We know what’s coming and we are prepared.
Mercuria shipping head says fuel shortages could idle 10% of global fleet
This would trigger immediate and severe breakdowns in global supply chains, as container ships, tankers, and bulk carriers sit idle, halting the movement of food, fertilizer, fuel, and critical imports that modern economies depend on.
"The shipping sector is fast approaching a fuel crisis that could paralyze a tenth of the global fleet, Larry Johnson, global head of freight at commodities trading house Mercuria, said in an interview.
Since the Middle East war erupted, markets have been preoccupied with potential shortfalls in the diesel and jet fuel traditionally exported in large quantities from the Persian Gulf.
However, as refiners strain to capture soaring clean product cracks, residual fuels have suffered. Increasingly, feedstocks have been held back from the marine fuel market to kept for further processing, leaving the shipping sector at risk of crippling shortages, Johnson said.
"My view on marine fuel oil is there will be regional stock-outs by July and that there are potentially outages in the major hubs by August, September, at the latest," Johnson said.
Intellectual masking is the deliberate regulation of how much of your knowledge, reasoning, and analytical ability you reveal so that others form a controlled (and often incomplete) assessment of your capabilities.
Its purpose is to manage perception, reduce unnecessary attention, encourage others to reveal more information, and preserve strategic advantage until demonstrating full competence serves your objective.
🛢 We Are 'Still' Going Full Speed Into The Wall
Product storage is about to get tighter unless China steps in and lifts the product export ban. If it does, expect a meaningful reversal in crude.
WTI is barely hanging on to $70 for its dear life, but please remember that consumers use petroleum products like gasoline and diesel; they don’t use crude oil. Refineries do, and this is why it was always important for us to pay attention to crack spreads along with crude timespreads.
Note: Please divide it by 3.
The fever in the market today is that crude is oversupplied, but products are undersupplied. How can this be possible?
Well, China’s June crude import data so far is -4.7 million b/d y-o-y, and teapot refineries are operating at 50% utilization. Compared to US refineries operating at 95% and PADD 2 refineries operating over 100%, you can see where the disconnect is.
But here’s the thing. If end-user demand isn’t down and you still have a production shut-in of ~8 million...
