4 ms·

TBF, Iran is saying an exorbitant price right now, but in reality they will need to balance their price with demand to bring in the maximum possible revenue. Th

by pokstad 6mo ago

TBF, Iran is saying an exorbitant price right now, but in reality they will need to balance their price with demand to bring in the maximum possible revenue. The toll may work out in the long run.

ivell 6mo ago
I think the price can only increase. There is not much competition for Hormuz. If it is exorbitant now, it can only be more expensive later on. The demand for oil is not going to go down drastically for quite a few years. If there was another route, the oil would have found the way.
- thatguy0900 6mo ago
  In time pipelines can be made, no? 2 million per ship already gives a lot of room for exorbitant infrastructure projects to break even in the medium term
  - 1attice 6mo ago
    Pipelines take years, even decades, at least here in Canada. You'd be surprised at how many billions of dollars and person-years of labour you need to get the thing turned on. Five years at 2mil per ship will make Iran rich.
- pas 6mo ago
  pipelines, railway, etc. had the US had any real plan to empower the Gulf states against Iran there would already be backup routes
  - Tostino 6mo ago
    Pipelines are incredibly vulnerable to being taken offline by an inexpensive long-range strike. You can't just put them in the middle of a war zone, especially when we (the US) have targeted that same type of infrastructure first.
    - pas 6mo ago
      sure, as the oil wells and the pumping stations and everything not underground, but right now there's not even an option to try. (also loss of a pipe section compared to the loss of a tanker is much better economically, easy to replace, not to mention that there's no loss of life, so ultimately it can bear more risk even if there's an active conflict.)
    - citrin_ru 6mo ago
      Pipelines are usually buried under the ground. Pumping statins could be protected by short range SAM systems. An undegraund pipeline can be destroyed by a heavy glide bomd (not an option for Iran) but should be relatively safe from shahed drones. Iran's ballistic rockets are not precise enough to hit a pipeline wihtout spending multiple rockets (in which case it would be cheaper to repair the pipeline than to produce all these rockets).
  - mrguyorama 6mo ago
    None of those have near the capacity to replace what was flowing through the Straight and will not replace the Straight for a long time. That's the whole problem. If there were viable alternatives to the Straight, the US would have attacked Iran decades ago. Every US administration has had people in the wings desperate to "Fix" the Iran situation, but only Trump was stupid enough to try it. Meanwhile, the actual production is meaningfully damaged, and for at least a couple years. This is an energy crisis.
- rhubarbtree 6mo ago
  There are already pipelines in the region.
tantalor 6mo ago
The problem is the fee has nothing material to do with the straight itself. There are no maintenance costs for the open sea. Coordination is also not a big concern, you can tell because previously ships were able to pass without incident and coordinate among themselves. Actually, this is extortion. Meaning that it is done under threat of violence. Worse yet, the US military may end up enforcing this, and collecting on a share of the fees. It won't take very long for Iran to recoup the damages. After that, why keep the fees going? Because it's free money, that's why. The strange this is, if the US and Iran can partner on this, that would lead to a weird peace, because they both stand to benefit, meanwhile countries that depend on the straight (Korea, Japan, etc.) have to pay the bill.
- insane_dreamer 6mo ago
  > extortion not really; you would have to pay to run an oil pipeline through another country's territory even if that country wasn't bearing the cost of maintaining the oil pipeline the strait isn't international waters -- it's part of Iran and Oman's territorial waters
  - citrin_ru 6mo ago
    For land pipelines thiere no eqauvalent of the United Nations Convention on the Law of the Sea according to which both Oman and Iran should allow free passage of ships. And "normal" path lies on Oman's waters which dones't stop Iran from attacking ships there. The strait toll is a pure racketeering.
    - surgical_fire 6mo ago
      What does the UN convention says about killing civilians and destroying civilian infrastructure? I think any such pretenses were abandoned right off the start.
      - ithkuil 6mo ago
        You make it sound that there are only two sides in this story. Spain, Argentina, Kenya, Indonesia, Kuwait and countless other countries haven't bombed any civilian infrastructure either and yet they will be affected by the aggressive posture around international maritime traffic. Are you expecting that Iran will not apply the fee to ships that sell oil Malesia or South Africa?
ux266478 6mo ago
Very Large Crude Carriers carry ~2 million barrels of oil. Ultra Large Crude Carriers double that. If oil went down to $50/Bbl, that $2 million fee amounts to a ~2% tax per ship, given their cargo capacity. It's not particularly exorbitant, especially given that the entire reason they proposed this toll was to fund their rebuilding efforts (Americans and Israelis did a lot of damage that's been under-reported and ignored) This conflict has been an interesting case of watching mass hysteria interact with propaganda in the newform, rapid pace of media that exists in the internet age. The amount of wild conjecture, speculation, misinformation is the most extreme I've ever seen it, eclipsing even the 6 months of nonsense that was spurred on by the Russian invasion of Ukraine.
- pokstad 6mo ago
  If that’s right, 2% indeed doesn’t sound bad. Especially since it’s supposed to be split with Oman.
- gwern 6mo ago
  The 2% is the camel's nose. They are establishing that they tax the Strait traffic and there is no longer freedom of navigation. Once it is a done deal, the deal will be altered...
cjbgkagh 6mo ago
AFAIK they only let two ships pass before closing it again due to Israeli strikes on Lebanon, so in effect the strait is still closed and likely to remain so.
- bamboozled 6mo ago
  I read Lebanon wasn’t part of the deal, so…
  - DANmode 6mo ago
    Where did you read this? Who were they quoting?

by pokstad 6mo ago

TBF, Iran is saying an exorbitant price right now, but in reality they will need to balance their price with demand to bring in the maximum possible revenue. The toll may work out in the long run.

ivell 6mo ago

I think the price can only increase. There is not much competition for Hormuz. If it is exorbitant now, it can only be more expensive later on. The demand for oil is not going to go down drastically for quite a few years. If there was another route, the oil would have found the way.

thatguy0900 6mo ago
In time pipelines can be made, no? 2 million per ship already gives a lot of room for exorbitant infrastructure projects to break even in the medium term
- 1attice 6mo ago
  Pipelines take years, even decades, at least here in Canada. You'd be surprised at how many billions of dollars and person-years of labour you need to get the thing turned on. Five years at 2mil per ship will make Iran rich.
pas 6mo ago
pipelines, railway, etc. had the US had any real plan to empower the Gulf states against Iran there would already be backup routes
- Tostino 6mo ago
  Pipelines are incredibly vulnerable to being taken offline by an inexpensive long-range strike. You can't just put them in the middle of a war zone, especially when we (the US) have targeted that same type of infrastructure first.
  - pas 6mo ago
    sure, as the oil wells and the pumping stations and everything not underground, but right now there's not even an option to try. (also loss of a pipe section compared to the loss of a tanker is much better economically, easy to replace, not to mention that there's no loss of life, so ultimately it can bear more risk even if there's an active conflict.)
  - citrin_ru 6mo ago
    Pipelines are usually buried under the ground. Pumping statins could be protected by short range SAM systems. An undegraund pipeline can be destroyed by a heavy glide bomd (not an option for Iran) but should be relatively safe from shahed drones. Iran's ballistic rockets are not precise enough to hit a pipeline wihtout spending multiple rockets (in which case it would be cheaper to repair the pipeline than to produce all these rockets).
- mrguyorama 6mo ago
  None of those have near the capacity to replace what was flowing through the Straight and will not replace the Straight for a long time. That's the whole problem. If there were viable alternatives to the Straight, the US would have attacked Iran decades ago. Every US administration has had people in the wings desperate to "Fix" the Iran situation, but only Trump was stupid enough to try it. Meanwhile, the actual production is meaningfully damaged, and for at least a couple years. This is an energy crisis.
rhubarbtree 6mo ago
There are already pipelines in the region.

tantalor 6mo ago

The problem is the fee has nothing material to do with the straight itself. There are no maintenance costs for the open sea. Coordination is also not a big concern, you can tell because previously ships were able to pass without incident and coordinate among themselves. Actually, this is extortion. Meaning that it is done under threat of violence. Worse yet, the US military may end up enforcing this, and collecting on a share of the fees. It won't take very long for Iran to recoup the damages. After that, why keep the fees going? Because it's free money, that's why. The strange this is, if the US and Iran can partner on this, that would lead to a weird peace, because they both stand to benefit, meanwhile countries that depend on the straight (Korea, Japan, etc.) have to pay the bill.

insane_dreamer 6mo ago
> extortion not really; you would have to pay to run an oil pipeline through another country's territory even if that country wasn't bearing the cost of maintaining the oil pipeline the strait isn't international waters -- it's part of Iran and Oman's territorial waters
- citrin_ru 6mo ago
  For land pipelines thiere no eqauvalent of the United Nations Convention on the Law of the Sea according to which both Oman and Iran should allow free passage of ships. And "normal" path lies on Oman's waters which dones't stop Iran from attacking ships there. The strait toll is a pure racketeering.
  - surgical_fire 6mo ago
    What does the UN convention says about killing civilians and destroying civilian infrastructure? I think any such pretenses were abandoned right off the start.
    - ithkuil 6mo ago
      You make it sound that there are only two sides in this story. Spain, Argentina, Kenya, Indonesia, Kuwait and countless other countries haven't bombed any civilian infrastructure either and yet they will be affected by the aggressive posture around international maritime traffic. Are you expecting that Iran will not apply the fee to ships that sell oil Malesia or South Africa?

ux266478 6mo ago

Very Large Crude Carriers carry ~2 million barrels of oil. Ultra Large Crude Carriers double that. If oil went down to $50/Bbl, that $2 million fee amounts to a ~2% tax per ship, given their cargo capacity. It's not particularly exorbitant, especially given that the entire reason they proposed this toll was to fund their rebuilding efforts (Americans and Israelis did a lot of damage that's been under-reported and ignored) This conflict has been an interesting case of watching mass hysteria interact with propaganda in the newform, rapid pace of media that exists in the internet age. The amount of wild conjecture, speculation, misinformation is the most extreme I've ever seen it, eclipsing even the 6 months of nonsense that was spurred on by the Russian invasion of Ukraine.

pokstad 6mo ago
If that’s right, 2% indeed doesn’t sound bad. Especially since it’s supposed to be split with Oman.
gwern 6mo ago
The 2% is the camel's nose. They are establishing that they tax the Strait traffic and there is no longer freedom of navigation. Once it is a done deal, the deal will be altered...

cjbgkagh 6mo ago

AFAIK they only let two ships pass before closing it again due to Israeli strikes on Lebanon, so in effect the strait is still closed and likely to remain so.

bamboozled 6mo ago
I read Lebanon wasn’t part of the deal, so…
- DANmode 6mo ago
  Where did you read this? Who were they quoting?