition to the facts, we believe it’s vital to hear perspectives from all sides of the political spectrum. We hope these different voices will help you reach your own conclusions.
The opinions published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.
Latest Commentary
We know it is important to hear from a diverse range of observers on the complex topics we face and believe our commentary partners will help you reach your own conclusions.
The commentaries published in this section are solely those of the contributors and do not reflect the views of Straight Arrow News.
Peter Zeihan
Geopolitical StrategistChina’s Fujian aircraft carrier is nothing to worry about
Russia unveils drone-resistant ‘turtle tanks’
Texas heat challenges a strained energy grid
Dr. Frank Luntz
Pollster and Political Analyst‘We want to find common ground’: Gen Z’s stubborn optimism
‘Take the job seriously’: Why Americans are fed up with Congress
‘If we can shrink it, it will stop growing’: Americans talk debt, deficit
Pete Ricketts
U.S. Senator for Nebraska