Finding the Drones - It's Hard

Iran is a large country and the drones they use are small. They're hard to find and knock out. Moreover, drones are cheap to make compared to the missiles used to destroy them.

Fuel Crisis Real

With war going fully regional in the Middle East, we are now looking at the possibility of diesel running out. This is not a pricing exercise, it is a have nothing at all crisis. I put it like this; if you have no water you're dead two and a half days later. It doesn't matter that a bottle of water hundreds of miles away is only a dollar, you can't reach it, so you die.

When it comes to diesel, it is like that complete lack of water. No diesel, no economy. It doesn't matter that diesel in some other part of the world is cheap, or whatever.

Thing is, both the Australia and New Zealand governments have had months to solve this, but they played politics, happy feelings, sing kumbaya, hope and pray.

Who Is Winning the US-Iran War?

A quick scorecard, winners and losers:

Winners

Iran - their oil revenues have increased since the outbreak of the war. According to the Wall Street Journal, they're now selling 985,000 barrels of oil per day to China via the rail corridor that runs through the Stans between Iran and China. The marshalling yards for this traffic sit within Turkmenistan, and that's where loads are taken off standard gauge and placed upon the old Soviet wide gauge track. The trains are about 50 wagons long, 66 tons each wagon, and each oil tank holds about 400-500 barrels. Iran charge China's 'teapot' refiners Brent + $1.50. This compares with volumes of about 1.38m bpd via the Strait of Hormuz before the war. Thus, Iran in revenue terms is raking in about the equivalent of 1.5m bpd levels from before the war. They knew they were going to be attacked. Leading up they were shipping a lot of crude and simply parking it out there on the water. The US then lifted sanctions on this oil and Iran profited. They must have laughed. Iran also has rail links with Russia, Pakistan, and via the Caspian Sea and into Russia's Volga-Don canal system and ultimately the Black Sea. Iran now has complete control of the Strait of Hormuz, and it remains shut to those it considers its enemies. 

Israel - they are now the US's only remaining ally in the region. They would have noticed the rise of the UAE, Qatar, Bahrain, Kuwait and in particular, Saudi Arabia. These states have been selling their soft power, with Saudi Arabia using sports promotions like LIV Golf to sell themselves. Israel won't have been happy with this overall, and now they can sit back and watch these states distance themselves from the US.

Russia - they're happy with the high oil prices. They've shut down the pipeline from Kazakhstan to Germany, likely motivated by the incentive of lifting prices.

Losers

USA - their attack has resulted in a massive strategic defeat. They've compromised food security and the world economy generally. American farmers will be livid as the attack on Iran came just before planting - not good timing.

Gulf States - they were mistaken in thinking the US could protect them. Dubai may come back to an extent, but people will never forget, and zero tax doesn't help one bit when a bomb may land on your bonce.

Asia (apart from China) - all Asian countries have been compromised and they'll likely move toward greater independence and away from the US.

China - they'd prefer the Strait of Hormuz to open, for conflict to end. They won't be greatly adversely affected but given their merchant outlook, they'd profit from less conflict, not more.

Oceania - they stand to go out of existence if they don't quickly get their act together. 

Africa - famine is possible, and their oil fields and refineries are only just now being built. This war came at a bad time for them.

Europe - deindustrialisation has proven to be a fool's errand. They're badly exposed with high cost structures and with few allies.

North, South and Central America (apart from the US) - they've been compromised, but countries like Canada have gained from their own oil sales to Asia. The picture is patchy, but overall a loss.

The war has benefited very few interests, and harmed most. End the war now.

Reliance on Fossil Fuels

Big Green capital interests will tell you fossil fuels have had their day, that solar, wind and tides will replace them as a source of energy.

What are the facts? Fossil fuels play a greater part in daily lives now than at any stage previously. Production is increasing with new oil and gas fields coming onstream, and new coal mines being opened up. 

With the Strait of Hormuz currently blockaded, with the US also blockading the blockade, this has resulted in a crisis of truly global proportions. And no amount of wind and solar can address the problem. That's because the world population has doubled over the last 50 years, and they require food. Farmers need urea fertiliser to grow crops efficiently, and that's fossil fuels. Those calling for a move away from fossil fuels are actually calling for depopulation. They prefer to talk about the environment, but opponents of fossil fuels are really against humanity.

See the graph below, fossil fuel consumption has increased eight-fold since 1950. This trend cannot and will not be reversed. 

Fossil Fuel Consumption

Oil Scarcity

Some appear to be getting it, finally. With the current oil crisis, we are not talking pricing, we are talking about the complete lack of something. 

UAE Leaving OPEC

Apart from the blockade of the Strait of Hormuz, the next biggest thing to happen as a result of the US-Iran war is the sudden announcement of the United Arab Emirates leaving OPEC.

When the Strait opens up again, and the oil is flowing freely, this move will have two effects; the first being to lower oil prices as the UAE will start pumping oil well beyond its current OPEC quota limits. They'll do this to help pay for damage caused by the war. A consequential effect may then be to challenge the viability of two industries, fracking and electric vehicles. The latter will only happen if the price of oil comes down by a lot, which it can do, but it is a wait and see.

Right now though, with the Strait still closed, we have an immediate supply crisis, that remains unchanged.

Looming Food Crisis

Make no mistake, this is serious.

But rejoice, the New Zealand government has secured nine days of diesel. Yeah, they really think that will make a difference. 

Action Required Now, Don't Wait

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.

https://www.worldoil.com/news/2026/3/4/producers-face-storage-crunch-as-hormuz-shutdown-traps-middle-east-crude/#:~:text=In%20theory,%20the%20Arab%20producers,be%20extended%20by%20a%20week.

“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.

Dangote Too Cheap

The World Bank is putting pressure on Nigeria to get Dangote to lift its prices, they're selling refined oil too cheap. You cannot make this up!

What About Crew Stuck in the Persian Gulf?

What has been happening to the crew stuck on ships caught in the Persian Gulf? I've been wondering if some crew may simply abandon ship, and then row to shore while leaving the vessel anchored.

Jet Fuel Running Out

The opening of the Strait of Hormuz didn't last long, and now we are looking at airlines shutting down or going out of business. This is not a pricing issue, it is an absolute scarcity of the key resource - kerosene. Only a small proportion of each barrel of oil turns into kerosene, otherwise known as jet fuel.

Iran Opens Strait, For Now

Good news, Iran has opened the Strait of Hormuz so long as the ceasefire in Lebanon holds. Ships must still go through their tollgate though, which limits the speed with which ships can exit the Gulf. I checked on Marine Traffic's website and there isn't a flood of vessels underway, but expect this number to increase significantly. 

Now, Australia and NZ governments, don't sit back and claim credit for everything while doing precisely nothing. Now is the window of opportunity to come up with distillation solutions for your own oil. How long do you need just sitting around on your hands, you clowns!

Here's what to do: https://kenhorlor.blogspot.com/2026/03/new-zealand-fuel-crisis-action-required.html

Massive Oil Downunder

The corrupt politicians will tell everyone there is no oil in Australia or New Zealand. Quite the contrary, both contain massive resources of oil that are almost diesel coming up out of the ground.

LIV Golf Could End Soon

Reports are coming in that the Saudi backed golf tour, LIV Golf, could have the plug pulled on it. It makes sense as Saudi Arabia has suffered a severe hit to its revenues. They can still ship oil out through their Red Sea port, but the capacity there is limited, so the double-blockade of the Strait of Hormuz must end soon.

Saudi Arabia spend a lot on sports in an attempt to soften their image worldwide. They invest in major soccer teams, boxing, motor sports, sailing, the list is endless. 

What will happen to the golfers now playing on the LIV tour? My guess is most of them will find a way back into the PGA. That's because the PGA really does need them for their talent. If they try to ban them, then that leaves a player pool wandering around the place who may form into another tour and, perhaps, outdo the PGA. It's an old quandary any business faces; don't leave assets out there that someone else may operate better.

Professional sport across the world is about to have a serious haircut if this conflict goes on much longer. That's because it isn't just Saudi Arabia sports washing, add the UAE, Qatar and Bahrain to the list as well. Take away that money and the value of many pro sports franchises starts to plummet.

https://www.theguardian.com/sport/2026/apr/16/liv-and-let-die-golf-rebels-count-cost-saudi-cutbacks

A slowdown in Saudi Arabia’s lavish spending on sport, which is conservatively estimated to have cost the kingdom more than $10bn in the past five years, had been expected, but its Public Investment Fund’s withdrawal of financial support for the rebel tour – which was first mooted to LIV execs on Monday – has caused shockwaves throughout the wider industry.

Significantly, the possibility of PIF’s withdrawal was not even addressed in an email sent by the LIV chief executive, Scott O’Neil, to his staff on Wednesday evening, which has left many of them more fearful for their jobs. Such concerns are not limited to golf, with other sports administrators fearful that similar cuts in Saudi’s budget could be coming their way.

Refinery Fire in Australia

What are the chances of this randomly happening when it did? 

Blockade of a Blockade Restricts Supply

The United States has now put into effect its blockade of Iran's blockade of the Strait of Hormuz; a blockade of a blockade. For any country importing its oil from the Persian Gulf, this makes things much worse. That's because, with Iran's single blockade, some oil did get through. Take China as an example, they obtain about 40% of their total energy imports from the Gulf. Now, that supply appears shut off, which forces China to start buying from other suppliers, driving up the price of oil generally, but also denying smaller nations like Australia and New Zealand. China's volume demand is so great, they could now soak up everything. 

What is astonishing to me is how lightly the Australian and New Zealand governments are taking this. They are like sheep being led into the abattoir. Immediate action is required - this is what the NZ government must do: https://kenhorlor.blogspot.com/2026/03/new-zealand-fuel-crisis-action-required.html

Oil - Lots of It

What does a barrel of oil contain, what products are derived from it, and what are the different types of crude oil?

1. Types of Crude

2. Refining Process - Like Making Moonshine

 

3. Refining Output - Various Products

Why the Strait of Hormuz Is So Important to Australia and New Zealand

A bit of simple arithmetic is needed to explain why the closing of the Strait of Hormuz could destroy the economies of Australia and New Zealand.

Both countries rely on imported refined product from Asia. New Zealand is wholly dependent while Australia is about 90% dependent. China has ceased exporting product, so cross them off the list. That leaves, for the most part; South Korea, Singapore and Malaysia as suppliers.

South Korea processes up to 3.4m bpd (million barrels per day), 2.5m of which is consumed domestically. 70% of their supply comes from the Middle East.

Singapore processes about 1.5m bpd, and they import 70% of their oil from the Middle East.

Malaysia processes about 900,000 bpb, and they import about 40% of that oil from the Middle East as they have their own oil wells. Domestically, they consume about 77% of the total and export the rest.

I trust you may begin to see the problem. With a huge amount of Middle Eastern oil coming through the Strait, but now shut off, these Asian economies will need to prioritise their own market first, and even then they'll come up short.

South Korea has begun buying oil from Canada, about 800,000 barrels per day. That's well short of the 2.4m bpd needed. They can only just supply themselves, leaving nothing to export. 

Singapore looks set to lose 1.0m bpd, and that equates to the daily consumption of Australia. Forget NZ, they'll just be left to fail.

Malaysia, just to supply its own needs, will have to import from other sources, just as South Korea is doing.

All of this adds up to a very serious predicament Downunder. I see the Philippines has declared a state of emergency, and that is a wise thing to do. Australia and New Zealand need to follow suit as this war in the Middle East could drag on for a long time, that much is obvious. 

Another link - what to do NOW https://kenhorlor.blogspot.com/2026/03/new-zealand-fuel-crisis-action-required.html

Iran's Victory Changes Everything

The Strait of Hormuz will remain closed until all of Iran's demands are met. Iran is calling the shots, and no-one can challenge them.

Useful Map from JP Morgan

Study the map to find out where and when fuel gets to critical levels in each region. Each area circled shows where fuel supply starts to become critical. The east coast of Africa is first, they're already feeling it. Then the Far East from the 1st of April. Europe follows on April 10th, and the US April 15th. Lastly, Australia and NZ feel the pinch from April 20th.

Why haven't governments hit the panic button yet? The reason: they're living in a false spring, either hoping supplies will resume, or refusing to see the bigger picture. What consumers are putting in their vehicles now are refined fuels from crude shipped back from before the war started. As those stocks from earlier gradually run out, the pinch will be felt, and fast. 

JP Morgan Map of Critical Oil Supplies