It is obvious the conflict in the Persian Gulf is not going to end anytime soon. Even if it does end today, oil flows will be down for the next year or two. That's because oil shore facilities have been damaged and will take time to repair, thus, the volume of oil that can be loaded will be well down. Additionally, oil storage facilities are nearing capacity and when these are maxed out, oil wells will start shutting down. Starting things up again is always a problem, often taking months, even years.
Both Australia and New Zealand need to take action now. Start building capacity of its own. Australia can build more refineries, and NZ should begin its stalled lignite to diesel project in Southland. Additionally, both should be looking to contract alternative supplies. Australia could try buying output from Uganda through the Tanzanian port of Tanga. This oil will become available later this year. New Zealand should see if it can buy finished fuels from the new giant Dangote refinery in Nigeria. Whatever options are available, both countries should be working at fever pitch, night and day to solve the problem.
What's particularly weird is that NZ still exports its high grade, light and sweet crude, while its own diesel tanks are about to run out. NZ has no plans underway to distill this easily processed crude into diesel. The NZ government is that stupid.
Both Australia and New Zealand are like possums caught in the headlights, they appear bereft of ideas.
“If oil producers reach ‘tank tops’ for lack of export outlets, then they have to curtail output,” Antoine Halff, co-founder and chief analyst of geospatial analytics company Kayrros, said in a post on LinkedIn.
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