by Larry C. Johnson, Sonar21:
Donald Trump would like you to know that the Strait of Hormuz is in tremendous shape. Possibly the best shape in its history. On September 27, he told reporters that “last night, we took a record amount of oil out of the Hormuz Strait, more than we took out before the war.” Three days later he was back with an even bigger number: “We took more oil out of the Hormuz Strait over the last couple days than at any point in history.” In his telling, the oil is pouring out of the Gulf in quantities that would make the shahs blush.
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So here is a question for the White House. If the oil is flowing like never before, why did the President of the United States spend this week threatening America’s closest allies with a diesel embargo unless they emptied their emergency tanks?
That is not a rhetorical flourish. That is what happened. On Thursday, Trump told reporters his administration “may” ask European countries to release their diesel stocks, shortly after Treasury Secretary Scott Bessent urged Europe to tap its reserves “immediately.” Washington had already gone country by country, warning that governments which refused could face a ban on U.S. diesel exports. By Friday, the G7 had agreed to release 100 million barrels over four months, with a frontloaded diesel release in the first 20 days. Trump announced that Europe had agreed to release “a massive amount of their heavily stocked diesel oil.” Mission accomplished, again.
A record that isn’t
The problem with a record is that someone eventually checks it. Trump’s own Energy Secretary, Chris Wright, let the air out of the boast on September 26. He said there had been a day “where over 20 million barrels of oil, more than pre-conflict levels, flowed out of the straits,” then added the inconvenient part: “The running average today is almost 13 million barrels a day.” About 20 million barrels a day moved through Hormuz before the war. Thirteen million is roughly 77% of normal by industry estimates, not a record, and that’s on the administration’s own numbers.
Wright has form here. In early September he claimed “over 17 million barrels” had passed through the strait in a single day, and analytics firms that track tanker traffic promptly rebutted him. The trick is simple: pick your best day, call it a record, and hope nobody asks about the other 29 days in the month. Energy analyst Karl W. Miller has warned against exactly this sleight of hand: a single high-volume sailing day cannot establish a sustained export rate. Neither can a press gaggle.
There is a second problem the President never mentions. Even if every one of those crude barrels were real, crude is not diesel. Miller’s research shows the Gulf’s refined-product exports recovering far more slowly than its crude. Hormuz product exports excluding LPG were reported at about 1 million barrels a day in mid-September, against about 4 million before the war. The International Energy Agency puts Middle East net diesel exports at 390,000 barrels a day in August, just over a quarter of prewar levels. You cannot run a truck on a press release, and you cannot run it on Saudi crude either until somebody refines it.
Europe’s arithmetic
To understand why Washington has Europe over a barrel, start with how much diesel Europe burns. Europe’s diesel demand is typically around 5 million barrels a day. It fuels the trucks that move its goods, the tractors that plant its crops and, as winter approaches, the furnaces that heat millions of homes. European refineries can’t cover all of it. Running flat out, EU refineries could produce roughly 4.5 to 5 million barrels a day of diesel and gasoil, and they are already running close to their maximum. The gap is filled by imports, which normally cover 10% to 15% of demand but set the price for the whole market. Kpler puts the EU’s diesel imports from outside the bloc at about 580,000 barrels a day this year. Britain is far more exposed: it imports more than half the diesel it uses.
