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324 comments on DrumBeat: June 11, 2007

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Rob-Organic-Chemist on June 11, 2007 - 8:20am Permalink | Subthread | Comments top

Saudi Arabia Maintains Supply Restrictions to Asia

Saudi Aramco will cut supplies of its Arab Light and Arab Heavy crude to Japan, China and South Korea as much as 10 percent below their contracted volumes, officials said.

In the same article it states that Iran will soon begin rationing gasoline. It really does not seem to add up.

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Hurin on June 11, 2007 - 8:38am Permalink | Subthread | Parent | Comments top

In the same article it states that Iran will soon begin rationing gasoline. It really does not seem to add up.

The thing is the Iranians don't have enough refineries to process enough gasoline themself, and it takes years to build new ones.
So they export oil and import gasoline, but because gasoline is subsidised, this is a huge expence to the Iranian government. This is the reason for the rationing scheme, otherwise they would have to cut the subsidies, which could lead to unrest.

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penguinzee on June 11, 2007 - 9:54am Permalink | Subthread | Parent | Comments top

This is my favorite line in that article-

"Iran's Oil Minister Kazem Vaziri-Hamaneh said there's no shortage of crude oil globally and the high oil price is because of low product stockpiles. Iran, OPEC's second-largest oil producer, will start gasoline rationing ``very shortly,'' he said after attending the Asia Oil and Gas Conference in Kuala Lumpur today."

I don't think Woody Allen could've written that better...

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oilmanbob on June 11, 2007 - 12:00pm Permalink | Subthread | Parent | Comments top

penguinzee,
I don't really see a contradiction. What is in short supply is the cheaply refined light, sweet crude, and the gasoline used in the United States. Oil companies, whether national or private, produce and sell the oil that is most easily sold and cheapest to produce first. So whats left is oil that comes out of the ground more slowly because of high viscosity, or has high sulfur content, or both. It brings less money because it costs more to refine.
The other problem with a quote like that is translation. To be translated accurately the translator must be very familiar with oil production and refining. And, the more languages the translation has to go through the more errors are multiplied.

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rainsong on June 11, 2007 - 7:37pm Permalink | Subthread | Parent | Comments top

According to the EIA Iranian gasoline consumption is expected to rise 11.4% in a year. They have limited refinery capacity and bought gasoline from Europe.

http://www.eia.doe.gov/emeu/cabs/Iran/Oil.html

They have undeveloped large fields, yet the decline rate for their existing fields was estimated as 8-10%.

Iranians got subsidized gasoline for 30-38 cents a gallon, thus the decision to ration is in lieu of free market economics.

http://www.boston.com/business/articles/2007/05/28/iranian_gas_price_hik...

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