The Strait of Hormuz — Part 3: Re-Routing Capacity, Refining Geography, and What 'Closed' Actually Means
The pipelines, alternative ports, refining mismatches, and timeline of any plausible bypass scenario
On Saturday, September 14, 2019, in the early morning hours, a coordinated attack involving cruise missiles and drones struck the Abqaiq oil processing facility and the Khurais oil field in eastern Saudi Arabia. The Abqaiq facility is the world's largest crude oil stabilization plant — the bottleneck through which roughly half of all Saudi crude production passes for sulfur removal and pressure normalization before being piped to export terminals or domestic refineries. The strikes knocked out approximately 5.
7 million barrels per day of Saudi production capacity — roughly half of the country's output and about 5% of total global supply — for a period that the Saudi authorities and the market initially expected might run for weeks. When markets opened Monday morning, September 16, 2019, Brent crude futures gapped approximately 14.6% higher (Brent spot moved approximately 11.
7% per EIA) — the futures move was widely characterized as the largest single-day move since Iraq's 1990 invasion of Kuwait.
That is the opening. Finishing a lesson is where it stops being interesting and starts being useful: the full lesson runs to 7 sections and ends with 6 practice questions. A free account is what opens the rest, and the other 255 lessons in the Academy with it. No card.
What this lesson covers
- 1The refining-slate problem — barrels are not fungible at the refinery
- 2The substitution timeline — what happens in days, weeks, and months after a major disruption
- 3Quantifying the substitution math — what 'closed' produces in barrels and days
- 4Hormuz disruption — substitution capacity at each timeline
- 5Abqaiq-Khurais attacks, September 14, 2019 — what a real Saudi supply disruption actually looks like
- 6Where to see this on the platform
- 7Summary