Tag: oil

Trump’s Fact-free Diatribe on the Price of Oil. “Strait of Hormuz Misrepresentations”

Another day and another fact-free diatribe by the president of the United States.

Trump went on his Truth Social (where truth is a rare commodity) and said Democrats have closed down the nation’s refinery capacity, and this is the reason diesel and gas prices are skyrocketing.

Here’s what Trump didn’t tell you:

He has triggered closures of major refinery companies.

The recent closures were corporate decisions by refinery owners, not a mandate by Democrats.

LyondellBasell Industries in Houston made a strategic decision to exit refining in March, 2025, eliminating approximately 264,000 barrels a day. (Categorized as among the 10 best in the U.S)

Phillips 66 in Los Angeles closed in October, 2025, citing uncertain long-term sustainability amid changing market conditions, while also reporting high operating costs and low earnings.

The closure removed 139,000 barrels from the market. Valero, in Benicia, California ended refining in 2026, citing high maintenance costs and other business considerations. The corporation produced 145,000 barrels a day.

Valero also mentioned regulatory hurdles in California, where the are unusually stringent fuel, environmental, emissions, and operating requirements. However, it is not accurate to claim that Democrats or California’s governor ordered these refineries closed, or that regulations in the state are responsible for the fuel crisis in the rest of the country.

The 2025 shutdowns at the LyondellBasell Houston and Phillips 66 Los Angeles refineries cut total US refining capacity by about 400,000 barrels per day. Because the two California closures eliminated roughly 17% of California’s capacity, their impact is concentrated on West Coast fuel supply and prices rather than the broader US market.

It’s correct to say Ukraine’s strikes on Russian refineries affect global energy markets. During his first term, Trump approved the first US provision of lethal weapons to Ukraine, notably Javelin anti-tank missiles. In 2018 and 2019, the United States notified Congress of sales totaling 360 Javelins, plus launchers, training, and related equipment. In other words, US foreign policy, under both Biden and Trump, is responsible for the current crisis.

Diesel and heating oil account for nearly 30% of global petroleum use, with about one-quarter of this supply moving across borders. When Russian refinery exports drop, the impact extends beyond Europe, resulting in rising costs in transport, farming, construction, freight, and heating, all of which contribute to wider inflation.

The Trump administration is responsible for raising oil prices by continuing the war against Iran.

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Massive Smoke Plume As Tanker Erupts In Flames, Spills Oil Off Russia’s Sochi Coast

The Black Sea tanker wars have continued Tuesday. In the latest tit-for-tat episode, a large so-called ‘shadow fleet’ tanker is ablaze close to the Russian Black Sea port of Sochi.

The vessel, identified in reports as likely being the Aframax Rio, which was previously sanctioned by Ukraine for alleged involvement in Russian oil exports, is producing a massive smoke plume and has been photographed and filmed by shocked onlookers at Sochi’s shores. Images like the below are widely circulating on Russian Telegram channels.

Russian regional authorities in nearby Sirius have since confirmed in a public announcement that a tanker had caught fire in the Black Sea.

Reuters writes that “The beaches in the settlement in Russia’s south Krasnodar region are closed to the public, the authorities said, without giving any details of the cause of the fire.”

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Ukraine Claims Over Half of Russia’s Oil Refining Capacity Taken Out in Missile Strikes

Ukraine says its long-range strikes have neutralized more than half of Russia’s oil refining capacity, hampering Moscow’s ability to supply its forces during its 4 1/2-year-old invasion.

The Defense Ministry said late Sunday that recent strikes on refineries in cities including Moscow, Yaroslavl, Ust-Luga, Perm, Saratov and Syzran had put 51% of Russia’s oil refining capacity out of action. The claim could not be independently verified.

Both Moscow and Kyiv have intensified their aerial assaults as progress along the 1,200-kilometer (750-mile) front line has largely ground to a halt.

Ukrainian forces have repeatedly attacked refineries from Moscow to Siberia, sparking a widespread fuel crisis in Russia earlier this year that forced authorities to restrict gasoline sales.

Russian officials have not publicly revealed any data on damage caused to the country’s oil infrastructure. However, President Vladimir Putin said in a rare admission on Oct. 1 that the strikes had cost Russia roughly 1% of its gross domestic product.

“They started attacking oil refineries and openly declared the goal of damaging our economy. Did they achieve their goal? Partially,” Putin said at a meeting of the Valdai Club forum of international foreign policy experts.

Ukrainian Defense Minister Yevhenii Khmara said analysts from Ukraine´s intelligence services, the General Staff and the Defense Ministry had assessed the strikes’ effects.

“Fifty-one percent of struck refining capacity is a significant blow to the enemy´s economy, to its ability to carry out aggression and supply its troop groupings. Our deep strikes continue to bring the war to Russian territory,” he said.

Russia has historically been the world’s third-largest producer of refined fuel products from crude after the U.S. and China.

Some of Russia’s 32 refineries have been hit as many as 15 times since the start of the war, and one refinery has been hit every three days in recent months, creating a cycle of damage and emergency repairs that could degrade units long term, according to the International Energy Agency.

Ukrainian strikes have also increasingly targeted the more complex equipment that removes impurities from fuel, which takes months to repair. The IEA says diesel output has fallen by about 30%, and drivers have had to wait up to 40 hours to fill up at gasoline stations.

Russian refiners have tried to compensate by delaying scheduled maintenance and bringing mothballed units back online. Another response has been to lower fuel quality standards to maintain gasoline supplies, which risks damage to engines and pollution control equipment.

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The US Doesn’t Have An Oil Problem – It Has A Refinery Problem

One of the enduring weaknesses of the modern US economy is the lack of redundancy.  As long as most of the world is operating normally and there are no serious geopolitical disruptions, America’s “just in time” system works fine.  But, throw a monkey-wrench into distribution, global exports, freight systems, shipping or elements of production and cracks quickly form in the armor.  

This does not mean that the US economy can’t adapt; the pandemic shutdowns were horrifically pointless but they did prove that the system has the ability to function despite deep deficiencies.  However, when it comes to the management of vital resources, such as energy resources, it’s clear that some changes need to be made in the near term.  

Before the war in Iran a large portion of the public was oblivious to the fact that the US is the largest exporter of oil in the world, and of the foreign oil supplies we do receive, only 8% come from Gulf nation producers.  A mere 7% of those supplies travel through the Strait of Hormuz.  In other words, the US doesn’t rely on the Gulf for oil.  With the new Venezuelan deal and oil flows from the gulf back to 98% of pre-conflict levels, the war is even less of a concern when it comes to US energy. 

The problem is, there is a global oil refinery capacity shortage, and the US is not adapting as it should.  

Ukrainian drone strikes against Russian refineries have recently forced the Kremlin to cut off all diesel exports to other countries.  Russia is the second largest supplier of diesel in the world with 12% of all exports.  This loss to global markets is straining already struggling refineries and causing prices to climb.  The only country with the ability to increase refining capacity quickly is the US, but it’s not happening.  

The last time a full-conversion refinery was built in the US was Marathon’s Garyville, Louisiana plant. It came online in 1977 at about 200,000 b/d and has since been expanded to about 617,000 b/d.  Most U.S. capacity growth since the 1970s has come from expanding existing sites, not building new ones.    

In five decades, no major infrastructure has been added.  This means that as aging plants shut down, or as they are closed down due to state policies, US refining capacity will continue to fall and the ceiling for supply vs demand will get tighter and tighter. 

Currently, national demand for distilled products is 8.7 million b/d, and production provides only 9.5 million b/d – That’s an extremely narrow gap at 95%-98%.  Unfortunately, this gap has narrowed further due to refinery closures in 2025.  The largest drop in U.S. capacity came from the shutdown of the LyondellBasell’s Houston plant (about 264,000 barrels per day) and the Phillips 66’s Los Angeles plant (about 139,000 barrels per day). Together those removed about 400,000 b/d; small expansions elsewhere offset some of that, but not enough.  

The Houston plant was built in 1918 and was so old any expansion or updating would have been too costly.  Plants in California, on the other hand, have been closing due to crushing regulations.  Valero’s Benicia plant (about 145,000 b/d) stopped refining this spring and was taken out of monthly capacity later.

The answer to refinery shrinkage has long been “expansion creep” in existing facilities because it’s faster than building brand new infrastructure, but this is not going to help for much longer.  Current facilities are limited in their ability add on more capacity and these measures do not account for abrupt global changes, wars and crisis events. 

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Zelensky Vows To Hammer More Russian Refineries As G7 Greenlights Emergency Fuel Dump

President Volodymyr Zelensky told Reuters in an exclusive interview that Ukraine plans to intensify attacks on Russian oil refineries in response to continued strikes on Ukrainian cities. The threat comes as the Trump administration pressures European allies to release up to 100 million barrels of emergency oil and diesel stocks ahead of the Northern Hemisphere winter, with a global refining crunch already straining fuel supplies.

Zelensky told the outlet that Ukrainian intelligence had obtained documents outlining what he described as Russian President Vladimir Putin’s new war doctrine to broaden attacks on civilian infrastructure ahead of winter.

“We saw documents and we know that they allow them to attack infrastructure, logistics, and especially to attack in the cities, in the villages, everywhere, roads, schools, hospitals,” Zelensky said. “To pressure people to leave the capital, leave different cities: this is the goal of the operation.”

Zelensky then said, “We have to respond in any way (we can). With their attacks on our energy, we have to respond on their energy. First of all, oil refiners, etc.: what gives money to them for this war. But we will not respond, of course, just like them, on any civilian objects.”

Zelensky’s plan to further destroy Russia’s refineries comes as the Trump administration seeks to revive peace negotiations. Zelensky said Russia had shown no willingness to discuss either peace talks or a ceasefire covering energy infrastructure.

The Trump administration’s move to pressure European countries and other G7 members into releasing as much as 100 million barrels of emergency oil and diesel stocks, as confirmed by French President Emmanuel Macron on Friday, is likely in response to Zelensky’s expanding drone and missile attacks on Russian energy assets, as stockpiles for critical fuels are well below seasonal levels for this time of year. 

The International Energy Agency is coordinating the emergency release, which will take place over the next four months, according to Macron.

Goldman energy analyst Nikhil Bhandari warned last month that the global refining crisis stems from a combination of disruptions in the Strait of Hormuz and, more importantly, Ukraine’s bombardment of Russian refineries. Those attacks have prompted Moscow to extend its diesel export halt, suggesting the refining crisis could linger well into next year and keep refined-product prices elevated. 

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HYPOCRISY: Crazed Democrat Gov. Maura Healey, Who Sued Exxon and Bragged She “Stopped Two Gas Pipelines,” Now Begs Trump’s Energy Secretary to Fast-Track a Natural Gas Expansion Days Before Re-election

Massachusetts Democrat Governor Maura Healey is suddenly singing a very different tune on natural gas.

Far-left Massachusetts Governor Maura Healey, the same Democrat who sued ExxonMobil over climate change and once boasted that she stopped gas pipelines from entering the state, is now pleading with the Trump administration to rush federal permits for a natural gas pipeline expansion.

Healey sent a letter Thursday to Energy Secretary Chris Wright urging the administration to speed reviews and permits for Enbridge’s Algonquin Reliable Affordable Resilient Enhancement project, known as RARE, according to her office and CommonWealth Beacon.

She asked Wright to “work across the Administration to ensure that the federal reviews and permits needed for RARE move without delay,” and that “sufficient staff and resources are dedicated to completing the required reviews in time to preserve the project’s planned 2028 in-service date.”

The governor’s own press office confirmed the ask. In an October 1 release, Healey called on the Trump administration to expedite federal review of the Algonquin expansion she says she has previously supported.

Her office said the project would supply gas to about 600,000 customers and cut gas bills by roughly $40 million a year. The savings would come largely from reducing reliance on higher-cost imported liquefied natural gas through the Everett LNG terminal.

In January, the Massachusetts Department of Public Utilities approved two 10-year agreements between Eversource gas utilities and Algonquin to take the new supply. Enbridge, not ratepayers, would pay for the development, Healey said.

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DOJ Seeks $61M in Iranian Oil Proceeds Laundered Through Binance Accounts

The U.S. Department of Justice has filed to forfeit $61 million in crypto it says was generated from Iranian black-market oil sales.

The U.S. Department of Justice said Monday it is seizing and seeking to forfeit $61 million in cryptocurrency that it alleges came from black-market sales of sanctioned Iranian oil.

That sum is a fraction of the operation prosecutors describe in the civil forfeiture complaint. A cluster of self-custodied wallets received and distributed more than $1.5 billion in oil proceeds, routing funds to Islamic Revolutionary Guard Corps-linked businesses, other crypto addresses and an Iranian exchange, according to the filing. Two China-based firms, Blessed Trust and Hexa Whale, allegedly used trading accounts at Binance to launder proceeds and funnel them to the Iranian government and its proxies.

It comes after the U.S. tries to crack down on Iran’s use of the leading cryptocurrency: the U.S. in July said that it had frozen crypto linked to the Iranian regime, mostly in the form of Tether’s stablecoin; Iran started a bitcoin-backed insurance service for its counties shipping companies earlier this year.

There was no mention of bitcoin in Monday’s claim — but the Iranian government is also using bitcoin to skirt around sanctions. Bitcoin has no issuer, so no blacklist function and bitcoin held without intermediaries can’t be frozen

“The Government of Iran relies on black-market sales of sanctioned crude oil to fund its military and foster terrorism in the Middle East and around the world, along with other malign efforts to develop a nuclear program and ballistic missiles capable of delivering nuclear payloads,” Deputy U.S. Attorney Sean S. Buckley said in a statement. 

“As alleged in the complaint filed today, the Government of Iran used a network of cryptocurrency actors in China and elsewhere to launder more than $1.5 billion in illicit oil money intended to benefit the Iranian military and the terror-designated IRGC.”

The filing alleges that the illicit oil money was laundered via Chinese companies Blessed Trust Limited and Hexa Whale Trading Limited.

Once the money was laundered, it was funneled back to Iran’s government, its agents, and its proxies, feds said. 

The U.S. Treasury’s Office of Foreign Assets Control in July said Iran had been dodging sanctions by accepting pay in bitcoin from ships passing through the Strait of Hormuz. 

OFAC said at the time that Hormuz Safe, developed by Iran’s Ministry of Economy, “accepts payment in bitcoin and other digital assets” so it can bypass sanctions. 

The Financial Times last week reported that the Middle Eastern country was using bitcoin to settle cross-border transactions through Iranian crypto exchanges after the central bank advised its countrymen to do anything necessary to help the economy.

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Iran’s Disappearing Oil Is Becoming Everyone’s Problem

Iranian oil is disappearing from the market just as its biggest buyer returns for more. China’s recovering crude demand is colliding with the loss of a supplier that sustained its independent refiners through the crisis, forcing them to compete for increasingly expensive alternatives. The consequences reach beyond China: every replacement barrel tightens supplies for other buyers, while Tehran faces a growing incentive to disrupt the Strait of Hormuz, which is now carrying an unexpectedly strong 13 million barrels a day (just 5 million below pre-crisis level), while its own oil remains trapped.

Iranian crude has long been an underestimated part of the global oil balance. After Bashar al-Assad’s government fell in December 2024, breaking the political relationship that sustained Iranian shipments to Syria, China became Iran’s only crude buyer – in 2025, it received an average of 1.4 million b/d. The war initiated by the US and Israel in late February initially made Iran even more important to Chinese buyers: while Tehran blocked other tankers from crossing Hormuz, its own cargoes passed freely, lifting Chinese intake of Iranian oil to around 1.76 million b/d in April.

That competitive edge ended with the US blockade announced on April 13. Loaded tankers could no longer leave the Gulf, while empty vessels could not enter. Loadings at Kharg Island, Iran’s main export terminal, collapsed from 1.8 million b/d in March to 260,000 b/d in May. A June 17 memorandum allowing Iranian cargoes to pass for 60 days offered temporary relief: loadings recovered to 740,000 b/d in June and 890,000 b/d in July. But the reprieve expired in August, shipments slumped again to 250,000 b/d, and no Iranian loadings were observed in the Gulf in September.

The more important part of the story, however, was unfolding outside the Strait. Iran had accumulated a vast floating stockpile that allowed deliveries to China to continue even when fresh cargoes could not leave the Gulf. In mid-April, that cushion stood at about 160 million barrels, spread across waters around South, Southeast and East Asia. Drawing on those stocks, China still imported 1.37 million b/d of Iranian oil in May, just 10% below February’s level. But the buffer was shrinking; floating storage fell to 106 million barrels by mid-June before the temporary reopening replenished it to 128 million by mid-July.

That replenishment of available floaters has since stopped. China still received 980,000 b/d of Iranian crude in August, but only 475,000 b/d in September, with arrivals ceasing from September 26 (all of the last arriving cargoes had been loaded in June).

Iran still has around 86 million barrels on the water, the lowest volume since January 2025. Yet 23 million barrels (more than a quarter) are trapped inside the Gulf. The total has barely changed since Chinese arrivals have wound down to an almost complete halt over the past two weeks, with evident loadings in the Kharg island stopping completely. With onshore storage gradually filling up (Kpler data suggests Iranian storage tanks are now 60% full, storing around 70 million barrels), Iran will face the inevitable choice of cutting production. Whilst roughly 2.2 million b/d of production is relatively safe due to demand from its refineries, Tehran’s pre-war crude output of 3.2 million b/d seems to be no longer achievable.

For China’s ‘teapots’ (the smaller independent refineries concentrated in Shandong province), this removes a cornerstone of their crude supply. Accounting for roughly a fifth of Chinese crude imports, these refiners have built their purchasing strategies around discounted sanctioned barrels, particularly from Iran and Russia. Now they must search for barrels farther away, from the Middle East, West Africa and South America. In mid-September, ten Chinese independent refiners reportedly sent traders to Singapore to secure available supplies from the mentioned regions.

The shift is visible at Shandong’s ports. Qingdao, connected by pipeline to 12 independent refineries, relied on Iran for 40% of its 690,000 b/d incoming flows in 2025. In recent months, it has increased purchases of Brazil’s Tupi and Buzios grades and even started receiving Guyana’s Golden Arrow in July, while still relying on Saudi and Russian supplies. Nevertheless, intake has fallen to a record low of around 150,000 b/d over the past three months.

At Dongying, on Shandong’s northern Bohai coast, situated near 32 independent refineries, Russia and Iran supplied virtually all of last year’s 330,000 b/d intake, accounting for two-thirds and one-third respectively. Iranian deliveries started to decrease in summer months, with just two cargoes arriving in August and just one in September. Total intake fell to a mere 220,000 b/d in September as crude-deprived refiners were compelled to cut refinery throughputs.

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16 U.S. Trucking Companies File For Bankruptcy In Less Than A Month As Diesel Prices Soar

Diesel prices have exploded over the past month, creating another major cost shock for an industry that was already operating on thin margins. The national average climbed from roughly $5.60 per gallon at the end of August to a record $6.53 in late September, an increase of about 17% in just a few weeks. Prices have eased slightly from that peak, but the EIA’s latest weekly reading still puts diesel at $6.38 per gallon, compared with $5.60 at the end of August.

Now the financial damage is beginning to show up. Sixteen American trucking companies have entered bankruptcy proceedings in less than a month, affecting more than 250 jobs, according to FreightWaves and the Independent. Eight filed for Chapter 11 bankruptcy, allowing them to continue operating while restructuring their debts, while seven entered Chapter 7 and are liquidating their assets and shutting down.

Among the larger companies seeking Chapter 11 protection are Xoco Transport and Globemaster. Neither specified the cause of its financial problems in federal court filings, and diesel is hardly the industry’s only problem. Carriers have also been grappling with rising labor, insurance, maintenance and regulatory costs, while seasonal slowdowns can leave them without enough revenue to absorb those increases.

But the sudden surge in fuel costs adds another layer of pressure because trucking companies have limited options when diesel jumps this quickly. They can absorb the expense and sacrifice margins, pass it through with higher freight rates and risk losing business, or cut workers and equipment. The latter can keep a company alive temporarily, but it also reduces shipping capacity and the amount of revenue the carrier can generate.

And for now, there is little reason to consider the diesel problem resolved. Prices remain near historic highs and are still heavily tied to the war with Iran and the resulting disruption to global energy supplies.

Even as crude shipments through the Strait of Hormuz have begun recovering, refined-product flows remain constrained, inventories have been depleted and damaged Middle Eastern refining infrastructure continues to limit supply. Until those disruptions ease materially, diesel remains another major transmission mechanism through which the Iran war is feeding directly into the U.S. economy.

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Why Even A Temporary Diesel Export Ban Is A Bad Idea

Energy analysts spent much of the past week laying out all the reasons why a presidential ban on exports of diesel fuel is a no good, terrible, very bad idea. As the Institute for Energy Research detailed on Thursday, such a ban would not only fail to lower diesel pump prices for any appreciable amount of time, it would also inevitably result in higher gasoline prices and supply shortages as refiners are forced to cut back runs because they have no outlet for the diesel volumes currently being exported to the global market. 

Late in the week, we saw the emergence of an alternative proposal from politicians and industry critics: A temporary ban of “only” 90 days. This, they claim, would have the benefit of helping Republican candidates in their mid-term election campaigns while also allowing refiners to see a clear light at the end of the tunnel.

As a siren song it all sounds lovely. But in the real world, it’s also nonsense.

Whether we like it or not, capital does not care if some farmers in Iowa, Nebraska and Texas might go under because diesel prices are too high. Capital does care about two hard factors: The anticipated rate of return on its investment, and the consistent application of U.S. laws and regulations. 

A 90-day pause might as well be a permanent ban where capital deployment is concerned. It would send the signal to investors that the government, even in a Republican presidency, might step in at any time to do major damage to your rates of return. 

Former President Joe Biden’s killing of the Keystone XL pipeline on his first day in office in 2021 did enormous harm to that second key factor. Biden and his autopen cancelled that long-term multi-billion-dollar project which was already under construction without siting a single violation of U.S. law or regulation. The developer — Trans-Canada, now TC Energy — had moved forward with its federal permits fully secured with the faith that no future administration would intervene to cancel the billions of dollars it had already invested by January 20, 2021. 

A Trump intervention into diesel markets would do similar harm. Perhaps even more given that it would send the signal to investors that they now cannot have faith in the consistent application of the law even in a Republican administration. 

The current crisis shines a spotlight on the folly inherent in half a century of federal regulations that have made it near-impossible to build new refineries in the United States. America needs additional refining capacity and fast to be able to restore the country’s level of energy security to pre-Iran Conflict levels. 

But here’s the thing: These are multi-billion-dollar projects which take years, often decades to execute. Convincing investors to consider pouring billions of capital dollars into such projects requires their confidence that U.S. law will be applied fairly and consistently across multiple presidents of both political parties. Biden’s Keystone XL cancellation made doing that much harder. 

Sure, there is a new greenfield refinery under construction at the Port of Brownsville, Texas today— but that project benefits from a big injection of capital by India’s Reliance Industries. A big question remains whether American investors will have the confidence to step up and invest in the series of new refining operations needed to keep more of America’s domestic production at home. 

Any ban on exports for any length of time implemented for transparently political reasons would almost certainly answer that question in the negative. America cannot afford for that to happen.

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