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The Trump administration continues to aggressively drain the Strategic Petroleum Reserve (SPR). The amount of crude in the SPR tumbled by another 9.1 million barrels last week, just shy of the record-setting decline the prior week. The emergency reserve is down by 50 million barrels over just the past two months alone.

Gasoline inventories continue to fall sharply, declining last week to the lowest May level since 2014. Diesel and other distillates are now at their lowest level since May 2003.

The Iran-US conflict is effectively in military stalemate - the massive dumping of ordinance by Israel and the US destroyed only a fraction of Iran's missiles, but used up 20%-40% of the US supply of sophisticated offensive and defensive munitions. The US simply can't afford to repeat the same scope of attack without seriously limiting their military during other potential conflicts.

OTOH, the US blockade is seriously impacting the Iranian government's ability to rule. Of course, it is also negatively impacting some of the political allies of the current US government.

In the game of who can hold whose breath longest - Iran or the US, it is advantageous for both sides to settle quicker, rather than later. Both sides have to look like they have "won" to their domestic constituencies and both are eyeing "the day after" as to whether, once traffic through the Strait has normalized, the US can force Iran to give up its enriched uranium.

Frankly, the US is unlikely, after all this bruhaha to get a deal as good as the Obama administration did - which was abrogated by the first Trump administration.

Poor decisions make for poor outcomes.

Jeff

The Trump administration continues to aggressively drain the Strategic Petroleum Reserve (SPR). The amount of crude in the SPR tumbled by another 9.1 million barrels last week, just shy of the record-setting decline the prior week. The emergency reserve is down by 50 million barrels over just the past two months alone.

I posted a link on the Policy board, some days ago: the CEO of either Exxon or Chevron warning that global reserves of crude are being drawn down, and the potential for a major oil shortage this summer. Of course, he could have been talking his book, but the US administration is the only one expressing optimism that the Strait will reopen and the flow of oil resume, any time soon.

I also posted a hilarious Irish drinking song "Shipwrecked in Hormuz" on the policy board.

Gasoline inventories continue to fall sharply, declining last week to the lowest May level since 2014. Diesel and other distillates are now at their lowest level since May 2003.

It has been suggested that the US cap exports of crude and refined products, to ensure adequate supplies of American produced oil for Americans. An administration official promptly declared that a really bad idea. So, USians will need to bid against fuel starved countries around the world, for oil produced in the US.

Burgum Dismisses US Oil Export Curbs as ‘Bad on All Accounts’

https://news.bloomberglaw.com/environment-and-ener...

Poor decisions make for poor outcomes.

Estimates are that, at the start of the year, there was some 2-3Mbpd of excess production in the world, crushing margins and smoking profits. Now, big oil is pocketing an extra $30/bbl of pure profit, thanks to the artificial constraint on supply.

Steve

I mean, it is obvious to everyone, right: The US lost this the moment the Iran strike happened.

PRC is involved in Iran, they are involved in Pakistan, they are a top 3 holder of US debt. They are the ones driving this. Just look at Wicker and Cruz *loudly* criticizing the proposed settlement.

The US administration is as firmly over a barrel as anything I've ever seen. They are also poor at predicting future events and planning strategically accordingly. They see oil => high gasoline prices => midterm losses and that's it. They don't see past that, to long term US strategic objectives in the region. We still haven't entirely heard what happened in the PRC summit. We did here poor message discipline in US statements about Taiwan recently, after decades high discipline. Would the current president sell out a multi-decade US ally and strategic regional/global ally in order to get himself out of a bad midterm situation? I think the answer is obvious at this point.

I mean, he literally threatened one of our oldest allies in the world, Oman (back to a Treaty of Amity in 1833) with military attack for reasons that are still unclear. Just because he is working from a framework of his own interests superseding those of the country.

The worst part is the Iran and PRC hold literally all the cards. We should be *adding the SPR now* not drawing it down for "bread and circuses" reasons, but here we are.

US debt is up $5T in the last 2 years. How many countries are left that we haven't threatened militarily or levied tariffs against that would buy our increasing debt load, so we don't have to print money to do so and monetize the debt? This will end badly, it could scarcely be going worse if someone was designing a path to weaken the US globally. Invest accordingly, so help us all.

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