Petrol at €1.37 after the Iran war: the shortage that never came
Petrol stands at €1.37 after the Iran war. Spain has used 15% of its reserves and VAT is back at 21%. Real depletion or a false alarm?
English · Original discussion in Spanish · Published
Petrol at €1.37 after the Iran war: the shortage that never came
A driver filled up on 1 August at €1.37 a litre and asked where the apocalypse promised by the forecasts was. The same petrol station that, according to some models, should have run dry in June. Petrol keeps flowing, diesel is more expensive, and VAT returns to 21% at the end of the month. What peine to the fuel shortage?
The price that disproves the collapse
Despite the closure of the Strait of Hormuz, through which around 25% of the world's crude passes, the barrel remains below $100 and petrol has not exceeded the two euros some said were certain. Some see this as proof that the market is pricing in a quick resolution in Iran. Others, however, point out that China has halved its imports and is drawing down reserves, and that the US is making up the shortfall, but is required by law to stop the flow when its reserves fall to 20%, something estimated for late July or September.
Reserves: the buffer is being eaten away
Data from the Corporación de Reservas Estratégicas de Productos Petrolíferos (CORES, Spain's strategic petroleum reserves agency) paint a less dramatic picture than was being suggested, but not a reassuring one. Spain buys roughly 85% of the oil it consumes and is drawing the remaining 15% from its reserves, mainly the commercial ones. Before the conflict it had strategic reserves for 30 days and commercial ones for 65, a total of 95 days of consumption. That buffer is shrinking month by month.
Diesel, the real concern
Attention has focused on petrol, but the serious problem lies with diesel. Its price remains higher, and international passenger and freight transport is starting to feel it, especially on connections with Asia. In Africa and South Asia the shortage is no longer a prediction, it is a daily reality. Meanwhile, kerosene reserves are also trending downwards, a detail that is often overlooked.
The investment banks' scenarios
The models from Exxon and JP Morgan, cited in the analysis, suggest that usable reserves could run out in September if the conflict continues. But there is a gap between those models and the reality at the pump. The futures market suggests that oil companies expect a diplomatic or military solution to reopen the flow. It is not the first time catastrophic forecasts have fallen short: during the Ukraine crisis a shortage was also predicted and the shops stayed full.
On 1 August, a driver filled up at €1.37. The tanks were not empty, but strategic reserves kept falling. The building has not caught fire, but the analyses citing JPMorgan warn that the flames are getting closer. The question is whether the market is pricing in a peace that has not arrived.
A driver filled up on 1 August at €1.37 a litre and asked where the apocalypse promised by the forecasts was. The same petrol station that, according to some models, should have run dry in June. Petrol keeps flowing, diesel is more expensive, and VAT returns to 21% at the end of the month. What peine to the fuel shortage?
The price that disproves the collapse
Despite the closure of the Strait of Hormuz, through which around 25% of the world's crude passes, the barrel remains below $100 and petrol has not exceeded the two euros some said were certain. Some see this as proof that the market is pricing in a quick resolution in Iran. Others, however, point out that China has halved its imports and is drawing down reserves, and that the US is making up the shortfall, but is required by law to stop the flow when its reserves fall to 20%, something estimated for late July or September.
Reserves: the buffer is being eaten away
Data from the Corporación de Reservas Estratégicas de Productos Petrolíferos (CORES, Spain's strategic petroleum reserves agency) paint a less dramatic picture than was being suggested, but not a reassuring one. Spain buys roughly 85% of the oil it consumes and is drawing the remaining 15% from its reserves, mainly the commercial ones. Before the conflict it had strategic reserves for 30 days and commercial ones for 65, a total of 95 days of consumption. That buffer is shrinking month by month.
Diesel, the real concern
Attention has focused on petrol, but the serious problem lies with diesel. Its price remains higher, and international passenger and freight transport is starting to feel it, especially on connections with Asia. In Africa and South Asia the shortage is no longer a prediction, it is a daily reality. Meanwhile, kerosene reserves are also trending downwards, a detail that is often overlooked.
The investment banks' scenarios
The models from Exxon and JP Morgan, cited in the analysis, suggest that usable reserves could run out in September if the conflict continues. But there is a gap between those models and the reality at the pump. The futures market suggests that oil companies expect a diplomatic or military solution to reopen the flow. It is not the first time catastrophic forecasts have fallen short: during the Ukraine crisis a shortage was also predicted and the shops stayed full.
On 1 August, a driver filled up at €1.37. The tanks were not empty, but strategic reserves kept falling. The building has not caught fire, but the analyses citing JPMorgan warn that the flames are getting closer. The question is whether the market is pricing in a peace that has not arrived.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (84 replies).
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