The Situation Room: More Trouble in the Strait of Hormuz
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The Situation Room: More Trouble in the Strait of Hormuz

by | published July 22nd, 2019

Welcome back from a scorching hot weekend, everyone. I hope all of you in the middle of it were able to stay cool from the heat wave (that has thankfully ended). Unsurprisingly, energy consumption set records this weekend thanks to residents avoiding the heat.

After staying in air conditioning as much as humanely possible, I’m ready to tackle this week’s initiatives. The Persian Gulf continues to be a hot spot, after Iran seized a British oil tanker – not to mention the country’s claim of arresting 17 CIA spies this morning.

Oil prices are working around all these geopolitical tensions, and, as of this writing, are up 2%. But oil is far from the only thing on my to-do list this week.

Here’s what else is on my plate…

1. Ignoring the U.S. in the Strait of Hormuz

The Strait of Hormuz is one of the most important stretches of water in the world. In 2018, approximately 21 million barrels of oil per day passed through the Strait, and that number is only growing.

Which is why the troubles in the area are even more concerning than you might imagine.

And now, a U.S. initiative to provide naval convoying of tankers through the Strait of Hormuz is being met by refusal from other oil importers and allies. This week, I’ll be examining this situation to see its underlying implications in the long run.

Profit in the Real Geopolitical Hot Spot

The trouble in the Strait of Hormuz is small potatoes compared to another important region.

The South China Sea is the second-most used sea lane in the world with over 10 million barrels of oil per day shipped through it.

Not to mention it has a proven 11 billion barrels of oil and 190 trillion cubic feet of natural gas underneath its waters, and it’s estimated there are billions more barrels undiscovered.

That alone makes it one of the most hotly contested areas in the world.

And the Chinese have claimed it for themselves.

Which is not something the U.S. is going to take lying down.

The battle for the resources in the South China Sea has been waged for decades, but it’s been heating up as geopolitical tensions between these two world powers peak.

The Chinese think they have a game changer. The U.S. has a counter to it.

Learn more about this volatile situation – and where the profits are – right here.

2. An Increase in Natural Gas Consumption

Last week, the Energy Information Administration (EIA) reported that more than 90% of natural gas consumed in the U.S. was produced in the U.S.

Total U.S. natural gas consumption averaged about 82.1 billion cubic feet per day in 2018, and is expected to increase 3.1% this year.

The EIA now forecasts that natural gas consumption by the electricity sector is set to increase by 1.1 billion cubic feet per day (3.8%) “As a result of favorable natural gas prices and coal-to-gas switching.”

This week, I’ll be analyzing the forecast that U.S. natural gas usage is about to surge. This could mean interesting things to come for the sector.

Sincerely,

Kent

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