The ongoing conflict between the U.S. and Iran and the near-total closure of the Strait of Hormuz isn’t just stranding significant volumes of refined products (especially diesel, jet fuel and naphtha) in the Persian Gulf. It’s also resulting in potentially extensive and long-lasting damage to some refineries there and trapping crude oil that Asian refiners depend on to supply their own operations. The net effect is the largest disruption to the global refining sector in decades (with the exception of the demand-induced COVID lockdowns) and — depending on how long the Iran war continues — maybe ever. In today’s RBN blog, we look at the multiple impacts of the conflict on global refined product markets.
This is the second blog in our series about the effects of the Persian Gulf conflict that has been flaring since February 28. In Part 1, we focused on the region’s NGL fractionators and NGL exports. Before the war started a few weeks ago, the Gulf countries (not counting Iran) had more than 2.7 MMb/d of fractionation capacity, about two-thirds of it in eastern Saudi Arabia and the rest divided among Qatar, Kuwait and the United Arab Emirates (UAE). As a group, they had been exporting an average of about 1.7 MMb/d of NGLs, including about 1.5 MMb/d of LPG (mostly propane, some butanes) and ~200 Mb/d of natural gasoline and pentanes-plus. (We noted that virtually all the region’s ethane is either rejected into natural gas or consumed domestically at petrochemical plants.)
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Part 1 also explained that the vast majority of the Persian Gulf’s exported LPG ended up in Asia — mostly in India (more than 600 Mb/d) and China (more than 500 Mb/d) — and that, with the nearly complete stoppage in imports from the Gulf, India’s LPG supply situation is particularly dire. We added, finally, that there is little U.S. suppliers can do to help in the near term due to limited Gulf Coast LPG export capacity and the fact that it takes at least five to six weeks to transport LPG from Texas to India.
Today, we shift our focus to Persian Gulf refineries and their exports of refined products, which have been affected in the same way as exports of LPG and in many ways are more critical to global product markets.
As shown in Figure 1 below, the combined capacity of non-Iranian refineries in Persian Gulf countries totals about 7 MMb/d, including ~3.3 MMb/d in Saudi Arabia (dark-blue refinery icons), ~1.4 MMb/d in Kuwait (white icons), ~1.1 MMb/d in the UAE (green icons), 429 Mb/d in Qatar (pink icons), 380 Mb/d in Bahrain (purple icon), and 280 Mb/d in Iraq (gray icon). Importantly, Saudi Arabia’s capacity is split, with ~1.4 MMb/d on or near the Persian Gulf — and therefore directly affected by the situation in the Strait of Hormuz (orange circle) — and ~1.9 MMb/d along the Red Sea. (As we’ll get to, even the kingdom’s Red Sea-oriented refineries have been impacted by Iran’s retaliation to U.S. and Israeli attacks.)
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About the song
On “Stuck in a Moment You Can't Get Out Of,” U2 wrote the music; the lyrics were written by Bono and The Edge. It appears as the second song on U2’s 10th studio album, All That You Can’t Leave Behind. Bono wrote the lyrics about the 1997 suicide of his friend Michael Hutchence, who was the lead singer for the band INXS. Three different videos were made for the song. The single was released in January 2011 and went to #1 on the Billboard Adult Alternative Airplay chart and #52 on the Billboard Hot 100 Singles chart. Personnel on the record were: Bono (lead vocals, synthesizers), The Edge (guitar, piano, backing vocals), Adam Clayton (bass), Larry Mullen Jr. (drums), Brian Eno (synthesizers), Daniel Lanois (guitar), and Paul Barrett (brass).
All That You Can't Leave Behind was recorded in 2000 at HQ, Windmill Lane, Westland, and Totally Wired in Dublin, and Riviera Studios in the South of France. Produced by Daniel Lanois and Brian Eno, the album was released in October 2000 and went to #3 on the Billboard 200 Albums chart. It has been certified 4X Platinum by the Recording Industry Association of America. Four singles were released from the LP.
U2 is an Irish rock band formed in Dublin in 1976 by singer Bono, guitarist The Edge, bassist Adam Clayton, and drummer Larry Mullen Jr. They met while attending school at Mount Temple Comprehensive School in Dublin. They played their first gig in Dublin in April 1977 and signed with CBS Ireland in August 1979. U2 has released 15 studio albums, two live albums, three compilation albums, nine EPs, and 85 singles and sold more than 175 million records worldwide. The band has won an American Music Award, 10 Billboard Music Awards, eight Brit Awards, two Golden Globe Awards, 20 Grammy Awards, four Ivor Novello Awards, and six MTV Video Music Awards, and are members of the Rock and Roll Hall of Fame. They have received Kennedy Center Honors. They continue to record and tour, and released their latest EP, Days of Ash, in February.
"About the Song" -- written by Mickey McMahan , RBN Director of Musicology
