Iran’s threat to close the Strait of Hormuz if sanctions are imposed on the country’s oil exports has been mitigated somewhat by a statement from a Saudi official that other Gulf states will make up the loss if the Iranians carry through with their threat.
That’s very kind, but not very realistic. About 15.5 million barrels/day pass through the Strait, and even if all the spare capacity in the Middle East could be brought on-line quickly, that doesn’t amount to more than around 3 million barrels.
A new pipeline is scheduled to start transporting 2.5 million barrels/day from Abu Dhabi to the Gulf of Oman. Other idled pipelines in the area could transport another 2 million barrels or so every day, but it would take some time (probably weeks at a minimum) to bring the pipelines back on line.
The Saudi statement did have the effect of curbing a steady rise in crude prices. Brent crude is down about -0.7% at $108.56/barrel and WTI crude is down about -0.8% at $100.53/barrel.
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