Oil built the Persian Gulf. Desalinated water keeps it alive. War could threaten both

As missiles and drones curtail energy production across the Persian Gulf, analysts warn that water, not oil, may be the resource most at risk in the energy-rich but arid region. On Sunday, Bahrain accused Iran of damaging one of its desalination plants. Earlier, Iran said a U.S. airstrike had damaged an Iranian plant. Hundreds of desalination plants sit along the Persian Gulf coast, putting individual systems that supply water to millions within range of Iranian missile or drone strikes. Without them, major cities could not sustain their current populations. In Kuwait, about 90% of drinking water comes from desalination, along with roughly 86% in Oman and about 70% in Saudi Arabia. The technology removes salt from seawater — most commonly by pushing it through ultrafine membranes in a process known as reverse osmosis — to produce the freshwater that sustains cities, hotels, industry and some agriculture across one of the world’s driest regions. For people living outside the Middle East, the main concern of the Iran war has been the impact on energy prices. The Gulf produces about a third of the world’s crude exports and energy revenues underpin national economies. Fighting has already halted tanker traffic through key shipping routes and disrupted port activity, forcing some producers to curb exports as storage tanks fill.

But the infrastructure that keeps Gulf cities supplied with drinking water is equally vulnerable.

 

“Everyone thinks of Saudi Arabia and their neighbors as petrostates. But I call them saltwater kingdoms. They’re human-made fossil-fueled water superpowers,” said Michael Christopher Low, director of the Middle East Center at the University of Utah. “It’s both a monumental achievement of the 20th century and a certain kind of vulnerability.” The war that began Feb. 28 with U.S. and Israeli attacks on Iran has already brought fighting close to key desalination infrastructure. On March 2, Iranian strikes on Dubai’s Jebel Ali port landed some 12 miles from one of the world’s largest desalination plants, which produces much of the city’s drinking water. Damage also was reported at the Fujairah F1 power and water complex in the United Arab Emirates, and at Kuwait’s Doha West desalination plant. The damage at the two facilities appeared to have resulted from nearby port attacks or debris from intercepted drones. On Sunday, Bahrain accused Iran of indiscriminately attacking civilian targets and damaging one of its desalination plants, though it didn’t say supplies have gone offline. The island nation, home to the U.S. Navy’s Fifth Fleet, has been among the countries targeted by Iranian drones and missiles. Earlier, Iran said a U.S. airstrike damaged an Iranian desalination plant. Abbas Araghchi, the country’s foreign minister, said the strike on Qeshm Island in the Strait of Hormuz had cut into the water supply for 30 villages. He warned that in doing so “the U.S. set this precedent, not Iran.” Many Gulf desalination plants are physically integrated with power stations as co‑generation facilities, meaning attacks on electrical infrastructure could also hinder water production. Even where plants are connected to national grids with backup supply routes, disruptions can cascade across interconnected systems, said David Michel, senior fellow for water security at the Center for Strategic and International Studies. “It’s an asymmetrical tactic,” he said. “Iran doesn’t have the same capacity to strike back at the United States and Israel. But it does have this possibility to impose costs on the Gulf countries to push them to intervene or call for a cessation of hostilities.” Desalination plants have multiple stages — intake systems, treatment facilities, energy supplies — and damage to any part of that chain can interrupt production, according to Ed Cullinane, Middle East editor at Global Water Intelligence, a publisher serving the water industry. “None of these assets are any more protected than any of the municipal areas that are currently being hit by ballistic missiles or drones,” Cullinane said. Gulf governments and U.S. officials have long recognized the risks these systems pose for regional stability: if major desalination plants were knocked offline, some cities could lose most of their drinking water within days. A 2010 CIA analysis warned attacks on desalination facilities could trigger national crises in several Gulf states, and prolonged outages could last months if critical equipment were destroyed.

More than 90% of the Gulf’s desalinated water comes from just 56 plants, the report stated, and “each of these critical plants is extremely vulnerable to sabotage or military action.”

A leaked 2008 U.S. diplomatic cable warned the Saudi capital of Riyadh “would have to evacuate within a week” if either the Jubail desalination plant on the Gulf coast or its pipelines or associated power infrastructure were seriously damaged. Saudi Arabia has since invested in pipeline networks, storage reservoirs and other redundancies designed to cushion short-term disruptions, as has the UAE. But smaller states such as Bahrain, Qatar and Kuwait have fewer backup supplies.

The threat is not hypothetical

During Iraq’s 1990-1991 invasion of Kuwait and the subsequent Gulf War, Iraqi forces sabotaged power stations and desalination facilities as they retreated, said the University of Utah’s Low. At the same time, millions of barrels of crude oil were deliberately released into the Persian Gulf, creating one of the largest oil spills in history. Yemen’s Houthi rebels have targeted Saudi desalination facilities amid regional tensions. The incidents underscore a broader erosion of long-standing norms against attacking civilian infrastructure, Michel said, noting conflicts in Ukraine, Gaza and Iraq. International humanitarian law, including provisions of the Geneva Conventions, prohibit targeting civilian infrastructure indispensable to the survival of the population, including drinking water facilities. The potential for harmful cyberattacks on water infrastructure is a growing concern. In 2023 and 2024, U.S. officials blamed Iran-aligned groups for hacking into several American water utilities. After a fifth year of extreme drought, water levels in Tehran’s five reservoirs plunged to some 10% of their capacity, prompting President Masoud Pezeshkian to warn the capital may have to be evacuated. Unlike many Gulf states that rely heavily on desalination, Iran still gets most of its water from rivers, reservoirs and depleted underground aquifers. The country operates a relatively small number of desalination plants, supplying only a fraction of national demand. Iran is racing to expand desalination along its southern coast and pump some of the water inland, but infrastructure constraints, energy costs and international sanctions have sharply limited scalability. “They were already thinking of evacuating the capital last summer,” Cullinane of Global Water Intelligence said. “I don’t dare to wonder what it’s going to be like this summer under sustained fire, with an ongoing economic catastrophe and a serious water crisis.”

NN: Its not just the oil. Its the water too. And one little drone can reduce it all  to a pile of rubble. No oil…  No water and that is a big awh shit

 

UAE and Kuwait Start Oil Output Cuts After Hormuz Blockage

The United Arab Emirates and Kuwait started reducing oil production, as the near-closure of the crucial Strait of Hormuz ripples through energy markets and affects global supply. Abu Dhabi National Oil Co. is “managing offshore production levels to address storage requirements,” the company said in a statement, without giving details. Kuwait Petroleum Corp. said it was lowering production at both its oil fields and refineries after “Iranian threats against safe passage of ships through the Strait of Hormuz.” The war in the Middle East has all but closed Hormuz, the narrow waterway linking the Persian Gulf to the open seas, to maritime traffic following Iranian threats to shipping. That’s clogged up exports from the world’s top oil-producing region and helped drive prices in London to the highest close in more than two years at almost $93 a barrel, sending consumers searching for alternatives and threatening to push global inflation higher.

Hostilities in the region have interrupted production and tanker traffic

Sources: Institute for the Study of War and AEI’s Critical Threats Project; US Central Intelligence Agency; US Department of Energy

Kuwait’s oil cutback started with about 100,000 barrels a day as of early Saturday and is expected to almost triple on Sunday, with further gradual reductions depending on storage levels and the status of Hormuz, a person with direct knowledge of the plan said, asking not to be named because the details are private.

The UAE, which pumped more than 3.5 million barrels a day as OPEC’s third-biggest producer in January, is using export capacity that bypasses the Strait of Hormuz, and its international storage facilities, to ensure supply to global markets. Adnoc operates a 1.5 million barrel-a-day pipeline to Fujairah on the UAE’s western coast to avoid the strait. Adnoc said its onshore operations are continuing normally. Cutbacks by the two OPEC members follow a swathe of others in the region. Iraq started holding back production earlier this week as storage tanks started filling up, while Saudi Arabia shut its biggest refinery and Qatar closed the world’s largest liquefied natural gas export plant after drone attacks. Kuwait Petroleum declared force majeure — a legal clause allowing a company not to fulfill contractual obligations because of circumstances outside its control — on sales of oil and refinery products, according to a notice seen by Bloomberg. The country produced about 2.57 million barrels a day of oil in January, according to data compiled by Bloomberg. The only route out for the supply is through the Strait of Hormuz. Saudi Arabia, the biggest producer in the region, has diverted some of its crude away from this route toward Yanbu in the Red Sea.

Mideast Oil Producers Against the Clock

Hormuz halt may exhaust oil and fuel storage in weeks or days

Note: Re-routing denotes where Saudi Arabia and UAE have alternative options to partially by-pass Strait of Hormuz

Kuwait had earlier begun lowering processing rates at its refineries because of the fuller tanks. The nation’s plants — Al-Zour, Mina Al-Ahmadi and Mina Abdullah — have a combined capacity of about 1.4 million barrels a day. Al-Zour is one of the biggest oil-processing facilities in the Middle East. US President Donald Trump said he expects crude prices to drop at the end of the war, which he called a “minor excursion” that’s likely to continue “for a little while.” “We figured oil prices would go up, which they will,” Trump told reporters aboard Air Force One on Saturday. “They’ll also come down. They’ll come down very fast. And we will have gotten rid of a major, major cancer on the face of the Earth.” The UAE and Kuwait, like other Gulf nations, have been heavily targeted by Iranian missiles and drones in the region’s expanding war. The US embassy in Kuwait has been hit and the US consulate in Dubai targeted, along with other infrastructure in the two countries.

NN; Easy to shut down production. Months to restart and months to deliver. $5.00 gasoline here we come and $15o crude.

Iran reaches consensus on Khamenei’s successor

Iran’s Assembly of Experts member Ayatollah Mohammad-Mahdi Mirbagheri stated that the country’s deliberative body managed to reach a “decisive and unanimous opinion, which is the opinion of the majority” on who will be the successor to the country’s late Supreme Leader Ayatollah Ali Khamenei (pictured), Mehr news agency reported on Sunday. According to the report, Mirbagheri said that there are still “some obstacles” that need to be resolved regarding the process, but that “great efforts to determine the leadership” have been made. “The delay in electing the third leader is bitter and unwanted for everyone, and there is no alternative, so we should not have bad thoughts about our representatives at this difficult time,” the representative of Zanjan in the Assembly of Experts, Hojjatoleslam Jafari, said.

Crude Closes Near $91 After Historic Rally

 

US oil posted the biggest weekly gain on record as the war in Iran upends critical energy market flows, with shipping through the Strait of Hormuz at a near-total halt. West Texas Intermediate added 12% on Friday to settle just below $91 a barrel, the largest daily jump in almost six years, while Brent closed near $93 a barrel. Iran warned that the European Union is a “legitimate” target if it joins the war, adding to bullish momentum. The Wall Street Journal reported that Kuwait has begun cutting production at some oil fields after running out of places to store bottled-up crude, the latest sign of a hit to regional output. Citigroup Inc. estimates that the oil market is losing 7 million to 11 million barrels of daily supply due to the disruption through Hormuz. Crude surged even after US President Donald Trump signaled “imminent action” to reduce pressure on prices, while National Economic Council Director Kevin Hassett denied that the White House would tap the Strategic Petroleum Reserve, a cache of crude held in vast underground caverns, anytime soon. “We’ve got a whole flow chart of tools to use,” Hassett said during a Bloomberg Television interview. So far, the Treasury Department has eased curbs on India’s ability to buy Russian oil and the US International Development Finance Corp. announced a $20 billion plan for maritime reinsurance, including war risk, in the Gulf region. Japan was also reportedly considering tapping national reserves. No action has yet been taken, though market participants are speculating that a coordinated release from multiple nations’ emergency oil inventories could be enacted to maximize impact. Still, with no sign of a let-up in hostilities, Goldman Sachs Group Inc. flagged the risk of scenarios for oil topping $100 a barrel in the case of prolonged disruption. European diesel futures headed for a weekly gain of more than 50%, and central banks signaled unease about a possible resurgence in inflation. There has been a “near-total” pause in commercial traffic through Hormuz, according to the Joint Maritime Information Center, a multinational naval advisory group. The collapse stems from “security threats, insurance constraints, operational uncertainty and effective disruptions.” Some shippers are booking smaller vessels to transport oil from the US Gulf Coast to Asia as costs soar for the massive tankers typically used on those routes. Meanwhile, only nine empty VLCCs remain available to store crude from major Middle East producers. Once those are filled, onshore storage tanks will fill rapidly. Oil markets have been rocked by the conflict, which has ensnared about a dozen nations since the US and Israel launched their campaign on Feb. 28. As the fighting intensified, not only has shipping through the key strait all but ended, but some producers are starting to curb output. Refineries and tankers have also been hit. Qatar’s energy minister told the Financial Times that crude could soar to $150 a barrel in two to three weeks if tankers and other merchant vessels are unable to pass through Hormuz. Iranian Foreign Minister Abbas Araghchi told NBC News his country had no intention to negotiate and was ready for a ground invasion, although Trump commented later to the same network that he was not thinking about such a move. Saudi Arabia has stepped up direct engagement with Iran to try and contain the war. Last year, about 20 million barrels of oil and petroleum products flowed through the Strait of Hormuz daily, according to a tally from the International Energy Agency. With importers struggling to secure barrels, the Treasury Department’s Office of Foreign Assets Control issued a short-term waiver to allow India to buy Russian crude. The move “only authorizes transactions involving oil already stranded at sea,” Treasury Secretary Scott Bessent said. Indian refiners have already bought more than 10 million barrels of Russian crude, according to people with direct knowledge of the deals. Much of that may have been purchased even before the one-month waiver announced late Thursday in Washington. India’s Reliance Industries Ltd. is seeking to buy Russian oil, a person familiar with the matter said. Goldman Sachs warned that a prolonged disruption at Hormuz — which links the Persian Gulf to global markets and typically carries about one-fifth of global oil flows — could lift prices far higher, although the bank’s base case at present is for a gradual recovery of shipments and futures to average $76 a barrel in the second quarter. “Let’s say you have another five weeks of very low flows of oil through the strait,” Samantha Dart, the co-head of global commodities research at the Wall Street lender, told Bloomberg Television, speaking before the JMIC advisory was issued. “It is possible we would see Brent prices cross the $100-per-barrel threshold.” In Asia, signs of strain for top economies are mounting. China has told major refiners to suspend exports of diesel and gasoline, reflecting efforts to prioritize domestic needs. Elsewhere, Japanese refiners asked their government to release oil from strategic reserves.

Oil Prices

  • WTI for April delivery climbed 12% to settle at $90.90 a barrel in New York.
  • Brent for May settlement gained 8.5% to settle at $92.69 a barrel.

Meanwhile, Saudi Arabia raised the price of its main oil grade for buyers in Asia for April by the most since August 2022. Riyadh is also diverting millions of barrels to Red Sea ports to avoid Hormuz.

The options market may be adding fuel to the rally, as dealers who sold calls need to buy futures to rebalance hedges as prices rise through key strikes. There were large open positions in the April contract at $85 and May at $80 — levels that were blown through on Friday. NB: Can you believe these ASSHOLES  SHORTED THIS RALLY? IT  SHOW YOU WHAT CONGENTIAL  IDIOTS  STAFF THE TRADING DESKS IN THESE TRILLION DOLLAR MARKETS!

Refined-product prices have also soared. In Europe, low-sulfur gasoil futures have rallied 50% on ICE Futures Europe so far this week, the biggest move on record. In a sign of near-term tightness, Brent’s prompt spread — the difference between its two nearest contracts — widened to roughly $5.50 a barrel in backwardation, a bullish pattern. A month ago, it was 58 cents.

US to send third aircraft carrier to join Iran war

The United States will deploy a third aircraft carrier to the Middle East to join the ongoing war against Iran, Fox News reported. USS George H.W. Bush will cross the Atlantic and head to the eastern Mediterranean after USS Gerald R. Ford carrier entered the Suez Canal and sailed into the Red Sea. It would be the third aircraft carrier deployed near Iran. The USS George H.W. Bush could take part in potential operations against the Yemeni Houthis, should they join the hostilities.

NN: This is called escalation. America is walking into a big AWH Shit! Go big or go home!! It looks like they decided to go  BIG!!!!

 

Iran strikes with a drone Malta-flagged oil tanker in Strait of Hormuz

Iran’s Islamic Revolutionary Guard Corps (IRGC) revealed on Saturday that it struck an oil tanker called “Prima,” which was sailing under Malta’s flag, in the Strait of Hormuz, claiming that the vessel ignored “repeated warnings” from the IRGC Navy. “It is worth noting that the strategic Strait of Hormuz has been under control for the eighth day due to the malicious aggression of American terrorists, the martyrdom of the Leader of the Islamic Ummah, and the aggression against the Persian Gulf region and the Strait of Hormuz, and oil tankers and commercial vessels allied with the warring countries are not allowed to pass through this strait,” IRGC stated. Meanwhile, the United States announced a $20 billion reinsurance program yesterday for oil tankers and other vessels to promote maritime traffic through the Strait of Hormuz amid the ongoing conflict in the region and Iran’s threats to vessels attempting to go through the sea passage connecting the Persian Gulf to the open ocean.

NN: Its started… You can not effectively escort tankers in the age of drone warfare. Just like the US learned when it tried to supply tanks to Ukraine. Concentrate on defeating Iran and then the straights can be reopened. Until then we PARTY

Kuwait Shuts Production, Qatar Warns Oil Could Hit $150 in Weeks

Oil prices could soar to as much as $150 per barrel within two to three weeks if the critical Strait of Hormuz remains off limits for tankers, Qatar’s Energy Minister Saad al-Kaabi told the Financial Times in an interview published on Friday.   That proclamation came just a few short hours before reports that Kuwait—one of the founding members of OPEC—had begun shutting in oil production at some oilfields as there just simply isn’t anywhere to store any more oil with the Strait of Hormuz still at a standstill. According to sources familiar with the matter, Kuwait is also discussing cutting production even further, and refining operations as well, to levels that would match what would be needed domestically.  All major oil and gas exporters in the Middle East are set to declare force majeure on exports within days if the vital shipping lane remains de facto closed to tanker traffic, said al-Kaabi, who is also president and CEO of QatarEnergy.   Qatar’s state energy firm earlier this week halted LNG production at its Ras Laffan hub, the world’s largest LNG complex, and later issued force majeure notices to buyers, following a drone attack at the facility and the all but halted tanker traffic through the Strait of Hormuz.

Vessel traffic through the Strait of Hormuz has crashed from an average of 138 ships a day to just two in the 24 hours to Thursday, the Joint Maritime Information Center has reported. The center noted that neither of the two vessels that passed the Strait were tankers. 

There are several dozen tankers stranded near Hormuz, some have become the target of attacks, and insurers have pulled war insurance, contributing to the paralysis of energy trade in the world’s biggest oil-producing region. Announcements by the U.S. president that the federal government would step in to provide insurance coverage have yet to have an effect.  “Everybody that has not called for force majeure we expect will do so in the next few days that this continues. All exporters in the Gulf region will have to call force majeure,” Qatar’s al-Kaabi told FT.  The official also predicted that if the war continues for a few weeks, global economic growth would suffer.

But even if the war were to end today, Qatar would likely need “weeks to months” to ‌return to a normal schedule and cycle of energy deliveries, al-Kaabi said. 

Qatar: War to crash world economy, send oil to $150

Qatari Energy Minister Saad Al-Kaabi  cautioned that war in Iran and affecting the region could devastate global economies, forecasting that all Gulf exporters would halt output within weeks and oil would hit $150 a barrel, the Financial Times said on Friday after interviewing him. Al-Kaabi, who is also President and CEO of QatarEnergy, warned that ongoing developments could “bring down the economies of the world.” “If this war continues for a few weeks, GDP growth around the world will be impacted. Everybody’s energy price is going to go higher. There will be shortages of some products and there will be a chain reaction of factories that cannot supply.” He warned LNG recovery would take “weeks to months” even if war ended. Also, he predicted gas prices would reach $40 per MMBTU as Asian buyers outcompete Europe for limited supplies and other Gulf exporters struggle to meet obligations.

NN: This is a BIG shit. I do not belie they can get the straights opened that fast. And that means we have a great potential for a great oil shock.

 

Trump: No deal with Iran except surrender

United States President Donald Trump said on Friday that there will be no deal with Iran “except UNCONDITIONAL SURRENDER.” He added that, after the current regime surrenders, and “GREAT & ACCEPTABLE” leaders are selected, the US and its allies will work to “bring Iran back from the brink of destruction, making it economically bigger, better, and stronger than ever before.” He concluded by saying that Iran “WILL HAVE A GREAT FUTURE.” Yesterday, Trump said that Iranian Supreme Leader Ali Khamenei should not be succeeded by his son Mojtaba Khamenei, calling him a “lightweight” and stating that the US wants “someone that will bring harmony and peace to Iran.”

NN: Iran is toast. They will surrender unconditionally just like Japan and Germany

WTI up 8.3%, Brent up 5.6%

The prices of oil skyrocketed on Friday, continuing their upside spiral after investors received two news pieces impacting the energy market. First, Qatar’s energy minister warned that war involving Iran could send oil to $150 and devastate global economies. Additionally, the Wall Street Journal said Kuwait began cutting production after running out of storage capacity, with further cutbacks expected within days. West Texas Intermediate (WTI) for April’s settlements soared by 8.33% at 8:54 am ET to sell for $87.76 per barrel. Meanwhile, Brent for May’s deliveries jumped by 5.67% to go for $90.25 per barrel.

NN: You need to keep buying as your aerage points are elected