On today’s episode, we are pulling back the curtain on a massive media narrative circulating ahead of the upcoming U.S. midterm elections. You’ve probably seen the headlines over the last few weeks: political pundits debating whether injecting a few shipments of Russian diesel or releasing incremental strategic petroleum reserves into the U.S. domestic market will cool down inflation at the pump and save politicians at the ballot box on November 3rd.
Here is today’s reality check: injecting Russian barrels of diesel into the U.S. will have essentially zero impact on the global supply shortfall, and zero impact on U.S. voter sentiment. The first thing to remember is that an oil tanker moves about the speed of a bicycle. A trip from the middle east to anywhere along the pacific coast of Asia like say Yokohama in Japan takes about 3 weeks. So it takes even longer for a barrel of oil to go through the refining process at the destination and then is transported to where it is actually consumed.
You see, the political narrative completely ignores how international maritime commerce actually works. The decision to ship crude oil, diesel, and liquid commodities out of the Middle East isn't made by executive orders in the White House. It is made by private shipping companies, vessel owners, and marine insurance underwriters—and right now, those players are staring down an unprecedented crisis in global shipping lanes.
Let’s look at what is really happening in the world of shipping.
Over the past month, Iran has dramatically escalated attacks against commercial shipping in the Strait of Hormuz. We aren't just talking about isolated minor incidents; we are seeing a structural breakdown in maritime security. On October 11th alone, six commercial vessels were struck in a single day. On October 13th, four more vessels were hit. There were 24 separate attacks in just the first two weeks of October.
The cost of chartering a ship has increased anywhere from 10x to 17x the pre-war levels. At some point, shippers will refuse, irrespective of the danger pay.
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