Part of ADI Analytics’ ongoing coverage of the implications of the Iran conflict across oil & gas, LNG, refined products, and chemicals.
I recently spoke at the 10th Annual OCTG & Line Pipe Forecast Summit about the Middle East conflict and its implications for oil, gas, OCTG, and line pipe markets. This builds on ADI Analytics’ ongoing coverage of the conflict’s implications for energy and industrial markets.
My keynote presentation discussed how the Strait of Hormuz carried about 20 million barrels per day of oil and 20% of global LNG trade before the disruption. Several months later, crude exports from the Middle East have returned to pre-war levels. The seven-day moving average was estimated at 18.3 million barrels per day on September 30, with exports above pre-war levels on 14 days during September, while the 14-day average was reported at 18.6 million barrels per day.
The recovery has relied on several routes. Saudi Arabia increased loadings from both the Red Sea and the Gulf. Iraq obtained permission for its tankers to pass through Hormuz. Gulf producers also used ship-to-ship transfers in the Gulf of Oman, although those transfers were reported to have reached their limits.
Tanker movements through Hormuz have consequently increased. At the same time, attacks on commercial vessels have continued. At least seven incidents were reported during one week spanning late September and early October, including strikes on a very large crude carrier and an Aframax tanker. Higher export volumes have therefore eased immediate supply constraints without establishing a reliable shipping environment.
The question now is how these developments translate into drilling, upstream investment, and demand for OCTG and line pipe. Oil prices remain central to the North American drilling outlook, while higher offshore spending and investment in alternative export routes are creating different sources of pipe demand. We examine each of these markets below.
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