ENB Pub Note: This article was originally published on LinkedIn by Kirk Edwards, and he will be on the Energy News Beat podcast soon.
That old Texas oilfield saying may not be elegant, but it feels pretty accurate right now.
The situation involving Iran appears to be getting worse by the day, and we do ourselves no favors by pretending otherwise.
Overnight reports of attacks involving a Qatar-owned LNG tanker and a Saudi-owned oil tanker should be deeply concerning—particularly if they occurred during a “supposed” ceasefire and in shipping lanes the United States has worked to protect.
Then we hear that traffic in the Strait of Hormuz is “returning to normal.” That is not the same as saying traffic is normal.
A few additional vessels moving through the Strait do not restore the roughly 70 tankers a day moving in each direction before this conflict. Words matter, especially when global energy markets, shipping insurers, LNG buyers, oil producers, and American consumers are all trying to understand the real risk.
Oil markets, national security, shipping lanes, and global alliances are tied together in that narrow stretch of water. When tensions rise there, the consequences do not stay there. They move through energy prices, insurance costs, LNG flows, tanker routes, and ultimately the consumer.
I hope cooler heads prevail. But hope is not a strategy.
The Permian Basin exists for moments like this. Reliable domestic energy is not merely an economic advantage; it is a national-security asset.
What remains difficult to reconcile is how oil can sit near $70 when more than 1.2 billion barrels of supply have reportedly been lost or disrupted by this conflict – and it is still getting worse by the day. There are clearly major market bets being made that the disruption will be temporary, and a great deal of commentary reinforcing that view.
But watch the actual behavior of vessels, insurers, exporters, and the parties closest to the conflict. That will tell us more than optimistic headlines.
Fortunately, many Permian producers have used the past several months to hedge at favorable prices. That discipline should help protect balance sheets, shareholders, employees, and service companies through the rest of this year and into next year.
Pretending this situation is anything less than serious, or that the Strait has simply returned to “normal”, feels like someone peeing on our leg and telling us it’s raining. We Texans are too smart for that!
The post Don’t Pee on My Leg and Tell Me It’s Raining – Update from Midland and Kirk Edwards appeared first on Energy News Beat.
