Marginal Thinking

Here mostly for the finance and econ discussions; retweets are not endorsements.

[Marginal Thinking @marginthinking]

@UrbanKaoboy @hkuppy Good fanfic. One potential problem, the Iraqi government doesn’t actually control the militias that are allied with Iran in Iraq.

Similar to how the Lebanese government doesn’t control Hezbollah.

Perhaps the goal is to start civil wars, but unclear how that helps US objectives.

[Marginal Thinking @marginthinking]

@matthew_petti I mean, it is Axios. This could just be US officials trying to print it into existence and Iran hasn’t agreed to anything.

Wouldn’t be the first time

[Marginal Thinking @marginthinking]

@DanielLDavis1 And we only do can do even this under the cover of a quasi-ceasefire, not an outright war.

[Marginal Thinking @marginthinking]

@BrettErickson28 @citrinowicz Also notable that we didn’t even attempt the escort game pre-April ceasefire—an indication that if we are in open conflict with Iran, even the USG knows the chauffeur option is entirely off the table

[Marginal Thinking @marginthinking]

@m4h007 Tanker flows don’t reverse on a dime; US inventories will continue to draw for the next few weeks regardless and Iran got its own oil out.

Really didn’t change their relative position much. If this is a false dawn, will also make tanker companies more hesitant to enter next time

[Marginal Thinking @marginthinking]

@MattG_PE The Caribbean drug boats are defenseless; the Iranians are not.

Even if we could take out the boats, we can’t take out all the shore batteries or inland launching capabilities. If there was a viable military option, you can bet we would have tried that before the MoU.

[Marginal Thinking @marginthinking]

@staunovo US pretended Iran’s initial retaliations against bases in the war did limited damage only for reports to come out weeks later that many had been destroyed to the point we might not bother rebuilding them.

Not clear we should take US claims on this seriously at all.

[Marginal Thinking @marginthinking]

@BrettErickson28 Same as the initial ceasefire. Having lost the outright military conflict, the US is trying to get back to the pre-war status quo by reinterpreting the agreement and hoping for Iranian restraint (putting many innocent people at risk in the process).

This is embarrassing.

[Marginal Thinking @marginthinking]

@LVision_Trading @aeberman12 Given that Iran is over-represented here and (I believe) their pre-war export capacity was something like 2mbpd, the real effect of this ballast capacity on future flows would be lower I think.

11mbpd would be true if all this capacity was available to any player in PG right?

[Marginal Thinking @marginthinking]

@alon_mizrahi This pretty much doesn’t mean anything on the ground though since the Lebanese military isn’t involved in the fighting anyway, no?

[Marginal Thinking @marginthinking]

@LVision_Trading @Normal_2610 Do you think the fact that Iraq is physically much deeper in PG contributes to the hesitancy for the simple fact that any ship would have to be inside perhaps for an extra day vs. the UAE shuttle runs?

[Marginal Thinking @marginthinking]

@LVision_Trading @Normal_2610 I saw that Iraq headline too, which confused me. If anything, I thought they would be the most desperate given very limited bypasses and onshore storage

Did you read that as just a liquidity issue, that they can’t foot the bill for expensive tankers upfront unless oil is higher?

[Marginal Thinking @marginthinking]

@derry_lamb @Pawlicker88 As many have said, we can all see the wall we’re heading towards. But instead of braking before we get there, we’ve decided to either hit it at full speed or hope it disappears by the time we arrive.

[Marginal Thinking @marginthinking]

@LVision_Trading @Normal_2610 I imagine gulf countries like Kuwait, Bahrain or Iraq that have exported almost nothing and have full onshore storage, might be willing to foot the bill.

Yes prices are low, but it also shortens the time to production restart for them post crisis so might be worth it.

[Marginal Thinking @marginthinking]

Two things can be true.

1) Vessel traffic in Hormuz is much higher than it has been during the war.

2) It remains a small fraction (1/4 to 1/3) of the pre-war normal and, implicitly, if things level off here, the oil deficit will improve but will not be resolved.

[Windward @WindwardAI]

Traffic in the Strait of Hormuz is picking up to 35-40 vessels a day, a threefold jump from recent lows, but still just a fraction of pre-conflict levels (~130+).

Windward CEO Ami Daniel (@AmiDaniel1) joined @BBCNews to discuss the fragile ceasefire posture and whether global shipping is truly ready to rebound.

[Marginal Thinking @marginthinking]

@RusOilGasExpert That is fair. I guess the other counter to the pipeline story, for countries besides UAE & Saudi that can bypass SoH directly, is that places like Iraq or Bahrain, would just be trading their dependence on Iran for dependence on another country in the region (KSA, Jordan, etc)

[Marginal Thinking @marginthinking]

@fr_cdn Yeah, I’m familiar with the cavern issue. I guess I assume they might have accounted for that when they decided the release amount (esp. since it’s an oddly specific number).

I think the way we’ll see it play out is reduced draw rate below 300M but not all the way to zero.

[HFI Research @HFI_Research]

I'm going to start publishing these daily so you can recognize the pattern that will become obvious over the next few days/weeks.