TotalEnergies Profits Despite High Risk in Strait of Hormuz

TotalEnergies CEO Patrick Pouyanne said that despite higher transport costs due to the Strait of Hormuz being a high-risk area, the company is still able to move oil profitably through the strait. The reason is that crude producers are willing to sell their oil at steep discounts, often below $50 per barrel, in order to get it into the market.

This means that the extra cost of moving the oil through the Strait of Hormuz, which Pouyanne estimated to be around $10 per barrel, can be offset by the discount. However, this is not the case for refined oil products, which have smaller capacities and therefore cannot be transported profitably through the strait.

TotalEnergies plans to invest in alternative routes for oil transportation, including a pipeline from Baghdad to Syria and doubling the capacity of the Abu Dhabi Crude Oil Pipeline, also known as the Habshan-Fujairah pipeline. This pipeline has proven crucial in maximizing exports from the Gulf of Oman coast, just outside the Strait of Hormuz.