By Joe Petrowski
With tension rising between Iran and the West, it is important to remember that only 18 million barrels/day out of a world consumption of 99 million barrels/day pass through the Strait of Hormuz. Any long-term disruption (unlikely) would threaten 18 million barrels/day, or 19% of world exports, and probably instigate a $20/barrel rise in prices (assuming no lasting damage to any of the oil fields in the region).
However, the Saudi’s have five other export ports in their western provinces relying on Red Sea and not Hormuz for international access: Dhiba, Jizan, Yanbu, Jeddah, and Jubail. So while the strait is important petroleum will still flow, and any price rise of $20/barrel will increase non-Mideast supply by as much as 15 million barrels/day dampening any price spike.
Joe Petrowski has had a long career in international commodity trading, energy and retail management and public policy development. He currently serves as the fuel director of Yesway convenience stores and an adviser to their Chairman on Operations and Merchandising, as well as a director of Xebec, a Canadian manufacturer of Clean technology and Green Print, a carbon mitigation firm. Petrowski previously served as the president and CEO of Gulf Oil LP and was elected to the Gulf Oil LP Board of Directors and then as CEO of the now combined Gulf Oil and Cumberland Farms. He is Managing Director of Mercantor Partners, a private equity firm investing in convenience and energy distribution.