Cushing cannot raise the global price itself. But if US export machine is the buffer on the supply shock, certainly Cushing (and other US hubs) self-regulating to stop export is an indirect pressure on global price.
I get you that it's not a silver bullet. But Brent flows are still majority force majeure'd, so surely the implication of Cushing low inventory raising prices, if indirect, still holds true until we see Hormuz back up to 10 mbpd?
This is correct. Low Cushing storage can certainly be bullish global oil prices. It's just not as bullish as most of the narratives I see being talked about.
So if Cushing re-prices itself to other benchmarks, in order to not fall below operational minimums, what does that mean for a world starving for supply? Don't the other benchmarks just start soaring once Cushing re-prices itself in a way that denies export?
I get the idea of Cushing regulating it's own supply and that it probably won't fall below a certain supply. But that regulation of supply means the indirect effect will hit demand, via price mechanisms, right? How else do you avoid shortage, especially in a world where Brent is a hypothetical input until the Strait fully normalizes?
I'm not fully getting the article because you deny shortages and price increases, however the mechanism you describe, regulates shortages via price increases. Maybe I'm missing something.
Cushing cannot raise the global price itself. But if US export machine is the buffer on the supply shock, certainly Cushing (and other US hubs) self-regulating to stop export is an indirect pressure on global price.
I get you that it's not a silver bullet. But Brent flows are still majority force majeure'd, so surely the implication of Cushing low inventory raising prices, if indirect, still holds true until we see Hormuz back up to 10 mbpd?
Or am totally wrong?
This is correct. Low Cushing storage can certainly be bullish global oil prices. It's just not as bullish as most of the narratives I see being talked about.
Understood. Thank you for clarifying and I appreciate your detailed article. Has added a lot of color to my understanding.
So if Cushing re-prices itself to other benchmarks, in order to not fall below operational minimums, what does that mean for a world starving for supply? Don't the other benchmarks just start soaring once Cushing re-prices itself in a way that denies export?
I get the idea of Cushing regulating it's own supply and that it probably won't fall below a certain supply. But that regulation of supply means the indirect effect will hit demand, via price mechanisms, right? How else do you avoid shortage, especially in a world where Brent is a hypothetical input until the Strait fully normalizes?
I'm not fully getting the article because you deny shortages and price increases, however the mechanism you describe, regulates shortages via price increases. Maybe I'm missing something.