Trump's oil issue fix overlooks one crucial problem in Iran conflict: analysis
A proposed plan to escort oil tankers out of the Strait of Hormuz has been dismissed by a freight analyst as an unrealistic solution.
Matt Smith, an oil analyst at Kpler, estimates that 400 tankers are stuck in the Gulf due to the war with Iran. The president ordered strikes against Iran last weekend, with over 500 civilians killed in the bombing campaign. Ayatollah Ali Khamenei was also killed in the strikes earlier this week, the White House confirmed.
Despite the ongoing strikes against Iran, Trump is also attempting to solve a freighter problem in the Gulf, with oil tankers and supply vessels stuck in the Strait of Hormuz. The president's team suggested a naval escort could resolve the problem, bringing isolated tankers out of the area and back into safe waters.
This would not work, according to oil analyst Smith, as the logistics do not match up with the time frame required for the safe passage for such slow-moving vessels.
"There’s hundreds and hundreds of vessels still in the Mideast Gulf," Smith told CNBC. It would take "an inordinate amount of time to escort them even a few at a time.”
Energy Secretary Chris Wright confirmed earlier this week the administration would provide naval escorts for the tankers as soon as such a plan became viable.
He said, "Right now our Navy and our military is focused on other things, which is disarming this Iranian regime that’s been striking out at all of its neighbors and Americans in every way it can.
"In the not too distant future, we’ll be able to use the Navy to get energy flowing again, but in the meantime markets are very well supplied."
Natasha Kaneva, head of global commodities research at JPMorgan, says time is of the essence for the tankers to shift their products, especially with the potential backlog that may occur if supplies cannot be sent to oil refineries in time.
Barreling the oil could prove tricky should storage space run out, a move which could cause complete shutdowns in as little as four days from now. She said, "With the Strait of Hormuz still inactive, the clock is ticking."