For months, we were told that this moment was approaching. At first a lot of people didn’t want to believe it, and those that were sounding the alarm were mocked. But now even the mainstream media is being forced to admit the truth. When the war with Iran began, the world was sitting on vast stockpiles of oil that we could chew through to keep the global economy operating normally. Unfortunately, those stockpiles have rapidly dissipated and the conflicts on the other side of the planet are intensifying. As a result, we now find ourselves in unprecedented territory.
The world is using a lot more oil than it is currently producing.
So something has got to give.
For over six months we have been running through our reserves, and at this stage the mainstream media is openly telling us that a tipping point has arrived. The following comes from a Wall Street Journal article entitled “Oil executives say the great fuel crisis is here”…
American oil executives warned for months that the prolonged closure of the Strait of Hormuz was bound to cause a fuel crisis. Now, they say it is here.
Commercial fuel stocks around the world have been depleting for more than six months, and strategic crude reserves can’t be tapped much further. Attacks last week shut down a crucial crude pipeline in Saudi Arabia that bypassed the Strait, stranding at least 2.5 million barrels a day from an already tight global oil market, analysts estimate.
“All these mechanisms helped to mitigate the price and supply risk,” Chevron Chief Executive Mike Wirth said Friday at an energy conference in Austin, Texas. “Those have largely now played out, and we don’t have nearly the buffers in the system that we did when it began.”
Those oil executives are right.
It is here.
Thanks to recent developments, energy industry insiders now fear that the conflict in the Middle East “risks spinning out of control”…
Veteran energy advisers say that with no resolution to the Iran war in sight, the situation risks spinning out of control. Diesel prices have soared to a record $6.23 a gallon and gasoline prices, which slipped below $4 a gallon this summer, have rebounded to $4.32. Some energy analysts say they have been fielding investor questions about when consumers pinched by the high prices will start pulling back on new purchases.
For months, we were told that a deal to end the war with Iran was imminent.
That kept markets stable for a long time.
But now reality is catching up with us in a major way.
On Tuesday, average prices for both gas and diesel in the United States increased yet again…
Just look at those numbers.
A year ago, the average price for a gallon of diesel in the United States was just $3.68.
Last month, it was sitting at $5.43.
Now it is up to $6.26.
Of course we should consider ourselves to be fortunate, because Europeans are paying between 9 and 11 dollars per gallon…
Unfortunately, this is just the beginning, because global oil supplies are about to get even tighter.
It is becoming apparent that the damage to Saudi Arabia’s East-West pipeline is more extensive than we were originally told…
Saudi Arabia’s oil problem just multiplied.
What looked like a single Houthi hit on the East-West pipeline is now looking like a coordinated hammering of the whole system.
Fresh satellite imagery shows Pump Station 9 badly damaged, with Pump Station 8 possibly hit too, both feeding the same artery that carries crude clear across the country to the Red Sea.
Take out one pump station and you have a headache. Take out two on the same line and you have a pipeline that could sit largely dead for 3-5 weeks, maybe longer.
Yes, the Saudis could feverishly work to repair the damage that has been done.
But then the Houthis could just strike the exact same locations again.
On Tuesday, the Houthis hit the Yanbu Aramco Sinopec Refining Company, and for now all activity at the Yanbu export terminal has been suspended…
Oil loadings seemed to have stopped at Saudi Arabia’s main Red Sea port Tuesday as a major refinery there reportedly burned after an attack.
Shipping industry sources told Reuters on Tuesday that loadings at the Yanbu export terminal had been suspended, four days after a drone attack shut the East-West Pipeline that feeds it, the outlet reported. Earlier Tuesday, an attack struck the Yanbu Aramco Sinopec Refining Company, known as YASREF, according to a post from the Hormuz Letter account on X. The post cited footage it said showed a fire at the site and NASA satellite heat detections inside the refinery.
This is a major economic disaster for Saudi Arabia.
And it is going to turn into a major economic disaster for Europe too, because the Saudis have reportedly told refiners in Europe that they will not be receiving the shipments that they were expecting…
Europe’s energy supply outlook is deteriorating after Reuters reported Tuesday that Saudi Arabia had notified some European refiners that their September-loading crude cargoes would be canceled following the shutdown of its critical East-West pipeline after a drone attack.
Beyond a diesel shortage in the West, Europeans are also dealing with low natural gas stockpiles heading into the Northern Hemisphere winter, with prices reaching their highest level since December 2022.
What will Europe do?
One source is claiming that there will be no more Saudi oil for Europe until at least November…
Saudi Aramco has cancelled all of its September European crude oil allocations and is scrapping every cargo slated for late-September loading onward, with a European lifter saying no Saudi oil cargoes at all until November, per initial reports citing oil trading firm Onyx and market sources.
That takes the world’s largest exporter out of the European market for the rest of September and all of October, a de facto force majeure on Saudi crude to Europe from the 3rd largest energy producer in the world.
If you live in Europe, I would go fill up your vehicles immediately, because nothing quite like this has happened to Europe before.
Meanwhile, the Ukrainians just hit another Russian refinery after President Trump specifically asked them not to do so…
President Volodymyr Zelenskyy said on X that Ukrainian forces struck the Syzran refinery in Russia’s Samara region, about 75 miles west of Samara and 466 miles southeast of Moscow. The strike comes days after President Trump urged Ukraine to halt attacks on Russian refineries, as average US retail diesel prices jumped above $6 a gallon and alarming disruptions to global refining capacity threaten fuel supplies ahead of the Northern Hemisphere winter.
Needless to say, all of this bad news has pushed oil prices even higher…
Crude oil prices rose Tuesday as traders awaited updates on how long Saudi Arabia’s critical East-West pipeline will be closed.
Brent crude futures, the international benchmark, were up 2.6% to $108.48 per barrel by 11:06 a.m. ET. U.S. West Texas Intermediate traded 3.2% higher to $104.65. Prices have surged around 20% this month as fighting has sharply escalated in the Persian Gulf.
The good news is that we still have oil left in the Strategic Petroleum Reserve.
The bad news is that the SPR has now fallen to the lowest level that we have seen since 1982…
The U.S. Strategic Petroleum Reserve held 285.4 million barrels after inventories fell by about 1.2 million barrels in the latest week, according to Department of Energy data. The stockpile reached its lowest level since November 1982 as the government continued a planned release of crude oil from the emergency reserve.
If we drain the salt caverns where that oil is stored too low, we risk causing permanent damage.
There are some experts that are arguing that we have already crossed that threshold.
And federal law places restrictions on non-emergency drawdowns once we get down to 252.4 million barrels.
In other nations, there is simply no buffer left.
The global economy really is facing a nightmare scenario, and investors are starting to get really nervous.
On Tuesday, the yield on 10 year U.S. Treasuries hit the highest level in 19 years…
The benchmark 10-year Treasury yield climbed to its highest levels in 19 years on Tuesday as oil prices surge from the Iran conflict and expectations grow that the Federal Reserve will raise interest rates on Wednesday. The rate milestone could ripple through the economy as the 10-year yield is a benchmark for consumers loans and corporate funding.
The 10-year yield was last up more than 3 basis points to 4.996%. Earlier in the session, it scaled to 5.041%, the highest since July 2007. One basis point equals 0.01 percentage point, and yields and prices move in opposite directions.
To me, it appears that extensive efforts are being made to defend the 5 percent level.
If we ultimately reach 5.25 percent, that could be really bad news, because historically we have witnessed tremendous market disruptions once we cross that mark…
Treasury yields are closing in on an inflection point where, historically, stocks and bonds have reinforced losses in one another. That points to a regime shift of higher bond and stock volatility and wider credit spreads.
Lines in the sand are often a little too neat for reality, but when it comes to Treasuries there has been a stark change in regime when 10-year yields go much above 5.25%. After that point, the risks to bond volatility and hence stock vol and credit spreads markedly increase.
With 10-year yields rising above 5% this week the first question is: will they keep going? Yields may look stretched, rising to levels not seen since 2007 just today, but Treasuries are not yet oversold. Incorporating returns on capital and looking at prices, they are only back to their long-term mean on an annual growth basis.
We are dangerously close to the edge, and it won’t take much to set off a major financial meltdown.
All over social media, people are talking about this now.
They may not understand all of the specifics, but they can feel that something is coming.
We live in such perilous times, and I have a feeling that a tremendous amount of insanity is just around the corner.
Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
About the Author: Michael Snyder’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com. He has also written nine other books that are available on Amazon.com including “Chaos”, “End Times”, “7 Year Apocalypse”, “Lost Prophecies Of The Future Of America”, “The Beginning Of The End”, and “Living A Life That Really Matters”. When you purchase any of Michael’s books you help to support the work that he is doing. You can also get his articles by email as soon as he publishes them by subscribing to his Substack newsletter. Michael has published thousands of articles on The Economic Collapse Blog, End Of The American Dream and The Most Important News, and he always freely and happily allows others to republish those articles on their own websites. These are such troubled times, and people need hope. John 3:16 tells us about the hope that God has given us through Jesus Christ: “For God so loved the world, that he gave his only begotten Son, that whosoever believeth in him should not perish, but have everlasting life.” If you have not already done so, we strongly urge you to invite Jesus Christ to be your Lord and Savior today.
