Rory Johnston

All that together, you know, you're left with about 13 million barrels a day of production in the Gulf region that can't get out.

And when oil can't get out, when it can't, when it doesn't have egress, as we talk about it, if it can't go anywhere, you can't just spill it onto the desert.

You have to shut in the wells.

So this is essentially, this is the real supply loss that we're dealing with is that 13 million barrels a day that accumulates, accumulates every day.

And thus far in the war, we're at more than half a billion barrels of oil.

that should have been produced this year, based on all of our normal expectations going into the war, that now haven't been.

That's correct.

So, I mean, let's go through those because I think all of them are going to happen to a certain extent.

And let's, for the purposes of this discussion, assume that Hormuz remains closed indefinitely.

What would it mean to replace those barrels?

How would the market solve that kind of imbalance?

So, as you know, the first and most obvious way would be someone else producing more.

Where would that come from?

Most notably, I think people talk and think about the fast cycle response rate of the U.S.

shale patch or light, tight oil, which is the fastest response rate between investment and production in the oil industry.

Typically, we talk about response rates in the oil industry upwards of like five to 10 years.

U.S.

shale is more like months.

And that's still slow in the scheme of this conflict, but very, very fast in oil market terms.

But the hole in supply is just way, way, way too big.