An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur) crude oil. The sweet stock makes up about 1/3 of the reserve and hardly varies at all. This is because US refineries are virtually all configured for sour crude: due to a mistaken belief in the 1990s that sweet crude was running out, the industry bet the farm on sour crude refining, and if sour crude runs low, it's extremely economical to switch.
As a result, almost all the draw from the SPR is of sour crude (currently ~5 million barrels/week). However, you can't just use up all the reserve because as levels get lower brine must be pumped into the storage chambers to retain pumping pressure, and the more brine that is pumped, the more the output quality declines.
The weekly reports indicate a total in the SPR of about 300mbb, of which ~100 are sweet and 200 sour. But for the reasons above, output becomes unusable one the sour levels fall to ~140-150mbb, at which point there is almost certainly a severe diesel supply shock. At current drawdown rates, that would be sometime around October/November, right in the middle of harvest season when demand for diesel is highest.
There's more complexity to this than I want to type out in a HN comment, but not that much more. Draw your own conclusions.
I think the reserves have more complex dynamics. The law requires 250 million barrels to be kept but the pumping rate decreases as more is pumped. Also, there's various estimates that indicate that the storage areas will lose structural integrity and start to collapse at levels higher than 250M barrels. I'm not sure anyone really knows about the levels for sure and the best estimates are probably kept secret for security reasons.
Not that the administration is trustworthy, but they recently announced that the structural floor is ~70M barrels. Which is significantly lower than other public estimates. Which strikes me as an attempt to ease the market that there is significantly more breathing room.
That seems a bit optimistic to me. I'm no expert, but a relevant and recent examination of the physical SPR facilities (published just last month) is available at https://www.gao.gov/assets/gao-26-106918.pdf
Converting from sour to sweet is easier than sweet to sour. Because the sulfur in sour is the catalyst killer. You may have issues in the early processing steps because of lower viscosity, but you can do blending if necessary.
No, the two interventions are unrelated. Every indication is that they thought Iran would be a quick war with minimal impact on oil markets. Even if they did think the Strait of Hormuz would be closed for a long time, controlling Venezuela's oil does not help — it takes much longer than two months for Venezuela to meaningfully increase oil production. (And oil is ~fungible, so it doesn't really matter if the US is involved with production and sale. All that matters is that it's produced and sold by anyone.)
No, the attack on Iran was simply instigated by Israel, which has been trying to push the US in a war with Iran since at least 20 years.
Trump has a long history of doing what Israel wants- it's him who moved the US embassy to Jerusalem (which was illegally annexed by Israel), tore up the nuclear agreement with Iran, sanctioned the ICC, sponsored accords to get Arab states to accept the occupation of Palestine, and just the other day offered Saudi Arabia a civilian nuclear program if they do just this one favour to Israel (again the Abraham accords). His son in law Kushner is a personal friend of Netanyahu, like his father (who was nominated ambassador to France). Basically Trump has always been Netanyahu's tool.
Stop taking away responsibility for US actions. As you say Israel has asked US for a war with Iran everyday for 20 years and US has said no everytime. Now they said yes. So clearly US was able to say no and the choice to say yes was theirs.
Of course the US are entirely responsible for their actions. They're doubly responsible because not only they engaged in a reckless and illegal war, but also because they did it out of subservience to another country. The US politicians who promptly pledge their loyalty to Israel every time they're asked to (i.e. almost all of them), they are fully responsible.
I disagree with the current Iran action, however we can't just say that Iran has been forthcoming and compliant with their agreements.
>During the 1990s and early 2000s, Iran developed several undeclared sites, which were identified by international observers in 2002 and 2009. Following the collapse of negotiations with the EU-3 in 2005, the International Atomic Energy Agency (IAEA) Board of Governors found Iran in non-compliance with its NPT safeguards agreement,[6][7][8] leading the United Nations Security Council (UNSC) to pass a series of resolutions between 2006 and 2010 demanding a suspension of Iran's enrichment-related activities and targeting Iran’s banking, trade, and energy sectors.
>In late 2003, Iran was facing the prospect of censure and agreed to a degree of cooperation. In October 2003, Iran and the foreign ministers of Britain, France, and Germany (the "EU-3") struck the Tehran Agreement: Iran pledged to temporarily suspend all uranium enrichment and reprocessing activities, allow more intrusive inspections by signing the Additional Protocol, and clarify past nuclear work. This deal, reached just ahead of an IAEA Board of Governors deadline, was intended to build confidence while a longer-term solution was negotiated. However, Iran's cooperation was halting and incomplete.[22]
>In 2004 and 2005, the IAEA uncovered inconsistencies and omissions in Iran's disclosures, such as experiments with plutonium separation and advanced P-2 centrifuge designs that Iran had failed to report. Iran's suspension of enrichment proved short-lived as soon it resumed certain nuclear activities. In June 2004, the IAEA's Board rebuked Iran for not fully cooperating. By September 2005, the Board found Iran in non-compliance with its safeguards (a formal trigger for UN Security Council involvement). Iran reacted by ceasing voluntary implementation of the Additional Protocol and restarting enrichment work. In April 2006, President Mahmoud Ahmadinejad announced that Iran had enriched uranium to 3.5% U-235, low enriched uranium suitable for nuclear fuel, using a cascade of 164 centrifuges at Natanz. This marked Iran's first public entry into the nuclear fuel-cycle capability club.[22]
Tell the story of what’s happened in the last 15 years, not just the 2000s under Bush 2.
In 2015, the JCPOA was signed to address some of these shortcomings. It especially enhanced verification and started discussions between Iran and the rest of the world. But rather than build on it, the 45th administration decided to cut it up without alternatives in place.
India, Israel, Pakistan and South Sudan are all non-parties to the non-proliferation treaty. Iran is a party.
North Korea was a party, gave notice to withdraw, said they were still in then said they were out. The way that Iran is acting parallels the behavior of North Korea.
As the parent comment explains, the US can't produce all the oil it needs, because it's refinery capacity isn't aligned with the type of oil it pumps from the ground.
It can be if necessary. It’s just the US refineries can deal with the crappy oil produced by places like the tar sands in Canada, where few other countries currently can
I have seen a few slightly different figures but it is something like 40% of oil still needs to be imported to get the right mix for the current economic setup.
This is frequently stated as a goal of the 5D chess but it is ridiculous if you think about it. China is not buying oil and gas from Russia at discount rates (and had been for quite a while). They haven't performed blood rites with Venezuela that force them to only get oil from Venezuela. They can buy it from anybody who is willing to sell. Even if you sink the Middle East into the ocean they will still be able to buy oil from others, albeit at much higher prices.
So no, this is not a strategic target, unless you actually want to attrition them to bankruptcy with oil prices. But this path is and should be very unpopular with regular citizens.
But it is a free market. If prices in the international market are at 2x the prices in the domestic market, nobody would sell oil in the domestic markets. The US would have to introduce export controls.
But can the US do it? No, because it lacks refining capability for a lot of the kind of oil it produces and retrofitting existing refineries is a multi-year, very expensive project.
Oh. It wasn’t because the authoritarian leader was involved somehow in drug trafficking and needed kidnapping? Or was that a distraction from the distraction?
We are talking about this, because we're discussing a model of oil price vs availability which includes modeling of national oil reserves. I'm pointing out that the popularly understood amount of US reserve levels somewhat overestimates the available cushion, and provided two different and easily verifiable reasons for considering it to be smaller than the headline number. I also specified that I was oversimplifying for the sake of brevity. I also indicated which assumptions and approximations were inputs in my heuristic.
You could easily ask Gemini to critically appraise each of these steps and get the detail you feel you're lacking; I know this because I employed it over the last few months to research this topic, but did so in piecewise fashion. Apparently you opted for the easier 'ctrl-V is this true' type of inquiry, which reflected your natural skepticism back toward you.
Consider the possibility that this is a failure of the business press rather than on my part. I linked to the recent GAO report on the physical state of the SPR facilities and infrastructure elsewhere in the thread. You might also find this trucking industry overview of the fuel supply situation illuminating. I leave it to you to dig around in the Department of Energy's website until you find the (obscure) tracking data for sour vs sweet stocks and integrate with other information, from storage chamber maintenance issues to anomalous outcomes in recent commodity loan offerings.
Tangentially related but just watched this pretty interesting youtube mini-doc-thing about the recent moves China has been making regarding oil (and its bigger picture): https://www.youtube.com/watch?v=BkA0bkb6ZO0
That video was masterfully done, and it’s shocking how quiet the mainstream and financial media has been about this topic. Everything is an AI chip story, and the looming oil crisis is completely under discussed because we have goldfish memories and can’t appreciate what a massive move China made.
It won’t be a proper crisis if we knew it was coming, media will go full tilt when they actually see and feel it and They’ll act like it came out of nowhere. Until then, did you hear Taylor Swift got married!?
Clicked it and was greeted by a YouTube ad opening “How the fuck am I going to get a big dick from eating gelatin?” And then the woman in scrubs on the cowboy’s front porch explained it all to him.
It’s nice because it ensures I’m never going to get over-smart from watching YouTube. Plus I gotta go get some Jell-O.
Well, the model is less of a prediction and more of a stress testing tool. But under the hypothetical closure scenarios it shows the timing the oil reserves of distant countries exhaust, as well as the systemic effects on pricing (the France paradox).
>What developments in pricing/other would indicate that your model is wrong or incomplete?
The model has a stylized way of incorporating pricing as a function of the total supply. In practice, when countries ration their oil that's beyond the scope of the model. That being said, the implied pricing trajectory is estimated and could be tested (the staircase graph showing prices constant while countries absorb the shock with their reserves and rebalanced whenever there is a reserve depletion).
>Nice website regardless, but I'm a bit skeptical that the dynamics of the global oil/energy market can be accurately predicted.
Thank you! Indeed, but I think having at least a stylized testing tool might be useful for policymakers :$ (assuming decisions are ever data-driven lol)
And this is what the model price formation assumes, and in fact, the silent mechanism that makes the crisis worse. Reserves silently deplete for each country, and each epoch where they exhaust is when the price rebalancing occurs IN A SUDDEN SPIKE, affecting other nodes that are not even connected to Hormuz, which is one of the conclusions of the paper. Either directly or indirectly all countries feel the pain: the question is who can stand the game of chicken the longer before intervening
this is an interesting market design question: the point is that tapering would require everyone knowing everyone else's depletion clocks. As they are unknown (sanctioned trade, non-public state figures), the opacity is the game itself (that I called game of chicken in other comments). Surely the main players are trying hard to guess each other's numbers by every mean possible
There are two versions of the model:
-The one rendered by default (called Endogenous), with endogenous price that affects the demands according to the price elasticity slider. Reflecting how reactive are the nodes demand wrt price
-With fix price (called Fixed): that in the oil market doesn't apply, but it's an interesting baseline to consider oil purely as flow. And as a modeling tool, this allows the model to capture small supply chains that don't have price setting power.
France imports 0 oil directly through Hormuz, but when the Strait closes, all other countries start raising their safety stock which increases oil prices. This makes France's stockouts very expensive mostly due to price (not flows). Which is contagion without direct connection.
Think of the 2008 crisis where companies that had nothing to do with Credit Default Swaps were exposed to the crash due to network effects, potentially crashing the whole economy.
Then, the government intervened by bailing the banks out. Here, it's not really clear if there is even an effective intervention.
Very interesting. Here in India people were very concerned about potential cooking gas shortages (LPG) when the disruptions began which is also a good example of usually-overlooked dependencies on the the Strait
and the interesting thing is that the common factor is that all these crises (oil, financial, gas) spread silently until a node collapses and there is a domino effect over the whole network
Maybe I missed it looking over the paper, or maybe they are implicit, but are you taking into account Saudi Arabia’s East-West Crude Oil Pipeline (Petroline) , I believe it does about ~7m bpd and Habshan-Fujairah (Abu Dhabi Crude Oil Pipeline / ADCOP) about ~1.5m bpd? If not you might be underestimating things, though they do take a bit of a warmup to get into capacity, and can't match completely Hormuz's flow.
This pipeline predates the data but its oil is routed to Bab-el-Mandeb which is in the network. That being said, the numbers are more of a sensible baseline as the actual flows for many countries are unknown/sanctioned.
The biggest missing piece is China. Assuming actual delivered price is not subsidized by Western countries, you need to put in what if China demands that reflect the current price. Chinese in reality don't consume that much oil as what we thot they do from the oil purchases in the past. I assume Chinese just ramp down the purchase even though their consumption is well below that. Plus the hidden supplies from Iran and Russia to China via land route.
Another crucial element is land transport. The Gulf countries have developed a fleet of trucks to help offset some of the crude oil passing through the Strait.
oh and Strategic Oil Reserve is about to bottom out to the point where any lower brings permanent damage, imagine this going on through 2029 because you cannot "bomb your way to peace"
Nice. How does this stand up against backtesting with recent data?
Also, i thought China's emergency stockpile is about 1.4b barrels or close 5 months of domestic consumption, and they are building it up atm.
In the sim, it shows China's stockpile depleted after 1.2 wks?
Thanks! Two answers (repeated in other comments): UN Comtrade data doesn't include sanctioned oil (Iran), and nobody (except their government) knows China's actual stockpile. The model is more of a sensible baseline/stress testing tool than a prediction, the cool part is that anyone can BTON (bring their own numbers) and rerun their scenarios
OP, please add India as a shock target option if possible. It imports close to 80+% of its crude oil and gas requirements and is highly vulnerable to oil flow shocks.
Something seems to be wrong with the simulation: some countries run on reserves, and out of them, even with 100 % delivery.
OP blames "Market elasticity parameters" for that, but they should offer a reasonable reset, or shouldn't they even oversteer towards filling up tanks, not clearing them out of no supply shock is seen?
I don't know if I'm doing something wrong, but if I set Capacity Retained to 100% then no matter what I set the other values to a bunch of countries deplete their reserves.
This feels wrong; but I'm inclined to think I'm missing something.
Fair point. Actually this is both a semantics oversight on my part and also expected behaviour. at 100% retained there's no shock, but the model's countries target consumption plus a large safety buffer, and some can't fill that target even in peacetime, so they draw reserves at baseline, the shock scenarios show the additional damage relative to that baseline
China hides its stockpile numbers, and estimates are only what we can see. After buying loads of sanctioned oil for stockpiles, they are perfectly positioned to take advantage of trumps blunders in the straight and likely will get to set the price of oil if they aren’t already..
This is very interesting, and it shows why the Strait is urgently in need of a back up. I don't know what that would be or what would be feasible, but I've seen a lot of people talk about an underground pipe.
Exporting oil from the west side of Saudi Arabia works until some armed group like the Houthis with drones/missiles places a credible enough threat at another chokepoint that the ships won't go.
The choices are then to find a way to get the Houthis to chill out, or use enough military force to cut off the Iranian support for the houthis, or use military force to be confident you have destroyed the houthis' ship attacking capability.
But in reality this won’t happen, because China won’t be happy and will force Iran to a deal like last time or they will lose all the parts and intelligence tech they are providing to them.
> because China won’t be happy and will force Iran to a deal like last time...
Iran's political leadership is amenable to negotiating but their incumbent military leadership which now calls the shots aren't [0][1].
The current incumbents in the IRGC and Artesh are now vets who were deployed on the frontlines in Syria, Lebanon, Yemen, and Iraq and are deeply anti-Western as a result.
> or they (Iran) will lose all the parts and intelligence tech they (China) are providing to them...
This is why Iran has been leveraging Russia as well [2][3].
Russia is trying to link the Ukraine War with the Iran War ("stop giving Ukraine targeting capabilities and we'll stop giving it to Iran").
Iran's military leadership doesn't trust China because they undermined Iran's position on Hormuz by backing the UAE [4], and because hardliners still harbor negative views of China and Eastern culture as undermining the precepts of the Islamic Revolution [5][6][7] and still calling them "uncultured orientals" (شرق زدۀ بی فرهنگ)
> leadership doesn't trust China because they undermined Iran's position on Hormuz by backing the UAE [4]
Would you say that in the broadest possible sense, this is because China cares much more about keeping an unrestricted flow of (not $140-160 a barrel) oil coming from the Persian Gulf, oil/gas exports and outbound flow unrestricted for their own domestic consumption. They think that's much more important, given a choice and the impact of oil NOT flowing to their economies, than supporting the continuation of the IRGC and status-quo leadership in Iran.
But the issue is China doesn't have many options to push back against the IRGC's wish for shahadat.
The political and private sector economic leadership in Iran was neutered after Rouhani was not re-appointed by Khamenei, so opposition within the regime is weak and is largely purged.
Supporting opposition against the regime is also obviously a no-go as it would both be a diplomatic bruise for China's image as well as risk a Neutral or worst case Pro-American Iran, as well as send a message to Pakistan, North Korea, Laos, and Cambodia that Chinese commitments are only fair-weather.
Supporting any intervention by neighboring countries would be diplomatically bruising for China's image and risk a Neutral or worst case Pro-American Iran, as well as send a message to Pakistan, North Korea, Laos, and Cambodia that Chinese commitments are still dependent on American power projection.
And the clerical leadership and IRGC (two sides of the same coin - to join the Pasdaran you need to be ideologically vetted by clerical leadership, and a large portion of recruits are products of the religious education system) have complete control over all the organs of Iran's armed forces and it's economy, and hold resentment against both the West and East for being morally and religiously lax as well as capitalist.
Within the neighboring region, China has also been sending extensive signals of "we support you and will engage in full trade with you, and retain full diplomatic relationships, etc, no matter what you're doing to your own people domestically" to the Taliban in Afghanistan. Stuff like offering full accreditation to the Taliban-run embassy in Beijing and issuing visas/support for a whole cadre of Taliban officials.
If China did an about-face on maintaining friendly relations with the IRGC, that would also be a big signal to the Taliban that maybe their "all weather" relationship with China was a bit more precarious than they previously thought it was.
With the recent minor border war between Afghan Taliban and Pakistani forces, closing the major land cargo trade routes of Torkham, Spin Boldak (and flows of cargo) along the AF/PK border, Afghanistan has very recently become much more reliant on import transit trade via Uzbekistan and Tajikistan. Much of that for manufactured goods and technology that Afghanistan can't build domestically (just about everything of any technical sophistication) is ultimately manufactured in China and goes through UZ and TJ.
> China has also been sending extensive signals of "we support you and will engage in full trade with you, and retain full diplomatic relationships, etc, no matter what you're doing to your own people domestically" to the Taliban in Afghanistan. Stuff like offering
China has started disengaging with the Taliban now that Pakistan is fighting a war against them and after the Taliban are sending their leadership to India almost every month [0][1], backing the Taliban's position [2], and the Pakistani Taliban (which has the same leadership as the Afghan Taliban) has continued to attack CPEC [3] and targeting Chinese personnel [4].
> If China did an about-face on maintaining friendly relations with the IRGC, that would also be a big signal to the Taliban that maybe their "all weather" relationship with China was a bit more precarious than they previously thought it was
China snubbed the Taliban by not condemning Pakistan's strikes on Afghanistan [2] and not pressuing Pakistan to allow Afghanistan's ascension in the SCO [5].
And there's a reason the Taliban are sending their wounded for treatment in India and not China [6].
> With the recent minor border war...
The Taliban are treating the war as existential. And they are now diverting Afghan cargo to Indian operated Shahid Beheshti Terminal in Iran [7].
> and the Pakistani Taliban (which has the same leadership as the Afghan Taliban) has continued to attack CPEC [3] and targeting Chinese personnel [4].
Is it a fair assumption that a major factor in this in China's long term and continuing military cooperation with Pakistan? Joint fighter/attack jet development programs for air force, etc. It's my understanding that China has very friendly relations with the generals who actually run the Pakistani state, no matter who might be occupying the PM/president role at any given time.
China's on the fence about transferring newer Chinese tech like the J-35 to Pakistan because the F-16 remains the backbone of the PAF [0] and American military personnel remain deployed in Pakistan to maintain the fleet.
Also, the current dictator in charge of Pakistan leans pro-America after the US allegedly helped overthrow Imran Khan [1][2].
And this is what makes it so difficult for China - opposing the IRGC makes it easier for Pakistan, Cambodia, Laos, and others to justify enhancing engagement with the US at the expense of China while supporting the IRGC means dealing with the extended logistical shock while backing an organization that views both Western and Chinese investors negatively and undermining long-term engagement with the GCC.
I have been hoping China would force this issue. Send an oil tanker through and see if the US has the balls to stop it. Either the US does and everyone gets peeved or the US lets it float away and look incredibly impotent.
Sometimes I think that's Trump endgame. Destroy world's economy, solve debt with massive dollar de-valuation, and uses its resource advantages to reindustrialize itself.
Of course, that would fuck most of the world population, including the American Poor and The Middle Class.
But I don't think this would weight too much on Trump's conscience.
This is a nice idea. I will build this a feature on the scenarios menu. And it would give an estimate of how much time doing this buys China under different configurations
If the strait were to suddenly fully open <now> then reserves in (say) Singapore would continue to deplete until an oil ship or three reaches Singapore, which may take a while.
the models, proofs and writing are mine (with some AI assistance for proofreading/formatting). AI was mostly used in the visualization and the rerunning of multiple scenarios of the numerical examples
Thank you. Yes, in desktop there is one (that might still be going a little bit too fast), but in mobile it might not be that easy to find. Perhaps I will slow down the speed in mobile by default and change the location (should be in the bottom right corner, the 2 wk/s can be changed to 1 wk/s)
Thanks, the modeling is similar math to the financial banking networks paper by Eisenberg and Noe Systemic Risk in Financial Systems (used as a stress tool by regulators after the 2008 financial crisis). My adaptation is combining this with the inventory management part in my article: https://arxiv.org/abs/2607.17491
it came from the data (UN Comtrade) that notably doesn't include sanctioned oil flows (Iran, etc). On top of that, China's reserve levels are a state secret, yet, the model's framework is BYOD (Bring Your Own Data) which gives the depletion timeline for free. Also, the model is more of a sensible baseline than a prediction
I really do appreciate the effort but the data doesn’t reflect current conditions, and it’s falsified given it’s been virtually closed for months, certainly the same as 30% throughout that is the models default parameter, and we didn’t see ex. prices at $150/barrel 3 weeks in, or a host of other things it predicts.
EDIT: I’m not saying it doesn’t matter the strait is closed - it does! - it’s just, what are we to do with a model that generically tells us oil barrel prices is at $150 3 weeks in, when we are months in?
That's kind of the point because it hasn't been totally 100% closed. There's both sanctioned and unsanctioned oil flowing, which is the point of the scenarios in the simulation. Also it's more of a simulation/stress tool at a sustained closure than a prediction one
The thing I've heard now in several places is that China is drawing down its massive secret stockpile (its _greatly_ reduced imports) which counterbalances a huge amount of this
I do generally agree that the theoretical model being _this_ misaligned with the reality in front of us feels a bit hard to use
That's actually the intended behavior: while reserves are silently being spend is when the crisis is brewing. Although the main point is that nobody knows China's reserves, but this allows to calibrates scenarios based on what you believe is plausible
An interesting fact to consider is that the US stockpile (the Strategic Petroleum Reserve) is reported as the total of sour (high sulfur) and sweet (low sulfur) crude oil. The sweet stock makes up about 1/3 of the reserve and hardly varies at all. This is because US refineries are virtually all configured for sour crude: due to a mistaken belief in the 1990s that sweet crude was running out, the industry bet the farm on sour crude refining, and if sour crude runs low, it's extremely economical to switch.
As a result, almost all the draw from the SPR is of sour crude (currently ~5 million barrels/week). However, you can't just use up all the reserve because as levels get lower brine must be pumped into the storage chambers to retain pumping pressure, and the more brine that is pumped, the more the output quality declines.
The weekly reports indicate a total in the SPR of about 300mbb, of which ~100 are sweet and 200 sour. But for the reasons above, output becomes unusable one the sour levels fall to ~140-150mbb, at which point there is almost certainly a severe diesel supply shock. At current drawdown rates, that would be sometime around October/November, right in the middle of harvest season when demand for diesel is highest.
There's more complexity to this than I want to type out in a HN comment, but not that much more. Draw your own conclusions.
Should have said 'extremely uneconomical to switch. Sorry for the confusion.
I think the reserves have more complex dynamics. The law requires 250 million barrels to be kept but the pumping rate decreases as more is pumped. Also, there's various estimates that indicate that the storage areas will lose structural integrity and start to collapse at levels higher than 250M barrels. I'm not sure anyone really knows about the levels for sure and the best estimates are probably kept secret for security reasons.
Not that the administration is trustworthy, but they recently announced that the structural floor is ~70M barrels. Which is significantly lower than other public estimates. Which strikes me as an attempt to ease the market that there is significantly more breathing room.
That seems a bit optimistic to me. I'm no expert, but a relevant and recent examination of the physical SPR facilities (published just last month) is available at https://www.gao.gov/assets/gao-26-106918.pdf
This is incredibly superficial, but that’s the most thoughtfully laid out and typeset official report I’ve read in ages.
> would be sometime around October/November, right in the middle of harvest season
Right in the middle of election season.
You guys still having elections?
This could well be the last one for a while
Or the previous one may have been the last one for a while.
Right in the middle of "election" season. FTFY.
This is an interesting insight, as usable reserves < reported reserves the clocks in the model are optimistic
Well that's also election time so the timing could not be better
> virtually all configured for sour crude
They have retooled them in the past 40 years for the actually accessible inputs and desired distillates.
Converting from sour to sweet is easier than sweet to sour. Because the sulfur in sour is the catalyst killer. You may have issues in the early processing steps because of lower viscosity, but you can do blending if necessary.
Isn't this the reason why they specifically targeted Venezuela, to get their oil?
No, the two interventions are unrelated. Every indication is that they thought Iran would be a quick war with minimal impact on oil markets. Even if they did think the Strait of Hormuz would be closed for a long time, controlling Venezuela's oil does not help — it takes much longer than two months for Venezuela to meaningfully increase oil production. (And oil is ~fungible, so it doesn't really matter if the US is involved with production and sale. All that matters is that it's produced and sold by anyone.)
Not completely unrelated. Both were likely entered to distract from the same news story dogging him every 24hr cycle.
No, the attack on Iran was simply instigated by Israel, which has been trying to push the US in a war with Iran since at least 20 years.
Trump has a long history of doing what Israel wants- it's him who moved the US embassy to Jerusalem (which was illegally annexed by Israel), tore up the nuclear agreement with Iran, sanctioned the ICC, sponsored accords to get Arab states to accept the occupation of Palestine, and just the other day offered Saudi Arabia a civilian nuclear program if they do just this one favour to Israel (again the Abraham accords). His son in law Kushner is a personal friend of Netanyahu, like his father (who was nominated ambassador to France). Basically Trump has always been Netanyahu's tool.
Stop taking away responsibility for US actions. As you say Israel has asked US for a war with Iran everyday for 20 years and US has said no everytime. Now they said yes. So clearly US was able to say no and the choice to say yes was theirs.
Of course the US are entirely responsible for their actions. They're doubly responsible because not only they engaged in a reckless and illegal war, but also because they did it out of subservience to another country. The US politicians who promptly pledge their loyalty to Israel every time they're asked to (i.e. almost all of them), they are fully responsible.
I disagree with the current Iran action, however we can't just say that Iran has been forthcoming and compliant with their agreements.
>During the 1990s and early 2000s, Iran developed several undeclared sites, which were identified by international observers in 2002 and 2009. Following the collapse of negotiations with the EU-3 in 2005, the International Atomic Energy Agency (IAEA) Board of Governors found Iran in non-compliance with its NPT safeguards agreement,[6][7][8] leading the United Nations Security Council (UNSC) to pass a series of resolutions between 2006 and 2010 demanding a suspension of Iran's enrichment-related activities and targeting Iran’s banking, trade, and energy sectors.
>In late 2003, Iran was facing the prospect of censure and agreed to a degree of cooperation. In October 2003, Iran and the foreign ministers of Britain, France, and Germany (the "EU-3") struck the Tehran Agreement: Iran pledged to temporarily suspend all uranium enrichment and reprocessing activities, allow more intrusive inspections by signing the Additional Protocol, and clarify past nuclear work. This deal, reached just ahead of an IAEA Board of Governors deadline, was intended to build confidence while a longer-term solution was negotiated. However, Iran's cooperation was halting and incomplete.[22]
>In 2004 and 2005, the IAEA uncovered inconsistencies and omissions in Iran's disclosures, such as experiments with plutonium separation and advanced P-2 centrifuge designs that Iran had failed to report. Iran's suspension of enrichment proved short-lived as soon it resumed certain nuclear activities. In June 2004, the IAEA's Board rebuked Iran for not fully cooperating. By September 2005, the Board found Iran in non-compliance with its safeguards (a formal trigger for UN Security Council involvement). Iran reacted by ceasing voluntary implementation of the Additional Protocol and restarting enrichment work. In April 2006, President Mahmoud Ahmadinejad announced that Iran had enriched uranium to 3.5% U-235, low enriched uranium suitable for nuclear fuel, using a cascade of 164 centrifuges at Natanz. This marked Iran's first public entry into the nuclear fuel-cycle capability club.[22]
https://en.wikipedia.org/wiki/Nuclear_program_of_Iran
This culminated in the US withdrawal of the treaty after Israeli intelligence uncovered further evidence of Iran breaking the treaty conditions.
Tell the story of what’s happened in the last 15 years, not just the 2000s under Bush 2.
In 2015, the JCPOA was signed to address some of these shortcomings. It especially enhanced verification and started discussions between Iran and the rest of the world. But rather than build on it, the 45th administration decided to cut it up without alternatives in place.
Ah, if only Iran did not get pushed onto the path of being a rogue state by the CIA. If only we just let other countries be normal.
Considering Israel has a illegal nuclear program, why should we hold Iran to a higher standard?
Not sure what you mean by illegal.
India, Israel, Pakistan and South Sudan are all non-parties to the non-proliferation treaty. Iran is a party.
North Korea was a party, gave notice to withdraw, said they were still in then said they were out. The way that Iran is acting parallels the behavior of North Korea.
Venezuela and Iran are strategic targets to control China's supply of crude oil. That's pretty much it.
USA can produce all the oil/energy it needs for itself. Everything else is about controlling the energy supply to adversaries.
As the parent comment explains, the US can't produce all the oil it needs, because it's refinery capacity isn't aligned with the type of oil it pumps from the ground.
It can be if necessary. It’s just the US refineries can deal with the crappy oil produced by places like the tar sands in Canada, where few other countries currently can
The Venezuelan oil is essentially the same, and Canadian bitumen is much cheaper on the world market to account for this.
I have seen a few slightly different figures but it is something like 40% of oil still needs to be imported to get the right mix for the current economic setup.
This is frequently stated as a goal of the 5D chess but it is ridiculous if you think about it. China is not buying oil and gas from Russia at discount rates (and had been for quite a while). They haven't performed blood rites with Venezuela that force them to only get oil from Venezuela. They can buy it from anybody who is willing to sell. Even if you sink the Middle East into the ocean they will still be able to buy oil from others, albeit at much higher prices. So no, this is not a strategic target, unless you actually want to attrition them to bankruptcy with oil prices. But this path is and should be very unpopular with regular citizens.
But it is a free market. If prices in the international market are at 2x the prices in the domestic market, nobody would sell oil in the domestic markets. The US would have to introduce export controls.
But can the US do it? No, because it lacks refining capability for a lot of the kind of oil it produces and retrofitting existing refineries is a multi-year, very expensive project.
Oh. It wasn’t because the authoritarian leader was involved somehow in drug trafficking and needed kidnapping? Or was that a distraction from the distraction?
I can't believe Joe Biden did that!
Random internet person says something that nobody is talking about. Gemini says random internet person is exaggerating the severity on most points.
I guess I’ll wait and see if someone provides citations because this feels like a nothing burger.
We are talking about this, because we're discussing a model of oil price vs availability which includes modeling of national oil reserves. I'm pointing out that the popularly understood amount of US reserve levels somewhat overestimates the available cushion, and provided two different and easily verifiable reasons for considering it to be smaller than the headline number. I also specified that I was oversimplifying for the sake of brevity. I also indicated which assumptions and approximations were inputs in my heuristic.
You could easily ask Gemini to critically appraise each of these steps and get the detail you feel you're lacking; I know this because I employed it over the last few months to research this topic, but did so in piecewise fashion. Apparently you opted for the easier 'ctrl-V is this true' type of inquiry, which reflected your natural skepticism back toward you.
What you also provided was conjecture based on… oh right you didn’t provide what it’s based on. Citation needed.
What I meant with nobody talking about it was that outside of your post your bullet points aren’t being brought up in any reliable sources.
Consider the possibility that this is a failure of the business press rather than on my part. I linked to the recent GAO report on the physical state of the SPR facilities and infrastructure elsewhere in the thread. You might also find this trucking industry overview of the fuel supply situation illuminating. I leave it to you to dig around in the Department of Energy's website until you find the (obscure) tracking data for sour vs sweet stocks and integrate with other information, from storage chamber maintenance issues to anomalous outcomes in recent commodity loan offerings.
https://tanktransport.com/2026/07/strategic-petroleum-reserv... https://www.plainview-energy.com/p/us-spr-deep-dive-part-iv-...
I get what you’re getting at, but do you honestly expect mainstream press to have a story on the technical details of oil production?
Kind of? It is of central importance at this time.
There was a time...
This was never a thing.
Grok, please check if this comment is right
Tangentially related but just watched this pretty interesting youtube mini-doc-thing about the recent moves China has been making regarding oil (and its bigger picture): https://www.youtube.com/watch?v=BkA0bkb6ZO0
That video was masterfully done, and it’s shocking how quiet the mainstream and financial media has been about this topic. Everything is an AI chip story, and the looming oil crisis is completely under discussed because we have goldfish memories and can’t appreciate what a massive move China made.
Not quiet, it's on the front page of reuters and other reputable news for the past two weeks essentially.
People are not noticing/caring to notice.
And yes the youtube video is masterfully done IMO. I'm happy I caught it when It was first uploaded.
It won’t be a proper crisis if we knew it was coming, media will go full tilt when they actually see and feel it and They’ll act like it came out of nowhere. Until then, did you hear Taylor Swift got married!?
Clicked it and was greeted by a YouTube ad opening “How the fuck am I going to get a big dick from eating gelatin?” And then the woman in scrubs on the cowboy’s front porch explained it all to him.
It’s nice because it ensures I’m never going to get over-smart from watching YouTube. Plus I gotta go get some Jell-O.
> Plus I gotta go get some Jell-O.
Don't forget to post a Show HN success story.
Will do, but I need to master the panorama feature on my phone first.
What concrete predictions does your model make?
What developments in pricing/other would indicate that your model is wrong or incomplete?
Nice website regardless, but I'm a bit skeptical that the dynamics of the global oil/energy market can be accurately predicted.
It's making crude predictions.
Ba dum bum... Tssss
>What concrete predictions does your model make?
Well, the model is less of a prediction and more of a stress testing tool. But under the hypothetical closure scenarios it shows the timing the oil reserves of distant countries exhaust, as well as the systemic effects on pricing (the France paradox).
>What developments in pricing/other would indicate that your model is wrong or incomplete? The model has a stylized way of incorporating pricing as a function of the total supply. In practice, when countries ration their oil that's beyond the scope of the model. That being said, the implied pricing trajectory is estimated and could be tested (the staircase graph showing prices constant while countries absorb the shock with their reserves and rebalanced whenever there is a reserve depletion).
>Nice website regardless, but I'm a bit skeptical that the dynamics of the global oil/energy market can be accurately predicted. Thank you! Indeed, but I think having at least a stylized testing tool might be useful for policymakers :$ (assuming decisions are ever data-driven lol)
>In practice, when countries ration their oil that's beyond the scope of the model.
Does your model assume that demand is constant regardless of price? We're already seeing a reduction in demand over the last several months.
https://finance.yahoo.com/energy/articles/global-oil-demand-...
> China's decrease of 1.5 million barrels per day, representing a 9% decline, was by far the largest globally, the report said.
Some global demand destruction is occurring, but that of China is them switching to large internal strategic reserves.
https://youtu.be/BkA0bkb6ZO0 (whole video is worth the watch)
And this is what the model price formation assumes, and in fact, the silent mechanism that makes the crisis worse. Reserves silently deplete for each country, and each epoch where they exhaust is when the price rebalancing occurs IN A SUDDEN SPIKE, affecting other nodes that are not even connected to Hormuz, which is one of the conclusions of the paper. Either directly or indirectly all countries feel the pain: the question is who can stand the game of chicken the longer before intervening
If the sudden spike is so bad, why would a country fail to taper their reserves?
this is an interesting market design question: the point is that tapering would require everyone knowing everyone else's depletion clocks. As they are unknown (sanctioned trade, non-public state figures), the opacity is the game itself (that I called game of chicken in other comments). Surely the main players are trying hard to guess each other's numbers by every mean possible
The suspense is terrible, I hope it lasts. Great work on the project!
Thank you! Much appreciated. On the suspense, we are all riding the same train :$
There are two versions of the model: -The one rendered by default (called Endogenous), with endogenous price that affects the demands according to the price elasticity slider. Reflecting how reactive are the nodes demand wrt price -With fix price (called Fixed): that in the oil market doesn't apply, but it's an interesting baseline to consider oil purely as flow. And as a modeling tool, this allows the model to capture small supply chains that don't have price setting power.
Can you explain the France paradox?
France imports 0 oil directly through Hormuz, but when the Strait closes, all other countries start raising their safety stock which increases oil prices. This makes France's stockouts very expensive mostly due to price (not flows). Which is contagion without direct connection.
Think of the 2008 crisis where companies that had nothing to do with Credit Default Swaps were exposed to the crash due to network effects, potentially crashing the whole economy.
Then, the government intervened by bailing the banks out. Here, it's not really clear if there is even an effective intervention.
Very interesting. Here in India people were very concerned about potential cooking gas shortages (LPG) when the disruptions began which is also a good example of usually-overlooked dependencies on the the Strait
and the interesting thing is that the common factor is that all these crises (oil, financial, gas) spread silently until a node collapses and there is a domino effect over the whole network
One might wonder whether the Late Bronze Age collapse had similar (copper, finance, tin) reasons for going the way it did.
Man those sea people closing the straight of Ur!
Maybe I missed it looking over the paper, or maybe they are implicit, but are you taking into account Saudi Arabia’s East-West Crude Oil Pipeline (Petroline) , I believe it does about ~7m bpd and Habshan-Fujairah (Abu Dhabi Crude Oil Pipeline / ADCOP) about ~1.5m bpd? If not you might be underestimating things, though they do take a bit of a warmup to get into capacity, and can't match completely Hormuz's flow.
This pipeline predates the data but its oil is routed to Bab-el-Mandeb which is in the network. That being said, the numbers are more of a sensible baseline as the actual flows for many countries are unknown/sanctioned.
The biggest missing piece is China. Assuming actual delivered price is not subsidized by Western countries, you need to put in what if China demands that reflect the current price. Chinese in reality don't consume that much oil as what we thot they do from the oil purchases in the past. I assume Chinese just ramp down the purchase even though their consumption is well below that. Plus the hidden supplies from Iran and Russia to China via land route.
Someone shared a video on this above:
https://news.ycombinator.com/item?id=49043797
Another crucial element is land transport. The Gulf countries have developed a fleet of trucks to help offset some of the crude oil passing through the Strait.
Nice that you allowed readers to customize the parameters! I personally thought the demand demand elasticity was too low and I was able to adjust it.
btw this website tracks actual ships passing though (vs not)
click on YTD for the shock of what's coming by the end of this year
100+ per day vs 5-10 per day, you can see the tiny cease-fire and when it ended
* https://en.macromicro.me/charts/94482/imf-strait-of-hormuz-n...
* https://i.imgur.com/fDmbaPa.png
oh and Strategic Oil Reserve is about to bottom out to the point where any lower brings permanent damage, imagine this going on through 2029 because you cannot "bomb your way to peace"
Nice. How does this stand up against backtesting with recent data? Also, i thought China's emergency stockpile is about 1.4b barrels or close 5 months of domestic consumption, and they are building it up atm. In the sim, it shows China's stockpile depleted after 1.2 wks?
Thanks! Two answers (repeated in other comments): UN Comtrade data doesn't include sanctioned oil (Iran), and nobody (except their government) knows China's actual stockpile. The model is more of a sensible baseline/stress testing tool than a prediction, the cool part is that anyone can BTON (bring their own numbers) and rerun their scenarios
OP, please add India as a shock target option if possible. It imports close to 80+% of its crude oil and gas requirements and is highly vulnerable to oil flow shocks.
Thanks, added to list of possible UX improvements
Something seems to be wrong with the simulation: some countries run on reserves, and out of them, even with 100 % delivery.
OP blames "Market elasticity parameters" for that, but they should offer a reasonable reset, or shouldn't they even oversteer towards filling up tanks, not clearing them out of no supply shock is seen?
This is really interesting. Investment firms could incorporate this kind of simulation into their products.
Yes, and the network setting is flexible enough to allow smaller supply chains where nodes don't have price setting power
I don't know if I'm doing something wrong, but if I set Capacity Retained to 100% then no matter what I set the other values to a bunch of countries deplete their reserves.
This feels wrong; but I'm inclined to think I'm missing something.
Fair point. Actually this is both a semantics oversight on my part and also expected behaviour. at 100% retained there's no shock, but the model's countries target consumption plus a large safety buffer, and some can't fill that target even in peacetime, so they draw reserves at baseline, the shock scenarios show the additional damage relative to that baseline
Are emergency stockpiles calculated correctly? China should not be the first to be exposed.
China hides its stockpile numbers, and estimates are only what we can see. After buying loads of sanctioned oil for stockpiles, they are perfectly positioned to take advantage of trumps blunders in the straight and likely will get to set the price of oil if they aren’t already..
Which is the interesting game-theoretic aspect of the whole conflict. China really hasn't revealed their hand
For the importer nodes those are IEA mandates. In the specific China case, the UN Comtrade data doesn't report sanctioned oil (Iran)
This is very interesting, and it shows why the Strait is urgently in need of a back up. I don't know what that would be or what would be feasible, but I've seen a lot of people talk about an underground pipe.
The saudis built a pipeline across their nation, and are exporting over 5million barrels (a large increase).
There is a great bit of coverage on this by "what's going on with shipping" here: https://youtu.be/r0EvQgLcjMw?t=172
It does not look like this data is part of the paper above.
Exporting oil from the west side of Saudi Arabia works until some armed group like the Houthis with drones/missiles places a credible enough threat at another chokepoint that the ships won't go.
The choices are then to find a way to get the Houthis to chill out, or use enough military force to cut off the Iranian support for the houthis, or use military force to be confident you have destroyed the houthis' ship attacking capability.
https://en.wikipedia.org/wiki/Bab-el-Mandeb
https://www.bbc.com/news/articles/cn0n127lpzgo
Fair catch, the data predates the reroute. Although this pipeline is routed to Bab-el-Mandeb which is in the network
But in reality this won’t happen, because China won’t be happy and will force Iran to a deal like last time or they will lose all the parts and intelligence tech they are providing to them.
Exactly, which is what makes the simulation interesting because nobody really knows China's reserves clock.
But with the tool, you can put your guess number and see that the game of chicken also has an expiration date for them
> because China won’t be happy and will force Iran to a deal like last time...
Iran's political leadership is amenable to negotiating but their incumbent military leadership which now calls the shots aren't [0][1].
The current incumbents in the IRGC and Artesh are now vets who were deployed on the frontlines in Syria, Lebanon, Yemen, and Iraq and are deeply anti-Western as a result.
> or they (Iran) will lose all the parts and intelligence tech they (China) are providing to them...
This is why Iran has been leveraging Russia as well [2][3].
Russia is trying to link the Ukraine War with the Iran War ("stop giving Ukraine targeting capabilities and we'll stop giving it to Iran").
Iran's military leadership doesn't trust China because they undermined Iran's position on Hormuz by backing the UAE [4], and because hardliners still harbor negative views of China and Eastern culture as undermining the precepts of the Islamic Revolution [5][6][7] and still calling them "uncultured orientals" (شرق زدۀ بی فرهنگ)
[0] - https://quwa.org/pakistan-defence-news/pakistan-iran-mediati...
[1] - https://quwa.org/podcasts/pulse-check/the-islamabad-talks-ar...
[2] - https://www.reuters.com/world/middle-east/iran-strikes-cia-f...
[3] - https://mecouncil.org/wp-content/uploads/2025/06/IB-10_25-Ir...
[4] - https://www.straitstimes.com/asia/china-maintains-stance-on-...
[5] - http://www.imam-khomeini.ir/fa/c78_117016/%DA%A9%D8%AA%D8%A7...
[6] - https://ensani.ir/fa/article/93161/%D8%B4%D8%B1%D9%82-%D9%88...
[7] - https://psri.ir/?id=a7q4sdl4
> leadership doesn't trust China because they undermined Iran's position on Hormuz by backing the UAE [4]
Would you say that in the broadest possible sense, this is because China cares much more about keeping an unrestricted flow of (not $140-160 a barrel) oil coming from the Persian Gulf, oil/gas exports and outbound flow unrestricted for their own domestic consumption. They think that's much more important, given a choice and the impact of oil NOT flowing to their economies, than supporting the continuation of the IRGC and status-quo leadership in Iran.
Yes.
But the issue is China doesn't have many options to push back against the IRGC's wish for shahadat.
The political and private sector economic leadership in Iran was neutered after Rouhani was not re-appointed by Khamenei, so opposition within the regime is weak and is largely purged.
Supporting opposition against the regime is also obviously a no-go as it would both be a diplomatic bruise for China's image as well as risk a Neutral or worst case Pro-American Iran, as well as send a message to Pakistan, North Korea, Laos, and Cambodia that Chinese commitments are only fair-weather.
Supporting any intervention by neighboring countries would be diplomatically bruising for China's image and risk a Neutral or worst case Pro-American Iran, as well as send a message to Pakistan, North Korea, Laos, and Cambodia that Chinese commitments are still dependent on American power projection.
And the clerical leadership and IRGC (two sides of the same coin - to join the Pasdaran you need to be ideologically vetted by clerical leadership, and a large portion of recruits are products of the religious education system) have complete control over all the organs of Iran's armed forces and it's economy, and hold resentment against both the West and East for being morally and religiously lax as well as capitalist.
Within the neighboring region, China has also been sending extensive signals of "we support you and will engage in full trade with you, and retain full diplomatic relationships, etc, no matter what you're doing to your own people domestically" to the Taliban in Afghanistan. Stuff like offering full accreditation to the Taliban-run embassy in Beijing and issuing visas/support for a whole cadre of Taliban officials.
If China did an about-face on maintaining friendly relations with the IRGC, that would also be a big signal to the Taliban that maybe their "all weather" relationship with China was a bit more precarious than they previously thought it was.
With the recent minor border war between Afghan Taliban and Pakistani forces, closing the major land cargo trade routes of Torkham, Spin Boldak (and flows of cargo) along the AF/PK border, Afghanistan has very recently become much more reliant on import transit trade via Uzbekistan and Tajikistan. Much of that for manufactured goods and technology that Afghanistan can't build domestically (just about everything of any technical sophistication) is ultimately manufactured in China and goes through UZ and TJ.
> China has also been sending extensive signals of "we support you and will engage in full trade with you, and retain full diplomatic relationships, etc, no matter what you're doing to your own people domestically" to the Taliban in Afghanistan. Stuff like offering
China has started disengaging with the Taliban now that Pakistan is fighting a war against them and after the Taliban are sending their leadership to India almost every month [0][1], backing the Taliban's position [2], and the Pakistani Taliban (which has the same leadership as the Afghan Taliban) has continued to attack CPEC [3] and targeting Chinese personnel [4].
> If China did an about-face on maintaining friendly relations with the IRGC, that would also be a big signal to the Taliban that maybe their "all weather" relationship with China was a bit more precarious than they previously thought it was
China snubbed the Taliban by not condemning Pakistan's strikes on Afghanistan [2] and not pressuing Pakistan to allow Afghanistan's ascension in the SCO [5].
And there's a reason the Taliban are sending their wounded for treatment in India and not China [6].
> With the recent minor border war...
The Taliban are treating the war as existential. And they are now diverting Afghan cargo to Indian operated Shahid Beheshti Terminal in Iran [7].
[0] - https://amu.tv/247309/
[1] - https://www.afintl.com/en/202607073529
[2] - https://amu.tv/245784/
[3] - https://www.nytimes.com/2024/07/10/world/asia/pakistan-china...
[4] - https://afghandiaspora.org/2026/06/30/beyond-security-why-ch...
[5] - https://amu.tv/244941/
[6] - https://www.afintl.com/en/202606204287
[7] - https://www.reuters.com/world/india/afghanistan-urges-india-...
> and the Pakistani Taliban (which has the same leadership as the Afghan Taliban) has continued to attack CPEC [3] and targeting Chinese personnel [4].
Is it a fair assumption that a major factor in this in China's long term and continuing military cooperation with Pakistan? Joint fighter/attack jet development programs for air force, etc. It's my understanding that China has very friendly relations with the generals who actually run the Pakistani state, no matter who might be occupying the PM/president role at any given time.
China's on the fence about transferring newer Chinese tech like the J-35 to Pakistan because the F-16 remains the backbone of the PAF [0] and American military personnel remain deployed in Pakistan to maintain the fleet.
Also, the current dictator in charge of Pakistan leans pro-America after the US allegedly helped overthrow Imran Khan [1][2].
And this is what makes it so difficult for China - opposing the IRGC makes it easier for Pakistan, Cambodia, Laos, and others to justify enhancing engagement with the US at the expense of China while supporting the IRGC means dealing with the extended logistical shock while backing an organization that views both Western and Chinese investors negatively and undermining long-term engagement with the GCC.
[0] - https://thediplomat.com/2026/07/why-china-will-not-sell-5th-...
[1] - https://www.dropsitenews.com/p/pakistan-mediator-united-stat...
[2] - https://ia601601.us.archive.org/11/items/cypher-pakistan-i-0...
Can't Iran be selective and only allow Chinese ships through?
The USA could block Chinese ships. Or maybe disable the loading jetties.
I have been hoping China would force this issue. Send an oil tanker through and see if the US has the balls to stop it. Either the US does and everyone gets peeved or the US lets it float away and look incredibly impotent.
China can get what they want, a weakened USA, just by sitting back and doing nothing. There's probably no incentive to get involved more directly.
This works as the same feature reversed. Will think of a way of adding something like this
Ah yes, open war with a superpower.
Why haven’t the USA done that already?
It’s so obvious!
Sometimes I think that's Trump endgame. Destroy world's economy, solve debt with massive dollar de-valuation, and uses its resource advantages to reindustrialize itself.
Of course, that would fuck most of the world population, including the American Poor and The Middle Class.
But I don't think this would weight too much on Trump's conscience.
This is a nice idea. I will build this a feature on the scenarios menu. And it would give an estimate of how much time doing this buys China under different configurations
It has been doing it for some time. Not full flows, but a significant number of ships have passed with a chinese destination.
Probably that was the reason the US also instituted a blockage, but I don't think the US navy would shoot a chinese flagged super tanker.
Why do reserves deplete with 100% of the strait open?
If the strait were to suddenly fully open <now> then reserves in (say) Singapore would continue to deplete until an oil ship or three reaches Singapore, which may take a while.
Also, reserves do not magically refill until their operators decide to pay to refill them, which competes with ordinary non-reserve demand.
How much of the paper was written with AI?
the models, proofs and writing are mine (with some AI assistance for proofreading/formatting). AI was mostly used in the visualization and the rerunning of multiple scenarios of the numerical examples
Good stuff.
Maybe you can make a playback speed option for the simulation/play button? I fail to follow up.
Thank you. Yes, in desktop there is one (that might still be going a little bit too fast), but in mobile it might not be that easy to find. Perhaps I will slow down the speed in mobile by default and change the location (should be in the bottom right corner, the 2 wk/s can be changed to 1 wk/s)
What modelling approach are you using, and where can I learn more about it? Really cool, btw.
Thanks, the modeling is similar math to the financial banking networks paper by Eisenberg and Noe Systemic Risk in Financial Systems (used as a stress tool by regulators after the 2008 financial crisis). My adaptation is combining this with the inventory management part in my article: https://arxiv.org/abs/2607.17491
Very cool. I'll def check this out more later on.
Much appreciated, server seems to be (fingers crossed) going strong so far
It's good
did you model rapid decrease of oil import by China?
it came from the data (UN Comtrade) that notably doesn't include sanctioned oil flows (Iran, etc). On top of that, China's reserve levels are a state secret, yet, the model's framework is BYOD (Bring Your Own Data) which gives the depletion timeline for free. Also, the model is more of a sensible baseline than a prediction
I really do appreciate the effort but the data doesn’t reflect current conditions, and it’s falsified given it’s been virtually closed for months, certainly the same as 30% throughout that is the models default parameter, and we didn’t see ex. prices at $150/barrel 3 weeks in, or a host of other things it predicts.
EDIT: I’m not saying it doesn’t matter the strait is closed - it does! - it’s just, what are we to do with a model that generically tells us oil barrel prices is at $150 3 weeks in, when we are months in?
That's kind of the point because it hasn't been totally 100% closed. There's both sanctioned and unsanctioned oil flowing, which is the point of the scenarios in the simulation. Also it's more of a simulation/stress tool at a sustained closure than a prediction one
The thing I've heard now in several places is that China is drawing down its massive secret stockpile (its _greatly_ reduced imports) which counterbalances a huge amount of this
I do generally agree that the theoretical model being _this_ misaligned with the reality in front of us feels a bit hard to use
That's actually the intended behavior: while reserves are silently being spend is when the crisis is brewing. Although the main point is that nobody knows China's reserves, but this allows to calibrates scenarios based on what you believe is plausible