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anigbrowl 9 hours ago [-]
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.
scheme271 7 hours ago [-]
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.
3eb7988a1663 5 hours ago [-]
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.
anigbrowl 5 hours ago [-]
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
nxobject 2 hours ago [-]
This is incredibly superficial, but that’s the most thoughtfully laid out and typeset official report I’ve read in ages.
anigbrowl 7 hours ago [-]
Should have said 'extremely uneconomical to switch. Sorry for the confusion.
kccqzy 9 hours ago [-]
> would be sometime around October/November, right in the middle of harvest season
Right in the middle of election season.
actionfromafar 25 minutes ago [-]
Right in the middle of "election" season. FTFY.
eliotho 8 hours ago [-]
This is an interesting insight, as usable reserves < reported reserves the clocks in the model are optimistic
veqq 9 hours ago [-]
> virtually all configured for sour crude
They have retooled them in the past 40 years for the actually accessible inputs and desired distillates.
wombatpm 7 hours ago [-]
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.
pbkompasz 1 hours ago [-]
I can't believe Joe Biden did that!
zzzeek 9 hours ago [-]
Well that's also election time so the timing could not be better
brokencipher 8 hours ago [-]
Isn't this the reason why they specifically targeted Venezuela, to get their oil?
jml7c5 5 hours ago [-]
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.)
petcat 8 hours ago [-]
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.
jsiepkes 5 hours ago [-]
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.
SJC_Hacker 3 hours ago [-]
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
ColdStream 3 hours ago [-]
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.
cheschire 8 hours ago [-]
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.
anigbrowl 7 hours ago [-]
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.
cheschire 40 minutes ago [-]
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.
neom 8 hours ago [-]
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
sebmellen 8 hours ago [-]
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.
rootsudo 6 hours ago [-]
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.
conductr 6 hours ago [-]
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!?
a3w 1 hours ago [-]
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?
HarHarVeryFunny 2 days ago [-]
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.
maxerickson 9 hours ago [-]
It's making crude predictions.
largbae 9 hours ago [-]
Ba dum bum... Tssss
eliotho 2 days ago [-]
>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)
bragr 11 hours ago [-]
>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.
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.
toomuchtodo 10 hours ago [-]
> 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.
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
Dylan16807 7 hours ago [-]
If the sudden spike is so bad, why would a country fail to taper their reserves?
eliotho 6 hours ago [-]
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
toomuchtodo 10 hours ago [-]
The suspense is terrible, I hope it lasts. Great work on the project!
eliotho 10 hours ago [-]
Thank you! Much appreciated. On the suspense, we are all riding the same train :$
cout 58 minutes ago [-]
Can you explain the France paradox?
Haven880 6 hours ago [-]
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.
kccqzy 9 hours ago [-]
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.
bagels 4 hours ago [-]
Why do reserves deplete with 100% of the strait open?
defrost 4 hours ago [-]
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.
amluto 2 hours ago [-]
Also, reserves do not magically refill until their operators decide to pay to refill them, which competes with ordinary non-reserve demand.
firasd 12 hours ago [-]
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
eliotho 12 hours ago [-]
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
tolciho 7 hours ago [-]
One might wonder whether the Late Bronze Age collapse had similar (copper, finance, tin) reasons for going the way it did.
doctorwho42 6 hours ago [-]
Man those sea people closing the straight of Ur!
wtmt 6 hours ago [-]
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.
Normal_gaussian 11 hours ago [-]
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.
eliotho 11 hours ago [-]
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
kingjimmy 12 hours ago [-]
Are emergency stockpiles calculated correctly? China should not be the first to be exposed.
repeekad 12 hours ago [-]
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..
eliotho 12 hours ago [-]
Which is the interesting game-theoretic aspect of the whole conflict. China really hasn't revealed their hand
eliotho 12 hours ago [-]
For the importer nodes those are IEA mandates. In the specific China case, the UN Comtrade data doesn't report sanctioned oil (Iran)
entropie 11 hours ago [-]
Good stuff.
Maybe you can make a playback speed option for the simulation/play button? I fail to follow up.
eliotho 10 hours ago [-]
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)
sebzuddas 12 hours ago [-]
What modelling approach are you using, and where can I learn more about it? Really cool, btw.
eliotho 12 hours ago [-]
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
runlaszlorun 11 hours ago [-]
Very cool. I'll def check this out more later on.
eliotho 11 hours ago [-]
Much appreciated, server seems to be (fingers crossed) going strong so far
9 hours ago [-]
tamimio 12 hours ago [-]
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.
eliotho 12 hours ago [-]
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
upcoming-sesame 11 hours ago [-]
Can't Iran be selective and only allow Chinese ships through?
chairmansteve 11 hours ago [-]
The USA could block Chinese ships. Or maybe disable the loading jetties.
3eb7988a1663 5 hours ago [-]
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.
kadoban 5 hours ago [-]
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.
eliotho 11 hours ago [-]
This works as the same feature reversed. Will think of a way of adding something like this
DANmode 9 hours ago [-]
Ah yes, open war with a superpower.
Why haven’t the USA done that already?
It’s so obvious!
eliotho 11 hours ago [-]
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
alephnerd 11 hours ago [-]
> 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.
alephnerd 8 hours ago [-]
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.
walrus01 7 hours ago [-]
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.
alephnerd 7 hours ago [-]
> 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.
alephnerd 7 hours ago [-]
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.
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.
zer00eyz 9 hours ago [-]
The saudis built a pipeline across their nation, and are exporting over 5million barrels (a large increase).
It does not look like this data is part of the paper above.
walrus01 8 hours ago [-]
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.
Fair catch, the data predates the reroute. Although this pipeline is routed to Bab-el-Mandeb which is in the network
tonyx1998 29 minutes ago [-]
[flagged]
13 hours ago [-]
2 days ago [-]
refulgentis 12 hours ago [-]
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?
eliotho 12 hours ago [-]
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
rtpg 9 hours ago [-]
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
eliotho 8 hours ago [-]
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
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.
Right in the middle of election season.
They have retooled them in the past 40 years for the actually accessible inputs and desired distillates.
USA can produce all the oil/energy it needs for itself. Everything else is about controlling the energy supply to adversaries.
I guess I’ll wait and see if someone provides citations because this feels like a nothing burger.
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 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.
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.
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?
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.
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)
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-...
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)
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.
This feels wrong; but I'm inclined to think I'm missing something.
Maybe you can make a playback speed option for the simulation/play button? I fail to follow up.
But with the tool, you can put your guess number and see that the game of chicken also has an expiration date for them
Why haven’t the USA done that already?
It’s so obvious!
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
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.
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 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-...
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.
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...
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.
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
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?
I do generally agree that the theoretical model being _this_ misaligned with the reality in front of us feels a bit hard to use