7 ms·
Hormuz crisis side effect: a sharp rise in container shipping rates
- jmyeet 5mo agoThe funny thing is that we don't need to speculate about many of the effects of this because it's already happened but nobody really paid attention to it. I am talking about the Trump 2020 OPEC deal. First, some context. OPEC/OPEC+ generally set their production to meet demand and to keep oil prices stable. That means they aim for a floor and ceiling on oil prices. Every 3 months they meet and try and anticipate demand. Produce too much and the price is too low. This hurts revenue. Produce not enough and it creates political instabilities, both locally and abroad. It would in particular hurt security guarantees with the US that go back to FDR and King Faisal making an oil-for-security deal in 1945. Now, that doens't mean OPEC members can't and don't cheat. They can and do. But it is generally successful [1]. In January-February 2020 we had the start of the pandemic. A lot of people weren't paying attention or thought it could be contained. That was over by March 2020 and much of the world went into lockdown. A lot of travel just stopped. This had an immediate effect on the oil market. Nobody was buying. Nobody had places to store excess oil. Russia and Saudi Arabia got into an oil price war. And the futures price briefly went negative [2]. This technically was an extreme contango market [3]. So what did the Trump administration do? Well, in my estimation, they panicked. They feared this would be devastating to US oil producers. So then-president Trump went to MBS and cajoled him into getting OPEC to massively cut oil production [4][5]. How much? Initially by 9.7 million barrels per day and then going down over the next 2 years to 6.3 million. That's roughly 10% of global crude oil output. When I say "panicked", because of the OPEC meetings every 3 months, this would've happened anyway. OPEC would've cut production. The market would've stabilized. Instead, Trump locked OPEC into a 2 year cut and essentially gave them permission to drive up oil prices. And that's exactly what happened. This deal maps pretty much exactly to the pandemic inflation spike. And nobody talks about it. Republicans were keen to blame Biden. Democrats chose to blame "greedy" oil companies even though no amount of US production could replace what OPEC had cut. Biden even went to Riyadh to beg MBS to increase production and he refused [6]. And nobody talks about any of it. That was 10%. The Hormuz closure is 15-20% and also impacts natural gas, helium, fertilizer and a bunch of other things not impacted by the OPEC deal. Oil is being kept at a futures price of ~$100/barrel by record withdrawals from strategic reserves. By early July, those strategic reserves will be empty and there'll be no way to inject oil back into the market other than reopening the Strait. And that will lag weeks because oil container ships move as fast as bicycles. So think back to the pandemic. Shipping containers 6x'ed. Gas prices went way up. It impacted jet fuel and sea freight. All of that is coming in the next month or two and there's honestly little we can do about it now. If the Strait reopened today, these second and third order effects are already baked in. This is now a structural repricing event and we're going to see crude oil and gas prices near current levels probably for years. Oh and oil CEOs are starting to warn about the coming energy shock [7][8] so buckle up. [1]: https://www.macrotrends.net/1369/crude-oil-price-history-chart https://www.macrotrends.net/1369/crude-oil-price-history-cha... [2]: https://www.congress.gov/crs_external_products/IN/PDF/IN11354/IN11354.1.pdf https://www.congress.gov/crs_external_products/IN/PDF/IN1135... [3]: https://www.investopedia.com/terms/c/contango.asp https://www.investopedia.com/terms/c/contango.asp [4]: https://www.reuters.com/article/economy/special-report-trump-told-saudi-cut-oil-supply-or-lose-us-military-support--idUSKBN22C1V3/ https://www.reuters.com/article/economy/special-report-trump... [5]: https://www.reuters.com/article/world/trump-touts-great-saudi-russia-oil-deal-to-halt-price-rout-but-details-unclea-idUSKBN21L0KH/ https://www.reuters.com/article/world/trump-touts-great-saud... [6]: https://www.congress.gov/117/meeting/house/114185/documents/HHRG-117-GO00-20211028-SD005.pdf https://www.congress.gov/117/meeting/house/114185/documents/... [7]: https://www.thestreet.com/investing/stocks/chevron-ceo-drops-a-stark-warning-on-rising-oil-price-pressure-in-june-and-july https://www.thestreet.com/investing/stocks/chevron-ceo-drops... [8]: https://finance.yahoo.com/sectors/energy/articles/exxon-warns-oil-inventories-near-132743623.html https://finance.yahoo.com/sectors/energy/articles/exxon-warn...
- mullingitover 5mo ago> And that will lag weeks because oil container ships move as fast as bicycles. IIRC there’s also major long-term supply destruction happening, because wells have to be capped around the Persian Gulf since the tanks are full.
- 3eb7988a1663 5mo agoResuming production is also going to take years. Every bit of oil storage inside the Strait is at maximum capacity. All of the wells have had to stop producing because there is nowhere for the oil to go. When wells stop, it can take a long time to ramp up the production to previous levels -assuming it can ever again resume its prior peak output. Additionally, several key bits of infrastructure (trains, refineries) have been damaged and cannot be easily repaired.
- reducesuffering 5mo ago> By early July, those strategic reserves will be empty The US SPR is at 365m barrels and has a max withdrawal rate of 4m bpd. Currently they’re withdrawing 9m/week. There is 0 chance reserves are gone by July, just incredibly incorrect.
- mooreds 5mo agoMan, the older I get, the more I think that second and third and fourth order effects are way more important than first order effects.
- deleted 5mo ago[deleted]
- metalman 5mo agoand therefor you will not be surprised to find out that there has been a very recent dramatic decline in the asking price for empty containers in areas that are primarily devoted to imports, as the empty can is not worth the cost to ship it back.
- throwaway85825 5mo agoIn this case it's because of the time it takes to load the empties because its more profitable to use the time sailing. Some ports have rules now forcing them to take back empties so the yards don't fill up.
- metalman 5mo agowhich then leads to negative values for the cans, and makes it profitable for some trucking outfits to run "tiltload" container trucks, that can autonomously off load an empty can ,somewhere convienient or other wierdness where filling a can with an otherwise unprofitable comodity ,like hay, then drives a whole industry driven by water cost and the return value of cans, or scrap metal, and who knows what else, "half cut" cars, etc.
- namibj 5mo agoDropping containers at the consumer end isn't that bad, at least when they're empty they're not that hard to move back on a truck and there are plenty of uses above scrap value for a container in seaworthy condition. It's actually strange that we don't seem to have any system for just dropping containers at the destination until the contents have been processed, instead of the current system that essentially mandates unloading the container rapidly as soon as it shows up because an entire truck+driver is waiting for the unloading to complete. For palletized loads it's easy to unload them into temporary space in the building they're delivered to, but not everything is palletized.
- wrefw45g54g45 5mo ago[flagged]
- robinsoncrusue 5mo agoTired of winning, can't take it anymore.
- shevy-java 5mo agoTrump flip-flops numerous times per day. I am beginning to think that "The Art of the Deal" was also always fake - he is unable to make a deal. Everyone sees this now.
- CamperBob2 5mo agoOf course it was fake. It was ghostwritten (again, of course it was), and the ghostwriter is wracked with remorse. [1] The idea that a chump who bankrupted a casino could outmaneuver the country that invented the term "checkmate" was always profoundly stupid... so of course, Trump's supporters lapped it up like antifreeze. 1: https://www.cbsnews.com/news/tony-schwartz-trumps-ghostwriter-says-writing-the-art-of-the-deal-is-the-greatest-regret-of-his-life/ https://www.cbsnews.com/news/tony-schwartz-trumps-ghostwrite...
- galaxyLogic 5mo agoIt was always the Art of the BS, part of which is always to try to hide the fact that it is BS. But people fall for it and his minions often at least initially benefit from the same BS. Just because somebody tells us they are not lying does not mean they are not. But some people believe it because it makes them feel great again.
- Imustaskforhelp 5mo ago> I am beginning to think that "The Art of the Deal" was also always fake To me, the interesting part is that people used to believe it in the first place. Anything that I heard of the guy and his agenda 2025 or whatever it was called had some really weird points which America (and for what its worth, the world, who didn't have any say in the American election but is dragged into it as the prices of my gas station rise) Was it the silos of internet in an ever-polarizing nation that created the perfect conditions for a trump-esque person to take political power? I should read more American history but Reagan seems like a similar guy but the only difference seems to be the short-term vs long-term consequences in the damage of Reagan's trickle-onomics (note that Trump's damage is pretty irreparable as well)
- meroes 5mo agoAnyone tried to buy paint recently? $611 for 2x 5 gallon buckets just to do my garage.
- rirkrkrkfkfkfkf 5mo ago[flagged]
- Gomotono 5mo agoWhat?
- tclancy 5mo agoGod bless the Trump administration. Sounds like that’s a bunch of my summer task list checked off as No Longer Viable.
- xienze 5mo agoDunno, it depends on what brand that is. $60 per gallon sounds about where Sherwin Williams paint has been for a while.
- rozap 5mo agoI spent $111 for two quarts
- toasty228 5mo agoYou just discovered why your gdp is so high... American prices make no fucking sense to me, some of your double car garages are more expensive than a full high end house in central Europe
- drnick1 5mo agoPeople just make a lot more money in America. A decent job these days starts at $200k. That's fresh out of college or shortly after. Obviously not everyone makes that much, but it's not unusual at all in tech.
- shevy-java 5mo agoCan't someone take all possessions of Trump, Hegseth etc... and redistribute this to middle and lower class folks? I fail to see why I have to pay for increasing prices due to the actions of those guys. This is literally a racketeering scheme for milking us via increase of prices. A few get very rich, just as Smedley Butler pointed out many decades ago - even he would be shocked at the level of milking going on here.
- bdangubic 5mo agovote
- konart 5mo agoYou are asking for your own Lenin.
- selimthegrim 5mo agoWasn’t Steve Bannon too?
- mullingitover 5mo agoNot to get all fatalistic, but: What’s the point in getting revenge on these people in particular? The voters have made it clear that there’s about eight years at most, typically less, before they’ll rally behind some new grifters and need to repeat the complete set of coursework from scratch. As the saying goes: “The voters know what they want, and they deserve to get it good and hard”
- CrzyLngPwd 5mo agoA predictable FAFO event due to US global aggression, forced on the world by Israel and putting America last, as usual.
- thisisit 5mo agoWar insurance rates for shipping has also gone up: https://www.nytimes.com/2026/05/29/business/strait-hormuz-shipping-insurance-iran.html https://www.nytimes.com/2026/05/29/business/strait-hormuz-sh...
- maldev 5mo ago[flagged]
- simsla 5mo agoIMO the easiest way to open the straight is for the US to back down. "The EU helping the US" doesn't sound like a great way to achieve that. I don't want the EU to join a protracted Iran war.
- bigyabai 5mo agoI don't even see how this is a controversial opinion to hold. Israel blatantly roped the US into an unwinnable political conflict that can only escalate. Any rational politician will see a quicksand pit out of this scenario, and many military analysts arrived at the same conclusion in the 1990s. Europe cannot contribute relevant naval power to reeopen the strait. They cannot significantly turn the tides in a ground invasion, nor do they have the impetus to. The only thing they can do is legitimize Israel's war, and why would they do that? It's not like America or Israel are any closer to achieving their key objectives, Europe wouldn't even get a tour-de-force out of it. This is purely CENTCOM's fuckup, NATO has nothing to do with it.
- karmakurtisaani 5mo agoNope, no one else should definitely not get involved. The moment the EU or anyone else joins, Trump will pull out and leave it for others to clean up.
- dzonga 5mo agopeople don't realize how cheap shipping via containers had become. & this increased commerce all around the globe. but destroyed due to bad propaganda.
- boooring999 5mo ago[dead]
- ozgrakkurt 5mo agoIt is big beautiful and amazing. Everybody loves it, they ask me how is this possible?
- seanieb 5mo agoThere’s probably going to be a famine or famines due to lack of, and expense, of fertilizer resulting in less food for the developing world.
- dgellow 5mo agoAdd to that the USAID shutdown and other impacts to humanitarian relief caused by the DOGE team. It’s all coming together for a really nightmarish time for developing countries
- munk-a 5mo agoI'm not certain how recently you were in the grocery store but it's getting pretty serious in developed countries as well - not famine levels, for sure, but meat prices in Canada are going crazy right now and we're just feeling the first wave of the supply shocks - this will get a lot worse before it gets better.
- ck2 5mo agoclick on YTD on this graph * https://en.macromicro.me/charts/94482/imf-strait-of-hormuz-number-of-ships-and-transit-volume https://en.macromicro.me/charts/94482/imf-strait-of-hormuz-n... (screenshot https://images2.imgbox.com/cd/73/yMf1mwKy_o.png https://images2.imgbox.com/cd/73/yMf1mwKy_o.png ) every 1 single day = another 1 week of misery for the world 100 ships per day now single digits sometimes zero 90 days = 90 weeks except it's going to be still like this in SIX MONTHS if not all the way through January 2029 wait until Cuba happens some Friday night too
- ergocoder 5mo agoThe most surprising thing is that the whole world somehow has built dependency on Hormuz which has been known for decades that it is controlled by Iran, an adversarial actor to the west. Nobody ever thinks of, you know, building redundancy for Hormuz?
- dgellow 5mo ago> Nobody ever thinks of, you know, building redundancy for Hormuz? When you have questions like that in mind, the answer is pretty much always „yes, that’s a well known topic of discussion in that field“ You can see alternatives that exist here: https://hormuzstraitmonitor.com/alternative-routes/ https://hormuzstraitmonitor.com/alternative-routes/ (Really neat website, I think it was shared on HN a few months ago?) There is a lot of other proposed routes but it’s actually pretty hard to create them in that region, lots of actors with their own interests and not the best history of collaboration. And Iran would definitely be against it given it reduces their influence
- 3eb7988a1663 5mo agoPipelines are also easily targeted, should an adversary wish to destroy one. There is no way to protect hundreds of miles of static infrastructure.
- bawolff 5mo agoThey are also relatively easy to repair, and somewhat hard to hit given they are under ground.
- bawolff 5mo agoThey actually have. I think both Saudi Arabia and UAE have built pipelines to bypass the strait. Not to mention USA investing heavily in fraking to counter balance the middle east...
- smallstepforman 5mo ago[flagged]
- bawolff 5mo agoCalling increased shipping costs due to rising fuel prices a "side effect" of an oil crisis, seems odd to me. Isn't that the expected main effect?
- chrisbrandow 5mo agoI’d hardly consider this a side effect. Decreasing traffic in one path within a network of exchange has the direct effect of increasing traffic/demand on alternate paths. Increased demand == increased prices.
- walrus01 5mo agoThere were numerous simulations/war games run by the US and other militaries going back 20, 25, 30 years that basically came to the conclusion that: a) If Iran was attacked with sufficient severity they would take the step to close the straight of Hormuz b) Iran was developing or already had small-boat, mine laying, missile and UAV capacity sufficient to do so c) Iran was actively working on ways to hide this missile, uav, small boat capacity in the general region of the straight of hormuz in hundreds of small locations (down to the size/scale of a civilian small warehouse or garage), making it impossible to air strike/remove all of this capability with any known certainty without causing absurd levels of civilian casualties d) The only way to remove the missile, small boat, uav capability would be an extremely large boots on the ground and manpower intensive ground based search to hunt it down. You couldn't be sure you could remove the capability strictly from the air.
- vkou 5mo agoe) Invading Iran would not be a thee-week special operation like invading Iraq was.
- MengerSponge 5mo agoCounterpoint: it would be a three-week special operation a lot like invading Iraq, in that after minor victories the administration would declare "Mission Accomplished" before burning trillions of dollars and thousands of lives fighting an insurgency.
- vkou 5mo agoIt wouldn't even get to that point, because in order to be fighting an insurgency, you have to actually win on the ground and occupy the country. Without a coalition of fools, the US has zero odds of success in that first step. It wouldn't be a long war of insurgency, it would just be a long war. Iran is far bigger, far more capable, and far more difficult to wage war in than Iraq ever was.
- 5mo ago