TotalEnergies Beats Odds Moving Oil Through Paralyzed Strait

TotalEnergies CEO Patrick Pouyanne announced that his company is profitably moving oil through the Strait of Hormuz, despite the route being paralyzed during the US and Israeli war with Iran due to threats of bombing and mines.

The strait has been a key transit route for a fifth of global oil and LNG supplies, but Pouyanne noted that the route remains profitable for those who can find ship owners willing to cross the strait. He stated that crude oil is being sold at $30 below Brent prices, with producers desperate to push their oil into the market.

The company's CEO emphasized that the extra cost of moving a very large crude carrier (VLCC) through Hormuz and back is around $10 per barrel, but this is more than offset by the steep discounts from crude producers. However, Pouyanne warned that refined oil products are not being transported due to the high costs associated with smaller ships.

TotalEnergies still plans to invest in alternative routes, including partnering in a pipeline from Baghdad to Syria and investing in doubling the Fujairah pipeline in Abu Dhabi.