Oil Prices Collapse after Strait of Hormuz Opens, Saudi Arabia Refinery Resumes Normal Flows

Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

Summary

Brent crude oil prices are falling fast after announcements on the Strait of Hormuz. Brent jumped as high as $118 in late March. According to Industrial Info Resources data, energy installations caught in the cross-hairs are coming back online as well.

The Strait is 'Completely Open'

U.S. President Donald Trump and Iran's foreign minister said Friday that the Strait of Hormuz is completely open, sending energy commodity prices on a downward spiral. According to Industrial Info Resources data, energy installations caught in the cross-hairs are coming back online as well.

Iranian Foreign Minister Abbas Araghchi took to the social media platform X to announce the strategic waterway through which 20% of the world's waterborne crude oil and liquefied natural gas (LNG) "is declared completely open."

Energy installations caught in the cross-hairs are coming back online as well. According to Industrial Info Resources data, Saudi Arabian Oil Company (Saudi Aramco) resumed normal flows through its Yanbu Refinery on April 9. The refinery, with a capacity of 400,000 barrels per day (bpd), had been operating at approximately 70% capacity since a mid-March drone strike.

Subscribers to the Industrial Info Resources Global Market Intelligence (GMI) Petroleum Refining Plant Database can learn more about Yanbu--including capacities, investment values and necessary equipment--from a detailed plant profile. 

According to Industrial Info Resources data, unplanned crude and condensate outages due to the conflict in the Middle East were just under 3 million bpd by mid-March, barely two weeks into the conflict.

Commodity prices were in a freefall after the announcement. The price for Brent crude oil, the global benchmark, was trading at around $88 per barrel. Brent hit $118 per barrel on March 18.

The risk premium ebbed further after Israel agreed to a 10-day cease-fire with Lebanon went into force on Thursday. By Friday, Bloomberg reported that Trump had already called on domestic energy companies to open the taps to help address what the International Energy Agency said was the worst energy crisis in history.

It would take months, however, for shale drillers to put more oil on the market, and some have expressed reservation about reacting to market highs out of fear the rally will end once the fighting stops. Brent is trading at around $78 per barrel in the December contract.

Relief in Sight for LNG

Earlier this week, according to Industrial Info Resources, exports of LNG from berths at the Port of Corpus Christi in Texas increased 33% annually during the first quarter.

"The dramatically higher shipment levels seen since the start of the conflict in Iran are a testament to our customers' ability to maximize their operations and quickly respond to changing market conditions," said Kent Britton, the chief executive officer for the port.

That comes amid supply-side issues stemming Iranian attacks sidelined LNG production from Qatar, one of the largest LNG producers in the world. QatarEnergy added recently that one of is tankers was targeted in the Persian Gulf.

A March 19 attack wiped out nearly 20% of the capacity at the Ras Laffan LNG facility in Qatar.

By the Numbers

• $88 Brent on Friday
• $118 Brent at the end of March

Key Takeaways

• One of the worst energy crises in history could be coming to an end.
• Global economies were severly damaged by the war.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).