oil

The Strait of Hormuz has become a death trap. The Arab Emirates’ solution is a pharaonic oil “bypass” through the desert

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The new energy order is not debated in suit and tie summits, but is rising against the clock under the scorching sun of the Arabian Peninsula. Suffocated by the Third Gulf War, the United Arab Emirates has hit the table: it refuses to leave the survival of its trade routes in the hands of chance, war or its neighbors. The strategy is clear: if the strait is a minefield, they will build a rear exit. The news that has shaken the foundations of oil logistics came to light through official channels. According to a statement from the company itself ADNOC (the Emirati state oil company), His Highness Sheikh Khaled bin Mohamed bin Zayed has chaired a key meeting in which he has ordered an urgent directive: to accelerate the construction of the new “West-East Pipeline” project. But what infrastructure are we talking about exactly? As energy analyst Javier Blas points outthe key to this movement is that the Emirates is laying out a second oil pipeline expressly designed to turn its back on the Strait of Hormuz. The date marked on the calendar is 2027. When they open the tap, this new infrastructure will double the volume of crude oil that the country takes out to the world through the port of Fujairah (in the Gulf of Oman). In practical figures, this represents a gigantic leap: they will go from the 1.5 million barrels a day that they move right now, to injecting between 3 and 3.5 million. It is not a project improvised in the last week. As analyst Bachar El-Halabi points outwork on this project began quietly in early 2024, long before the war in Iran paralyzed the region. However, the conflict has acted as the definitive “catalyst.” The war did not inspire the pipeline, but it has injected it with urgency. The logistical “antidote” As was discussed in the middle Amwaj Mediathe Iran war has starkly exhibited the tremendous vulnerability of maritime bottlenecks (chokepoints). The near-total shutdown of Hormuz has caused the worst supply disruption in history, removing 12% of the world’s oil from the market. In this context, the West-East pipeline stands as a lifeline. This Emirati infrastructure, added to the gigantic oil pipeline East-West (or Petroline) of 1,200 kilometers that Saudi Arabia has reactivated towards the Red Sea, form a true logistical “antidote.” They are escape routes that neutralize Tehran’s blackmail, allowing crude oil to go out into the world without entering the range of missiles and blockades in the Persian Gulf. They are, in the words of experts, “buying invaluable time” for the West. To understand the privilege of having this infrastructure, just look at the neighboring country: the situation in Iraq exposes the other side of the coin. Lacking alternative outlets to the sea and completely dependent on Hormuz, Iraq has been left without physical space to store its own oil. As a result, Baghdad has been forced to shut down 70% of production in its prolific southern fields and beg the Kurdistan region to let them use an old, patched-up pipeline to Turkey that barely manages to export 250,000 barrels a day. Iraq is a hostage to its own geography; The Emirates, on the other hand, are buying their freedom with steel and engineering. A free (and flooded) market by 2027 All this new logistical muscle takes on its true meaning when it intersects with another historic decision: the Emirates’ slamming of the door on OPEC+. Emirates has formally left the organizationarguing the defense of their “national interest.” After almost six decades, the country has decided that its national interests no longer fit into the cartel’s quotas. The UAE had been accumulating commercial frustration for years because OPEC forced them to limit their pumping to 3.2 million barrels per day, despite the fact that the country has invested aggressively to reach a production capacity of 5 million barrels by 2027, the same year in which its new megagas pipeline to Fujairah will be ready. But as various international media explain, this divorce is not just about money. Abu Dhabi feels betrayed. The Emirates have had to absorb much of the impact of Iranian missiles and drones alone, feeling that their Arab “brothers” and the Gulf Cooperation Council were turning their backs on them. Therefore, the consequences of this schism will be tectonic. The cartel has seen its global market share plummet to 26%. When the Strait of Hormuz reopens and the West-East pipeline operates at full capacity, the Emirates will flood the market under its own rules, leaving a lone Saudi Arabia to bear the brutal cost of trying to stabilize prices in a world of extreme volatility. The cold war for the future The Emirati order, in fact, is directly addressed to Riyadh. In the silent cold war it is waging with Saudi Arabia for regional hegemony, the Emirates refuses to be a supporting actor in the face of Prince Mohamed bin Salman’s monolithic “Vision 2030.” As explained Middle East Economythe UAE can afford to leave OPEC and endure a downward pulse in prices because its break-even Fiscal is around a comfortable $45 per barrel, compared to the much greater needs of its neighbors. Thanks to diversification, the Emirates today generates 25% of its electricity with the Barakah nuclear power plant and has immense solar parks, allowing itself to use today’s petrodollars to finance hydrogen and the technology of tomorrow. However, this apparent invulnerability has a terrifying blind spot. Military analysts warn that, in the era of hybrid warfare, a steel pipe is of little use if a $500 drone can paralyze the region. The Third Gulf War already demonstrated this fragility when a drone reached the gigantic Emirati Ruwais refinery. Added to this is the panic unleashed when pro-Iranian militias explicitly threatened vital infrastructure such as the Barakah nuclear power plant. The Emirates is building its financial and logistical freedom, yes, but it is doing so through a minefield. The new West-East pipeline is ultimately much more than a … Read more

Dubai has come to the same conclusion as Russia. To protect your oil from drones there is something better than missiles: giant cages

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In World War II, the British discovered something disconcerting when analyzing the German bombings on its industrial cities: many times it was not necessary to completely destroy a refinery or factory to paralyze it for weeks. It was enough to hit some few vulnerable points to cause fires, disruptions and a disproportionate economic effect. Eight decades later, that same logic once again dominates another war, only now the weapon that attempts to find those weak points fits in an operator’s backpack and costs a fraction of an anti-aircraft missile. Dubai is located in Ukraine. For years, the United Arab Emirates built its security around a very specific idea: cutting-edge technology, advanced anti-aircraft systems and one of the most sophisticated defensive architectures in the Middle East were enough to protect the country’s energy heart. The war with Iran has begun dismantle that trust. After enduring hundreds of missiles and more than 2,200 Iranian drones, Dubai and Abu Dhabi have reached an uncomfortable conclusion that Russia learned before in Ukraine: in the face of cheap, numerous and persistent drones, it is sometimes more effective to raise huge metal structures over oil deposits than spending multimillion-dollar interceptors trying to destroy every threat in the air. The images that appeared near Dubai International Airport show precisely that: those gigantic “cope cages” surrounding fuel tanks, a scene that until recently seemed exclusive to Russian refineries attacked by Ukrainian drones, or in the films of George Miller. The cheap drone war. The problem facing the Emirates has less to do with the individual sophistication of each drone than with the economic logic of the conflict. Iran has demonstrated that it can launch massive waves of Shahed-136-type UAVs and other relatively cheap attack munitions against extremely expensive infrastructure and difficult to replace. Even when air defenses work, the economic drain It’s starting to be absurd: Shooting down low-cost drones using advanced interceptor missiles turns defense into a financially unsustainable battle. That’s where these appear giant metal cages. They are not designed to stop ballistic missiles or complex attacks, but to create a physical separation that reduces the damage of suicide drones or improvised munitions before reaching fuel depots, pipelines or critical facilities. A brutally simple solution, and precisely for this reason it is beginning to spread. Russia led the way. Because what the Emirates is doing now has been going on for years. happening in Russia. Since Ukraine began hitting refineries, oil depots and military bases with long-range drones, Moscow began to cover facilities strategic with nets, metal mesh and improvised structures. What was initially derided as a desperate solution ended up evolving in a defensive system relatively common around vulnerable assets. The logic is simple: an FPV drone or a Shahed does not need to completely destroy a facility to cause a huge problem, it is enough a precise impact on a tank, a pipe or a critical point to cause fires, interruptions and million-dollar costs. The Emirates, despite having practically unlimited resources compared to Russia, is discovering exactly the same structural vulnerability. The difference is that now these cages appear next to the most futuristic skyscrapers and financial centers in the Gulf. Oil as a strategic objective. Iran has focused a good part of its attacks precisely on the Emirati energy heart. Facilities such as the Fujairah oil port or the Habshan gas plant have suffered damage that will take months to fully repair. That explains why the country has accelerated visible defensive measures even after the partial ceasefire between Washington and Tehran. Because the threat has not disappeared. In fact, one of the most disturbing aspects of the conflict is that the attacks continued even after the truce announcements, reinforcing the feeling that any critical infrastructure can become a target again with very little notice. In this context, protecting refineries and warehouses no longer depends only on radars or anti-missile batteries, it also implies physically harden facilities, assume partial impacts and prevent a relatively cheap drone from causing a national energy disaster. The Pentagon changes its mentality. The expansion of these improvised defenses also reflects a broader doctrinal shift within of the US military itself. For years, many officials in Washington considered inefficient invest large amounts of money in physically shielding bases, hangars or critical facilities from cheap drones. Ukraine, Russia and now the Middle East are completely changing that perception. Shortly before the war between Iran and the United States broke out, the Pentagon published new guidelines precisely recommending networks, cables and other passive physical defenses to protect strategic infrastructures. The reasoning is beginning to be difficult to ignore: in an era of massive and cheap dronesthe survival of multi-million dollar facilities may depend less on futuristic systems and more on simple, ugly and gigantic industrial solutions. Dubai, probably one of the most recognizable symbols of global technological modernity, has just assumed exactly that reality. Image | x In Xataka | Every time the US takes stock of Iran’s arsenal and capabilities, it realizes something: it has destroyed very little. In Xataka | Suddenly, a military outpost sprouted up in the Iraq desert: it was Israel in its bombing campaign of Iran

There are a lot of people replacing the oil on ham toast with coffee and orange. And oddly enough, it makes sense.

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“You insist on putting olive oil on our Iberian ham toast and this is like putting sugar on top of a chocolate cake.” Víctor Sanchego did not know it, but with those words was about to make thousands of people prepare the strangest breakfast we’ve seen in a long time. How come you don’t have to add oil to the ham? Sanchego’s argument is that “the fat of Iberian ham contains more than 60% oleic acid, the same component of extra virgin olive oil.” Therefore, as happens in a perfumery when we have already worn several colognes, when we mix oil and ham at the same time our taste buds become saturated. “Instead of helping it enhance the flavor, it is subtracting it,” says the ham man. The reality, of course, is more complex. The general idea is true for Iberian ham: adding oil (especially if it is an intense and complex one) blurs the flavor profile and can actually oversaturate the bite. This, however, does not happen with the rest of the hams or with the rest of the oils. It is, so to speak, a borderline case. And a well-known one, at that. The normal thing when we talk about Iberian ham, in fact, is that it is recommended to enjoy it alone or with an accompaniment that cleanses the palate, such as a piece of neutral bread. Nobody usually proposes eating a plate of ham with a glass of EVOO on the side. The striking thing about all this is not that. The striking thing is the coffee with orange zest. Because Víctor Sanchego does not propose to eat ham with white bread, nothing like that. He suggests smearing the bread in a mixture of black coffee and orange peel, toasting it and, now, putting the Iberian ham on top. It’s a strange thing, yes; but we cannot define it as madness either. We said before that the ideal thing is to eat Iberian ham with something that ‘cleanses the palate’ and Sanchego’s idea goes directly there: coffee, due to its dry and intense qualities, allows us to enhance the organoleptic properties of our ham. Is it the most interesting decision? Well, the truth is that I couldn’t say. On a theoretical level, there could be dozens of similar combinations that fit better with our usual organoleptic repertoire; but without a doubt it is bold and many of those who try it (on social networks) They are delighted with the result. And that, without a doubt, is good news. Not because of the ham, not because of the coffee, not because of the orange zest. It’s good news because culinary Talibanism It is a practice that greatly impoverishes our understanding of food. And it limits us for no reason. Being open to ‘playing’ with products as iconic as Iberian ham is a symptom of a gastronomic maturity that, used well, can help us resolve problems in a much simpler way. big problems of the food security of the century. Image | Stephan Coudassot | Nathan Dumlao In Xataka | We’ve been telling ourselves for 100 years that breakfast is the “most important meal of the day.” The problem is that it is not true In Xataka | We’ve gone from “breakfast is the most important meal of the day” to “I grab something quick and stick with it.” And that has problems A version of this theme was published in 2025

The low cost companies of the United States are already suffering from the new oil crisis

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2.5 billion dollars. That is the figure that low-cost airlines demand from the United States Government in order to continue operating in the country. The rise in fuel prices has reached such a point that a handful of companies are beginning to see the wolf’s ears. And that wolf is called: bankruptcy. 2.5 billion dollars. The Association of Value Airlines, made up of Allegiant Air, Avelo Air, Frontier Airlines, Spirit Airlines and Sun Country (all low-cost airlines operating in the United States), have asked the United States Government to create a liquidity fund of $2.5 billion to pay for the fuel they need to offer their services. At the meeting, they assure from Reutersairline executives, Secretary of Transportation Sean Duffy and Head of the Federal Aviation Administration Bryan Bedford met. 111 dollars. It is the average ticket price offered by the low-cost airlines that attended the meeting. A figure that, they say, is impossible to maintain if the price of fuel continues to increase. And, according to his calculations, those 2.5 billion dollars It will be the increase in prices at the end of the year that they will have to assume if the market continues to be as volatile as it has been until now. According to their calculations, the rise in the price of oil has been such that it is forcing them to pay for fuel at twice the price they normally did. This puts their operations at risk to the point that, they say, the profit margin is so narrow that it puts the viability of the companies at risk. Ravine. Neither the White House nor federal aviation officials responded to questions from Reuters but by then it was already known that talks had been initiated to provide $500 million to Spirit Airlines. The airline, however, ended up bankrupt this weekend. The company, they explain in BBChad operated in the country for more than 30 years but since the hardest years of the Covid-19 pandemic, it was going through severe financial difficulties. The rise in fuel prices has been the last straw that has ended up leaving passengers on the ground. The Secretary of Transportation of the United States, Sean Duffy, has assured that the company already had serious problems before the country launched its first attacks against Iran. Now, 17,000 workers have lost their jobs overnight. It’s not the only one. Although the Spirit case has been the most striking (its business became such that in 2014 Morgan Stanley pointed it out as the airline with the greatest potential for its investors). but he withdrew his support in 2023), this airline has not been the only one in which bankruptcy due to the enormous cost of fuel has weighed on the heads of hundreds or thousands of workers. Latvia has had to rescue Air Baltic with a loan of 30 million euros and airlines such as Lufthansa or SAS have had to cancel thousands of flights to try to contain the hemorrhage. In the case of Lufthansathe company has focused on short-haul flights where profit margins are narrower, canceling more than 20,000 of them before the end of the year. For its part, SAS canceled more than 1,000 flights only last April. A warning (with buts). Michael O’Leary, CEO of Ryanair, has also not missed the opportunity to attack his rivals. In The Spanish They report that O’Leary predicts the bankruptcy of two or three European companies before the end of the year if the oil crisis continues. For the manager, WizzAir and Air Baltic would be the main candidates. However, some analysts have pointed out that they consider that the risk of reaching this point is lower among European companies. They point out that in the United States the strength of long-haul airlines is still very high and that, unlike in Europe, low-cost airlines have much less business. What they do not rule out, of course, is that flights will continue to be canceled en masse. less margin. The airline problem low cost It is similar to that of the gas stations serving cheap fuel. In both cases, very narrow profit margins are played in exchange for adding a large number of operations. However, the increase in the cost of fuel kills its business because it places its rates at the prices of its rivals. premium. In the case of airlines, as in the case of gas stations low costhave the added problem that fuel stock is usually small. Furthermore, in the case of aviation, variations in its price tend to be more damaging because its refinement and storage is so expensive and complicated that stocks are usually very small. Photo | Forsaken Films In Xataka | Ryanair asks to suspend the new EU border control system: many are missing flights due to the queues it generates

China turned off the oil tap when the conflict with Iran broke out. Now he reopens it to rescue a thirsty Asia

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When the Strait of Hormuz was practically sealed after the outbreak of the well-known Third Gulf War, the world held its breath. In the midst of widespread panic over the strangulation of one of the planet’s most vital energy arteries, the first major tectonic movement came from Beijing. The Asian giant opted for the crudest pragmatism: it ordered its large refineries to immediately and opaquely stop gasoline and diesel exports to shield its own tanks. China isolated itself to survive. However, in just a few weeks, the board has taken an unexpected turn. With an Asia that looks into the abyss of the shortage, Beijing has decided to reopen the valve, going from being a protectionist actor to establishing itself as the great energy lifeline of the region. Asia’s savior: China. The shockwaves of war have left the Indo-Pacific region shivering. Asia has become “ground zero” of the crisis. In Australia, the panic has emptied the gas stationsforcing the government to cut emergency taxes; India has had to sacrifice tax revenue to freeze prices due to shortages; Japan has refused to share its strategic reserves with its neighbors; and Vietnam airlines They have had to cancel en masse their flights due to the lack and extra cost of aviation fuel. In the midst of this desperation, China has made its move. As anticipated BloombergBeijing has given the green light to its state refineries to export 500,000 tons of fuels (gasoline, diesel and kerosene) over the next month. According to sources cited by oil pricecompanies such as Sinopec and China National Petroleum Corporation (CNPC) already have shipments ready on ships that will be destined, as a rescue, to severely punished neighboring nations such as Vietnam and Laos. The energetic rice bowl. That China can afford to export fuel while the rest of the continent applies rationing measures is not a miracle, it is the result of a silent strategy. China took advantage of previous years to buy heavily sanctioned and cheap crude oil (Russian, Venezuelan and Iranian), managing to accumulate colossal reserves of almost 1.4 billion barrels. According to researcher Henry Tugendhatthis gives Beijing a cushion of about 104 days of domestic demand, in addition to having a “floating warehouse” of Iranian oil tankers anchored off its coasts waiting to be unloaded. Returning to “Game of Thrones.” But Beijing’s move goes far beyond helping its neighbors; It is a direct geopolitical challenge. As detailed South China Morning Post (SCMP)China has for the first time activated its so-called “Blockade Rules” of 2021. The Chinese Ministry of Commerce has issued an official order prohibiting domestic companies from complying with the sanctions recently imposed by the United States. Washington had sanctioned five refineries Chinese independent companies (known as “teapots”), including Hengli Petrochemical, accusing them of financing the Iranian military by purchasing its oil. By ordering the contempt of these sanctions because they are considered a “improper extraterritorial application”Beijing demonstrates that it not only has physical control of the crude oil, but that it is willing to engage in a legal and financial confrontation with the United States to protect its supply lines. Tightrope diplomacy. The short-term scenario will be played in the offices. As explained The New York TimesChina is playing both sides in this conflict. On the one hand, he acts as a peaceful mediator, pushing Iran to negotiate to de-escalate tension, having been key in the fragile temporary ceasefires. However, on the other hand, US intelligence agencies suspect that Chinese companies continue to export dual-use material and even military technology to Tehran. All of this is meticulously calculated ahead of the imminent May 14 summit in Beijing between Xi Jinping and US President Donald Trump. According to the analysts consulted through the New York environmentthe fact that the US is bogged down in the Middle East and rapidly spending its military resources, gives China a position of tremendous strength to negotiate over tariffs, trade and the US naval blockade. lenergy as the definitive weapon of the 21st century. The Strait of Hormuz crisis has functioned as a stress test for energy globalization. The sanctions drawn up in Washington attempt to financially suffocate the actors in the conflict, but the tyranny of physical infrastructure imposes its own rules. China has shown that the energy wars in this decade are not only decided with naval deployments, but with warehouses full of strategic reserves, independence in refining capacity and overwhelming dominance in the manufacturing of renewable energy. By reopening its export tap, Beijing sends a clear message to the world: while the West hyperventilates over the price of a barrel, China is the one who has the ability to decide who is left in the dark in Asia. Image | Photo by Bundo Kim on Unsplash Xataka | China is one of the largest refining powers on the planet. And he has decided something: to keep all the gasoline he produces

The oil reserves of the main powers, in a graph that summarizes how well China is doing

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Since the Strait of Hormuz was closed On February 28, after the offensive by the United States and Israel, the world as we know it hangs by a thread: going to a gas station to refuel, catching a flight or simply filling the refrigerator are mundane actions at risk, although at the moment what we have noticed the most is that prices go up and flight cancellations. The threat of running out of oil is getting closer. Oil is not just energy: having oil means having more time in the face of an energy crisis. The question is: how many days can an economy function without a single new barrel entering its borders? Well, it depends on two factors: how much you have stored and how you manage it. A few days ago the United States Energy Information Administration answered that question in the form of graphic for some of the world’s major powers. The result is uncomfortable and summarizes very well that China has done its homework. The EIA analysis shows oil inventories in December 2025, that is, just before the game began. We insist: it is not just the barrels that remain, it is a map that reveals who has room to hold out. That the Strait of Hormuz is closed It doesn’t affect everyone the same.. In March 2026, the United States and other IEA members they agreed a coordinated emergency release of reserves after the closure because approximately 20% of the world’s oil passes through that redoubt of a few kilometers. But the exposure to the shock is totally asymmetrical: while Europe and East Asia import massively from the Persian Gulf, the United States has record domestic production (13.6 million barrels per day) that drastically reduces your dependency. Although China appears at the top as the outstanding leader, paradoxically it is the most exposed in volume, but also the best prepared in reserves: it has room to withstand months of supply cuts. On the other side of the coin is Europe, the most vulnerable to this situation: its reserves are noticeably smaller and its own production is residual. Which countries are most and least prepared for the closure of Hormuz Inventory of crude oil reserves in some specific countries. EIA. December 2025 During 2025, China accumulated an average of 1.1 million barrels per day, reaching almost 1.4 billion barrels. To put it on scale, it is more than triple what the United States stores in its strategic oil reserve (1,397 compared to 413). And it has done so quietly: China does not publish official data on its inventories, so the EIA estimates them by crossing imports, exports and data from third parties such as Vortexa, Kpler and Kayrros. As collects Reuterssince 2024, Chinese national companies add emergency oil to commercial reserves following government instructions. In short: they have a second strategic layer, logistics deliberately designed to endure in situations of blockade, sanctions or conflicts. China has made good use of cheap sanctioned Russian, Iranian and Venezuelan oil to fill its deposits at bargain prices, according to a report from the US Congressional Committee. Estimated crude oil inventories of China and the United States in December 2025. EIA Although the United States strategic reserve has capacity for 714 million barrels, at the end of last year it barely had just over 400, its lowest level in decades, after large sales in 2022 and 2023. The explanation is that the United States used its reserve to mitigate inflation after the war in Ukraine and has not yet recovered. That is to say, America’s room for maneuver has been reduced and with reserves at 58% and the Strait of Hormuz closed, it is at its lowest levels since the early 1980s, when the SPR was still in the process of filling. If there is a phrase to define the situation of the old continent, it is that Europe is hanging by a thread. OECD Europe held just 179 million barrels in government inventories as of December 2025, a structurally weak figure for a bloc that imports more than 97% of the oil it consumes. That Europe is dependent on oil is not a surprise, but with the closure of Hormuz the need to change this reality is urgent. He underlying problem in Europe is fragmentation: each member state manages its own reserves under the minimum framework of 90 days of demand required by the IEA, but without a common European strategic reserve. So in the face of a severe crisis, the response comes disseminated and not unified. Japan takes bronze, with 263 million barrels accumulated in government reserves. However, what is most striking is its legal architecture: the Petroleum Storage Law Japan forces private industry to maintain 70 days of demand (about 220 million additional barrels) over the government’s 90 days. A public and private double layer system that makes Japan the most robust system per capita. Finally, Japan participates in the international joint storage system: the EIA excludes from its calculation the international joint storage inventories that Japan maintains outside its borders. That is to say, the real figure of Japanese access to crude oil in an emergency scenario is higher than what the graph says. In Xataka | After gasification plants and renewables, Spain has another energy lifeline for Europe: oil refineries In Xataka | The world’s rare earth reserves, laid out in this graph showing the brutal dominance of a single country Cover | EIA

The US is doing a lot of damage to Iran with the Hormuz counterblockade. So much so that he is already considering closing oil wells

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Oil has an unbreakable physical law: once it leaves the ground, it has to go somewhere. If ships can’t transport it and storage tanks fill up, the only option is to shut down the wells. Today, the war of attrition between the United States and Iran has ceased to be a mere diplomatic conflict and has become a geological and logistical time bomb. According to data from the analysis firm KplerIran has just 12 to 22 days left before its crude oil storage capacity is completely saturated. The US naval blockade has suffocated its exports by 70%, plummeting shipments from 1.85 million barrels per day to a meager 567,000. A lethal limit. As explained Al Jazeera, Stopping production at an oil well is not like turning off a light switch. When pumping is stopped, the pressure in the underground reservoirs drops sharply, allowing water or gas to seep into the production layers. The potential damage is immense: The Wall Street Journal warns that almost half of the Iranian oil fields are old and low pressure. An abrupt shutdown threatens to permanently destroy part of this aging infrastructure, making recovering that crude oil in the future technically and financially unfeasible. In Washington, the narrative is one of imminent victory. The US administration is confident that this collapse will force Tehran to surrender. According to statements collected by Foreign Policythe US Secretary of the Treasury, Scott Bessentand President Donald Trump himself predict that the drowning will cause an imminent internal shortage of gasoline, increasing social pressure on the regime until it is forced to give in. However, experts urge caution against Western triumphalism. A rigorous analysis of the Center on Global Energy Policy from Columbia University dismantles part of the myth of catastrophic damage dividing the problem into two fronts: Crude oil can breathe: Specialists detail that the historic oil fields of Khuzestan operate through a “gravity drainage” system. Paradoxically, a temporary stoppage could allow these specific reservoirs to recharge naturally. Natural gas, the true Achilles’ heel: The real risk, the institution explains, lies in the natural gas fields, such as the gigantic South Pars. If these become blocked as they cannot release the associated liquids, Iran will be forced to drastically ration energy for industry and homes in the coming months. Tehran does not plan to give up. According to NDTV, The Islamic Republic will maintain its “diplomacy of patience.” Furthermore, the Revolutionary Guard (IRGC) already survived to severe production cuts in 2012 and 2019, and has a robust smuggling network that makes it very resistant to conventional economic pressure. Added to this is the time factor: according to the calculations of Kplerthe real financial blow will take between three and four months to be felt in Iranian coffers, since China – its main client – ​​operates with long delays in payments. The flight forward. To buy time, Iran is resorting to extreme measures. As revealed The Wall Street Journal, The country is reactivating dilapidated infrastructure, known in the sector as “junk storage”, in areas such as Ahvaz and Asaluyeh, and is even trying to export crude oil by train to China; a very slow and very expensive route that shows the level of stress in the system. and in the sea activation of the Nashaa 30-year-old supertanker rescued from scrapping to serve as an emergency floating warehouse. But the most fascinating and opaque strategy is unfolding thousands of miles from the Persian Gulf. As my colleague Miguel Jorge has developed for Xataka, There is a “secret gas station” in the middle of the ocean. This is an area off the coast of Malaysia, known as EOPL, which functions as a huge ghost car park. There, a shadow fleet of aging ships with their tracking systems (AIS) turned off conduct dangerous ship-to-ship crude transfers. With this maneuver they launder the origin of the oil, passing it off as Malaysian to sell it to independent Chinese refineries and evade the radar of US sanctions. The global earthquake. As Iran searches for oxygen, the collateral damage of this blockade is fracturing the global economy and geopolitics. Behind closed doors, the Iranian social collapse is advancing at a steady pace. A crude report of the Financial Times details that real inflation is already close to 50% and the national currency (the rial) sinks to historic lows. The price of basic products such as cheese and chicken has skyrocketed, and the government admits that more than 191,000 workers have applied for unemployment benefits since the start of the war. Globally, the Straits crisis has shattered the mirage of modern logistics. The collapse of Hormuz It’s not a temporary traffic jam.but a tectonic fault that has broken the “just in time” system and is threatening the hegemony of the petrodollar. Markets, panicking over a prolonged disruption, have pushed a barrel of Brent crude above $120, its highest level since 2022. But the most seismic geopolitical consequence of this war has erupted within the oil cartel: the United Arab Emirates (UAE). will leave OPEC+ May 1st. Fed up with production quotas that limited their income and feeling deeply abandoned by their Arab neighbors in the face of direct attacks from Iran, the Emiratis have decided to fly alone. This breakup leaves Saudi Arabia alone bearing the cost of stabilizing the market, greatly weakens OPEC and gives Donald Trump a diplomatic coup that he had been seeking for years. The final pulse. In the end, this conflict has become a drag race in which no one emerges unscathed. The big question that will decide the outcome of the war is who will go bankrupt first: the fragile and antiquated oil wells of Iran and its exhausted population, or the global consumers and the great Western powers, unable to withstand the skyrocketing fuel prices and the collapse of world shipping routes for much longer. And all this happens under inescapable pressure. While political leaders debate and move their chips thousands of kilometers away, the valves of Kharg Island … Read more

The banks didn’t want anything to do with oil. Wall Street has solved it with the 2008 mortgage strategy

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Oil and gas producers in the United States are turning to the financial magic of Wall Street to fuel their acquisitions in a frenetic race for growth. To achieve this, they are packaging thousands of pots into investment vehicles and selling stakes to American investors, replicating the exact same model that has long been used for mortgages, auto loans and other sources of securitized income. Away from the spotlight, the number of these operations has grown rapidly in recent years. Industry experts consulted by Financial Times They estimate that the total amount of debt issued through this format already ranges between 20,000 and 30,000 million dollars. It is a fundamentally opaque market, where most transactions are closed privately. Historically, independent oil and gas producers financed its operations through loans reserve-based (RBL) and high-yield debt. However, the situation has changed drastically. Some commercial banks have reduced their exposure to the extractive sector to meet their sustainability strategies under environmental, social and governance (ESG) policies, or in response to public concern over climate change. Added to this is the fear of traditional investors of “stranded assets” and the general uncertainty about the long-term viability of the sector in the midst of the energy transition. In addition, rising interest rates have raised costs, making high-yield debt too expensive or inaccessible for many producers. To survive, companies They have found an alternative way: They transfer their mature wells, known as proven, developed and producing (PDP) reserves, to a newly created Special Purpose Entity (SPE). This entity operates independently and is structured to be “bankruptcy-remote”, ensuring that the transferred assets are completely separate from the balance sheet of the producing company and safe in the event of its bankruptcy. Attracting conservative money By isolating these high-quality assets, the bonds issued by the SPE manage to achieve an “investment grade” rating. This seal of quality attracts a new class of investors who would normally avoid oil risk: pension funds, insurance companies and large asset managers looking for structured financial products with stable returns. For the oil companies, business is great. The securitization allows them to obtain advance rates (advance rates) of between 55% and 75% of the value of the reserves, figures significantly higher than those available in traditional RBL loans. To convince credit rating agencies, the secret lies in diversification and insurance. On the one hand, thousands of assets are grouped together; for example, Raisa Energy closed an operation combining more than 3,000 wells operated by more than 50 companies in more than 20 counties. On the other hand, long-term hedges are contracted to protect investors from oil fluctuations, reaching up to 85% of the entity’s production for a period of five to seven years. The “time bomb” and the cracks in private credit But financial engineering sometimes hides structural cracks. Brandon Davis, founder of energy intelligence company AFE Leaks, describes in FT These price hedges act as a “ticking time bomb” in case other production costs increase. If the price of oil rises, the company’s income is capped because the difference goes to the hedging counterparty (usually a bank). However, if at the same time there is inflation in operating costs, such as field services or water treatment, the profit margin backing the bonds could be seriously eroded. The cracks in this engineering are not an isolated case in the energy sector, but a symptom of a greater malaise in the opaque world of private credit on Wall Street, where patience (and money) is beginning to run out. This risk is framed at a time of growing tension for the entire private credit ecosystem on Wall Street. Investors are starting to demand their money back. In Cliffwater’s $33 billion fund, clients requested to withdraw 14% of their capital in a single quarter, but the firm said it only I would pay around 50% of those requests, forcing the other half to wait. If the panic spreads, traditional banks will not escape unscathed either. Lending by US banks to non-depository financial institutions, which includes private credit, reached 1.2 trillion dollars in the middle of last year, almost tripling its share compared to a decade ago. Furthermore, as with oil wells, the securitization market as a whole is extremely sensitive to external regulatory or macroeconomic shocks. A clear example occurred recently in another sector: Mpower Financing had to postpone the sale of almost $250 million in bonds backed by loans to international students. The cause was investors’ fear of the new restrictive visa policies of the Donald Trump administration. If regulatory changes or geopolitical crises hit the energy sector unexpectedly, oil securitization could face a similar collapse in demand. The danger of forgetting the nature of the business Wall Street has packaged a high-risk industry into a tame-looking product, but geology and the global market are difficult to tame. “The trick has always been to convince the rating agencies that measures have been put in place to mitigate the risk,” warns Olivier Darmounieconomist specialized in credit markets at HEC Paris. “But that’s the inherent thing about oil and gas, it’s an inherently volatile business.” Darmouni points out the ultimate risk: “If something goes wrong, the main problem will be that oil and gas will run out of capital” if producers start defaulting on bond payments. As long as the money keeps flowing, the machine will not stop. But as Laura Parrott warnshead of private fixed income at Nuveen, the market is experiencing a lot of effervescence. In scenarios of such investment fever, he concludes, “people are going to be trapped.” Image | Photo by David Vives on Unsplash Xataka | Climate change is no longer profitable: WallStreet and large investors abandon green policies

Unintentionally, the war in Iran has dynamited the great oil cartel

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The energy earthquake that caused the Third Gulf War has just claimed an unexpected victim: the unity of the oil cartel. As of May 1, the United Arab Emirates (UAE) will no longer be part of OPEC and its OPEC+ alliance. As reported by the state news agency WAMin Abu Dhabi consider that it is time to prioritize their “national interest.” After spending almost six decades making “great sacrifices”, the Emirati Government considers that stage over and prefers to fly alone, guided by its own “strategic and economic vision” far from the limits of the group. The context could not be more volatile. The Strait of Hormuz—through which a fifth of the world’s crude oil normally transits— is submerged in operational chaos due to Iranian threats and attacks, in addition to the US blockade of Iranian ports. As explained Reutersin this scenario of suffocation, the Emirates has decided that its energy future needs to maneuver without the ties of Vienna. The beginning of the end of quotas. The impact of this exit is tectonic for the oil market. As analyst Saul Kavonic warns in the BBCthis breakup could be “the beginning of the end for OPEC.” With the departure of Emirates, the cartel loses approximately 15% of its total capacity and one of its most rigorous members, leaving the organization weakened and with only 11 core members. The key to this divorce lies in production, since the Emirati authorities had been complaining for some time that the cartel’s quotas unfairly limited their exports. As detailed by Robin Mills, analyst consulted by the cnnOPEC kept the Emirates restricted to a production of 3.2 million barrels per day, when the country has invested aggressively to reach a real capacity close to 5 million. The Emirates “have been eager to pump more oil for some time,” notes David Oxley of Capital Economics in the same medium. The economic consequences are already being felt. The World Bank, which classifies this crisis as the largest supply loss on record, predicts a 25% increase in energy prices. Brent crude oil has experienced extreme volatility, fluctuating between $104 and $119 per barrel since the start of hostilities. Looking ahead, Jorge León, from Rystad Energy, explains in Guardian that Saudi Arabia will be left alone to shoulder the heavy burden of stabilizing the market, which predicts much greater volatility in the long term. The Arab fracture. Beyond barrels and dollars, the departure of the UAE is a direct symptom of a deep geopolitical fracture accelerated by the war. Emirates feels abandoned. The disappointment of the Gulf: As highlighted Al Jazeerathe decision comes shortly after harsh statements by Anwar Gargash, diplomatic advisor to the Emirati president. Gargash openly criticized the “historically weak” response of Arab countries and the Gulf Cooperation Council (GCC) to the Iranian attacks. According to Euronewsthe Emirates have had to absorb much of the impacts of missiles and drones, feeling that their OPEC allies have not provided them with political or military support. Direct tension with Riyadh: The departure has not been agreed with the de facto leader of the cartel. UAE Energy Minister Suhail Mohamed al-Mazrouei confirmed to Reuters who made this “political” decision without consulting Saudi Arabia. The relationship between both powers has been deteriorating for months due to economic competition and recent military disagreements, such as the collapse of their coalition in Yemen in December. An unexpected triumph in Washington. Curiously, this regional fracture represents a diplomatic victory for the American president. Donald Trump had been accusing OPEC of “scam the world” manipulating prices, while the United States paid for the military defense of the Gulf. The departure of the group’s third largest producer weakens exactly the structure that Trump had criticized so much. Towards a “new energy era”. Paradoxically, the flood of Emirati oil will not reach the markets tomorrow morning. As long as the Strait of Hormuz remains blocked by war, the impact on global supply will be limited in the short term because ships simply cannot leave. However, the message is sent. When the waters of the Persian Gulf calm, the world will find itself with a market flooded with Emirati crude oil, operating freely. The Emirates has decided to embrace a “new energy era”, the geopolitical map of the Middle East is being redrawn in the heat of the bombs, and OPEC, as we knew it, seems to be one of its first major collateral victims. Image | Emiel Molenaar Xataka | By blocking the Strait of Hormuz blockade, the US is dragging an unpredictable actor into the war: China

Spain continues refining oil and, once again, is once again Europe’s energy lifeline

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The closure of the Strait of Hormuz has caused panic in Asia and set off all the alarms in the International Monetary Fund (IMF) and the International Energy Agency (IEA). Faced with this global shortage, the Spanish system has done its homework. According to Agency EFEour country’s refineries have made their operations more flexible to maximize the production of petroleum derivatives, backed by a supply of crude oil that, for now, remains secure. Gonzalo Escribano, principal researcher at the Elcano Royal Institute, explains in statements to EFE that Spain has “specialized and better adapted refineries” than most of its neighbors. The contrast is blatant: Italy or Germany made the strategic mistake of closing 20% ​​of their refining capacity in recent years, outsourcing production to the Persian Gulf or to chinese refineries. Today, that decision is taking a historic toll on them. The real crisis is in the derivatives. It is easy to look out the window and think that the energy apocalypse has not arrived because there is still fuel at the gas stations. But it is a logistical mirage, maritime supply lines they move at the speed of a bicycle by the sheer inertia of the gigantic supertankers (VLCC) that were already sailing before the closure. The jam of more than 800 ships in the Gulf has already erased hundreds of millions of barrels from the market, and the real problem facing the world is not the lack of crude oil, but of already processed products. The first sector to suffocate has been aviation, which acts like the canary in the mine. global airlines They are canceling thousands of flights in the face of kerosene that has soared above 170 euros per barrel. At this point, the Spanish Fuel Industry Association (ACIE) corroborates EFE that the current bottleneck is in distillates such as diesel and kerosene. The Spanish lifeguard. By keeping its refineries at maximum performance, our country not only covers its demand, but also establishes itself as a logistics node capable of helping its neighbors. The contrast is abysmal: while the United Kingdom is forced to import 80% of the kerosene that its planes burn, Spain is capable of producing 80% of what it consumes. This not only protects the internal market from shortages, but also positions the peninsula to export the surplus to a thirsty Europe. In a scenario where the barrel maintains a “war premium” that inflates prices, having the final product already processed makes the Spanish plants the great emergency supplier. Those countries that decided to outsource their production of derivatives to Asia today depend on Spanish capacity so that their carriers and airlines do not remain grounded. The strategic “bunker”: the ace up CORES’ sleeve. How is it possible for Spain to hold its own if it imports practically 100% of the crude oil it consumes? The answer lies in our emergency reserves. Spain counts with an autonomy of about 105 dayswell above the 92 required by international law, managed through a mixed system between the industry and the Strategic Reserves Corporation (CORES). But the real “trick” of this bunker is not the quantity, but the quality: more than half (54.4%) of CORES’ reserves are already refined diesel fuel. Even if Saudi Arabia manages to bypass the Hormuz blockade by sending crude oil through its pipelines to the Red Sea, Europe has a serious problem if it does not have enough factories to distill it. By having the refining duties done in advance, the Spanish tanks buy the country more than three months of logistical peace to prevent the trucks from stopping. There is another safe passage: the “green shield” exception. Added to this fossil shielding is the electrical part, a front where Spain plays with a structural advantage. More than 60% of our generation mix It is already renewable, supported by massive solar and wind deployment and a solid hydraulic cushion. In the European electricity system—where the most expensive technology, usually gas, dictates the final price of all electricity—this green park acts as a retaining wall. During the central hours of the day, the massive injection of clean energy manages to sink wholesale market prices, reaching zero or even negative values. This protects us from the brutal gas increases that are suffocating bills in Germany or Italy. In practice, it allows the national industry to maintain a vital respite and a huge competitive advantage during sunny hours, cushioning an economic blow that is devastating manufacturers in the rest of the continent. A life preserver that floats, but is not immune. Spain has become a fortunate energy island, but not by chance. It is the result of not having succumbed to the temptation to dismantle its hydrocarbon infrastructure while, in parallel, investing massively in the transition towards sun and wind. However, it would be a mistake to become complacent. The life jacket floats, but the sea is rougher than ever. Fatih Birol, director of the IEA, has warned that this crisis exceeds those of 1973, 1979 and 2022 combined. And our country is not without cracks: we still lack massive batteries to store our renewable energy (which makes us vulnerable to gas every time it gets dark) and our external dependence on crude oil remains almost absolute. We have gained precious time, but the hyper-connected economy of the 21st century reminds us that when the world slows down, no one is completely unscathed. Image | Gregorio Puga Bailón Xataka | First it was the automotive industry, now Europe is going to lose another of its star industries to China

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