The Hormuz Letter @HormuzLetter

BREAKING: Yemen's Houthis have laid naval mines in the Bab el-Mandeb Strait, per a Yemeni military source to DPA. This comes days after they took over Yemen's entire Red Sea coast and Perim Island. Both chokepoints between Gulf oil and Asia are now mined.

BREAKING: The Trump administration is preparing a $2.8 billion sale of 40,000 2,000-pound bombs to Israel, the largest single sale of conventional explosive ordnance from the US in modern history, with 20,000 MK-84s, 20,000 BLU-117s and 20,000 I-2000 penetrator warheads, paid for with US taxpayer dollars, per a US official to WaPo. The package eclipses the $2.04 billion sale in 2025 that completely bypassed congressional review. Israel opened the war alongside the US in February and has not struck Iran since June, and Iran's missile bases and launch sites are tunneled into rock, the class of target the I-2000 penetrator exists for.

BREAKING: US diesel crack spread, the gap between diesel and crude oil, has just hit a record $111 a barrel against Brent for the first time in history, clearing the 2022 record set after Russia's invasion of Ukraine. Diesel is now trading at roughly $220 a barrel, more than double the price of crude oil itself, against a 25-year average margin of about $17.

BREAKING: Saudi Aramco has cancelled all of its September European crude oil allocations and is scrapping every cargo slated for late-September loading onward, with a European lifter saying no Saudi oil cargoes at all until November, per initial reports citing oil trading firm Onyx and market sources. That takes the world's largest exporter out of the European market for the rest of September and all of October, a de facto force majeure on Saudi crude to Europe from the 3rd largest energy producer in the world.

BREAKING: Oil loadings have just been suspended at Yanbu, Saudi Arabia's main Red Sea export port, following the attacks on the East-West pipeline, per Reuters. Yanbu had five to seven days of crude stocks left when the pipeline went down, repairs are expected to take far longer than a month, and late-September cargoes to Europe were cancelled an hour ago. European lifters are now hearing no Saudi cargoes until November, per initial reports.

BREAKING: Saudi Arabia has informed its European customers that late-September crude oil cargoes will be cancelled, due to the East-West pipeline being shut after last week's attacks and Yemen's Houthis taking over the entire Red Sea coast, per three sources to Reuters. Yanbu had five to seven days of crude stocks left for export when the East-West line went down, per industry sources on Saturday, and cancelling late-September cargoes means Riyadh does not expect the line back before they run out. Europe has been taking Saudi crude through Yanbu because Hormuz has been closed since spring. On top of the pipeline, the Houthis appear to have struck the YASREF refinery at that same port this morning.

BREAKING: Yemen's Houthis appear to have directly struck the YASREF oil refinery in Yanbu on Saudi Arabia's Red Sea coast this morning, the 400,000 barrel per day Aramco-Sinopec joint venture and one of the Red Sea's largest diesel exporters. Footage shows a large fire, with heavy black smoke from a flare stack, thick black smoke rising at ground level across the site and workers evacuated. NASA FIRMS shows two heat anomalies inside the refinery, one at high confidence, with fire radiative power above normal for the site. Yanbu is the terminus of the East-West pipeline and the port holding the week of crude stocks Saudi Arabia has left for export.

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BREAKING: Chevron CEO Mike Wirth says the fuel crisis oil executives warned would follow a prolonged closure of the Strait of Hormuz has now officially arrived, with the mechanisms that mitigated price and supply risk having "largely now played out" and the system holding nowhere near the buffers it had when the war began, as Trump officials continue to claim the disruption is temporary, per WSJ. Wirth says he has not spoken to Trump since August 3, when Trump attacked him on Truth Social for not crediting the administration and demanded oil companies bring retail prices "DOWN, NOW!"

BREAKING: Ukrainian drones have just struck Russia's Syzran oil refinery, with multiple fires burning across the complex, hours after Trump claimed on Truth Social that Ukraine had agreed not to hit Russian energy targets, that Russia had agreed likewise, and that the world's diesel price rise "is mostly caused by the Russia/Ukraine War, not Iran." Syzran runs about 170,000 barrels per day, roughly 3% of Russia's refining capacity. US diesel hit a record $6.23 a gallon today.

BREAKING: Iran's IRGC announces the UAE-owned oil tanker Algeira exploded after hitting Iranian naval mines while attempting to pass through the US-backed southern Omani corridor of the Strait of Hormuz, with efforts to contain the fire failing and the entire tanker now engulfed in flames. The IRGC says warnings had been issued to the tanker, but it proceeded anyway.

BREAKING: US jet fuel has surged to $4.43 a gallon, up 96% since the war began and 61% in the last ten weeks, with a 10% rise in the past week alone. As a direct result, consumer US airline fares jumped 23% year over year in August with most of the recent crude oil rally not even yet in the data. Jet fuel and diesel come from the same middle-distillate cut of the barrel, the cut the Gulf's light and medium crudes were built to supply, and those barrels are now cut off at Hormuz, the East-West pipeline and Bab el-Mandeb. September CPI could show a jump in fares of 35% or more.

BREAKING: Iran directly rejects Trump's claim minutes ago on Truth Social that "the failing nation of Iran wants to make a deal, quickly and badly," saying Iran has repeatedly stated it does not seek negotiations for a deal with the US and that Trump is making false claims about Iran's willingness to reach an agreement, per Tasnim. A senior Iranian official in Tehran separately says that Trump is the one "desperately seeking a deal" to "influence global markets," and not Iran.

BREAKING: ExxonMobil's 275,000 barrel per day Joliet oil refinery in Illinois has suffered a "total power outage," with heavy black smoke from emergency flaring visible for miles, as US diesel sits at a record $6.20 a gallon, per GasBuddy. A total power outage at a refinery this size is highly unusual. It forces an emergency shutdown of every unit at once, with the crude and intermediates in the system flared off, which is the smoke. BP's Whiting refinery in Indiana, the largest in the Midwest, is already partially down for maintenance, putting pressure on Great Lakes gasoline and diesel supply.

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BREAKING: The Royal Saudi Air Force has bombed its own allies in Yemen, the Saudi-backed Giants Brigades, on the Bab el-Mandeb coast south of Mocha overnight, with dozens of casualties, per initial reports inside Yemen. As Mocha fell Thursday, Yemeni commanders said the Saudi air cover they were promised never arrived. When the strikes came, they struck their own Saudi-backed forces. Yemen's entire Red Sea coast is now Houthi-controlled.

BREAKING: Iran has struck a UAE-owned oil tanker with anti-ship ballistic missiles in the US-backed southern Omani corridor of the Strait of Hormuz, while transiting under US escort, with the vessel now drifting and leaking oil, per IRIB. Notably, for the first time Iran fired the missiles within 5 minutes of the futures market open.

BREAKING: New high-resolution satellite imagery shows the pumping station on Saudi Arabia's East-West oil pipeline burned out end to end, with the entire process area blackened and crude oil that escaped the site pooled across the desert beyond the perimeter, per Vantor imagery.

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The Hormuz Letter @HormuzLetter

2 days ago

BREAKING: Repairs to Saudi Arabia's East-West oil pipeline will take far longer than a month due to a lack of spare parts, with the pumping infrastructure catastrophically damaged and at least 8 locations on the pipe hit, per initial reports citing sources inside Saudi Arabia.

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BREAKING: Repairs to Saudi Arabia's East-West oil pipeline will take far longer than a month due to a lack of spare parts, with the pumping infrastructure catastrophically damaged and at least 8 locations on the pipe hit, per initial reports citing sources inside Saudi Arabia. That leaves Saudi Arabia set to run out of crude oil stocks for export within five to seven days, taking around 4 million barrels per day, ~4% of global supply, off the market, per three industry sources to Reuters. Some repaired points were struck again, using up the spares and undoing the work. Yanbu has about a week of stocks left on the kingdom's only export route that does not pass through Hormuz.

BREAKING: US diesel has officially hit a record $6.20 a gallon, up 69% since the Iran war started and only 3 days after crossing $6 for the first time in history, with California at a record $8.14, San Francisco at $8.62, and individual stations, including a Shell in San Diego, selling at $9.99 today, the maximum their pumps can display, while others are posting "out of diesel" signs. The surge comes as the US enters peak diesel demand season with supply at historically low levels, hours after Trump said the shortage "isn't done by the Middle East."

BREAKING: Oman has indefinitely postponed the Iran-GCC foreign ministers' Hormuz meeting set for Monday in Salalah, the first since the war began, "in the interests of consensus," per Omani Foreign Minister Badr Albusaidi, as oil futures open. Senior Iranian officials said the meeting was going to be used by Trump as a "kickstart" to his TACO, marketed as a "temporary deal," even though Iran said it would not reopen Hormuz until all its conditions are met by the US. Iran says the meeting was to finalize an Iran-Oman maritime route through the Strait of Hormuz, with ships entering purely via Iranian waters and part of the exit under Iranian arrangements, suspending the current US-backed southern Omani corridor. Saudi Arabia had submitted amendments over concern the language would set a new status quo in the strait unacceptable to the GCC, per a Gulf official, and Bahrain was boycotting.

Trump, 3 days after US diesel hit $6 a gallon for the first time in history: "Zelenskyy has to do one thing, he has to stop knocking out diesel fuel in Russia. He's causing a shortage of diesel fuel. This isn't done by the Middle East, this is done by what's happening with Russia and Ukraine."