US Energy Secretary Chris Wright said that not all mines placed by Iran in the Strait of Hormuz need to removed for ships to resume transiting the vital passageway:“You just need a pathway for ships to be moved in and out,”Wright said in an interview on the sidelines of the Three Seas Summit and Business Forum in Dubrovnik. “I think that can happen quickly” he added suggesting that a restart can happen far sooner than the full demining timeline. Fully clearing the strait of mines could take six months, a Pentagon official said during a classified Congressional briefing last week, the Washington Post reported.
Iran has said it laid mines along the most frequently used routes of the narrow waterway, which has been effectively closed since February 28, and through which roughly one-fifth of the world’s oil and gas transited before the US and Israel launched a war on the Islamic Republic.
Understandably, shipping companies have been highly reluctant to attempt to navigate Hormuz, fearing seizure, mines, and a lack of other safety guarantees.
The longer the Strait of Hormuz is shut the longer a historic energy disruption will continue. In the US, a surge in pump prices comes months before President Donald Trump’s Republican party faces midterm elections.
Wright also said the US plans to announce “historic” pipeline agreements that will lead to increases in the amount of US oil and natural gas Europe imports as part of the Trump “Peace Pipeline Agenda.”
Last but not least, the US energy secretaryrepeated verbatimwhat we said over the weekend, when we pointed out that a prolonged shut in would be devastating to Iran's oil reservoirs as over half of them are low pressure "putting them at risk for permanent loss after shut-ins, via near-wellbore water emulsions, clay swelling, and water blockages."
Most Gulf reservoirs have medium pressure, but over half of Iran's have very low pressure, putting them at risk for permanent loss after shut-ins, via near-wellbore water emulsions, clay swelling, and water blockages(chart Rystad/Goldman).https://t.co/I1duGf7s1Rpic.twitter.com/9kIoKzDT6g
Fast forward to this morning, when Wright told Bloomberg TV that "Iran does not have a lot of oil storage capacity and its old reservoirs are not suitable if the country decides to shut down production." That's because“they’ve got old reservoirs that are low pressure, which means it’s much more destructive if they have to shut in their production."
With Iran having about 10-15 days before hitting tank tops (depending on how many tankers they use for storage), we'll find out in a few weeks if he is right.
Source: ZeroHedge News
