Iran has, as promised yesterday, responded to the USraeli attack on its energy installations by hitting refineries and gas facilities in several Persian Gulf countries.
Qatar spoke of ‘extensive damage’ to its gas liquefaction facilities caused by an Iranian attack. Saudi Arabia claimed that the attack was defeated but that a drone had hit its SAMREF refinery near Yanbu on its western coast. Kuwait reported fires at two of its three refineries, Bahrain and the UAE did not comment but people living there report of explosions, fires and damage.
Several missiles and drones hit Israel. It has by now come under a sustained attack with air alarms going off nearly every hour. This afternoon the BAZAN oil refinery in Haifa got hit.
The damage from the continuing U.S. and Israeli bombing campaign in Iran is also quite considerable. The Israeli plan is to destroy all of Iran’s capabilities to the extend that rebuilding will become excessively expensive.
But Iran has already planned for this. It has found a way to pay for rebuilding its state. As it is, and will likely stay, in control of the Strait of Hormuz it can ask for payments in exchange for providing safe passage.
Lloyd’s List reports:
Iran establishes ‘safe’ shipping corridor for approved and paid for transits
AT LEAST one tanker operator is understood to have paid a fee to Iran to transit the Strait of Hormuz while several other tankers have passed following Iranian vetting and diplomatic interventions, according to several well-placed sources with direct knowledge of the transits.
Multiple governments including India, Pakistan, Iraq, Malaysia and China are all understood to be discussing vessel transit plans directly with Tehran, where officials within the Islamic Revolutionary Guard Corps have established a nascent ship registration system for “approved” vessels to agree safe passage.
At least nine ships have now exited the strait via the “safe” corridor that routes ships through Iranian territorial waters via Iran’s Larak Island, which is used by the IRGC Navy and port authority to assess visual confirmation of the vessels.
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Without the war and without the blockade of the Strait crude oil prices would hover around $60 bbl instead of the current $100-120 bbl (soon to be $200 bbl). When Iran will finally agree to an end of the war – months if not years from now – one of its conditions might be a surcharge of $10 bbl for any tanker passing the Strait. This would come, for a limited time, on top of the $60 bbl peace-level market price. A moderate toll when one considers the cost of today’s barrels. This while providing a significant income of some $50-100 million per day for Iran. It would help to recuperated the money needed to repair any war damage.
The U.S., if it will have any say in this, might well agree to that condition.
Currently Iran has some 140 million barrels of crude oil sitting in floating storage – i.e. on old rented tankers anchoring somewhere. That oil was hard to sell as it was under U.S. sanctions.
The U.S. is currently considering to lift those sanctions to provide more oil to the global markets and to thereby lower its price. As U.S. Treasury Secretary Scott Bessent announced:
In the coming days, we may unsanction the Iranian oil that’s on the water. It’s about 140 million barrels, so depending how you count it, that’s 10 days to 2 weeks of supply, that the Iranians had been pushing out, that would have all gone to China. In essence, we’d be using the Iranian barrels against the Iranians to keep the price down for the next 10 or 14 days, as we continue this campaign. So, we have lots of levers.
The U.S. wasn’t willing to lift those sanctions during peace talks with Iran. But seeing the the dearth of oil under war conditions and high prices it suddenly allows that to happen.
How that would be ‘against the Iranians’ when they can sell their parked oil at $100 bbl exceeds my understanding.
Added:
The U.S. seems to have run out of stand-off ammunition. F-35 fighters were ordered into Iranian air space and at least one got damaged. This confirms that air superiority over Iran has not been achieved (yet).