Above, clip from Oil analyst Jeff Currie on Bloomberg News, discussing the fulminating situation with supply chains in the Middle East and globally – thanks to the Trump administration’s war for oil, a warming climate, and a monster El Niño.
Vladimir Putin’s wildest wet dreams could not have imagined what Donald Trump’s sheer stupidity, greed, and venality has wrought.
Chickens—>roost.
Saudi Arabia said Friday it shut down a major pipeline a day after it was attacked by drones, and Yemen’s Iranian-backed Houthi rebels captured a strategic island at the southern entrance to the Red Sea, two officials said, opening a new front in the Iran war.
The Houthis made their biggest territorial gains in years along the Bab el-Mandeb Strait, one of the world’s key shipping lanes. The advance could boost Iran’s strategy of driving up world oil and gas prices to pressure the United States.
Saudi Arabia said it had shut down the East-West pipeline after it was attacked the day before. The Saudi Ministry of Energy called the shutdown “a precautionary measure.”
The Saudi Foreign Ministry blamed the attack on several drones that came from Iraq. In a statement carried by the state-run Saudi Press Agency, the kingdom said it would not respond to give the Iraqi government “an opportunity to take the necessary measures.”
To get from Minnesota to China, a load of soybeans might meander down the Mississippi River on a barge, transferring around New Orleans to a ship that carries it through the Panama Canal and across the Pacific.
But this summer, low water levels have throttled traffic moving through the canal and limited barge cargo on the river. In Europe, the Rhine and Danube rivers, both important shipping channels, also saw record-low water levels.
Across the logistics industry, it’s been a season of bottlenecks caused by low rainfall and shrinking rivers.
In addition to the heat, floods and storms that have delivered acute shocks to local economies in recent months, climate change is worsening droughts, increasing shipping costs and slowing movement through the waterways that act as conveyor belts for global trade. Add in record-setting prices for the diesel that powers the global cargo industry, and it’s no wonder costs of goods are climbing.
The Panama Canal
About 5 percent of ocean shipping traffic flows through the Panama Canal, which relies on a system of locks that use millions of gallons of fresh water to move ships. Low rainfall, made worse by El Niño weather patterns, has contributed to low water levels in the lakes that feed the canal. The authorities have responded by slashing the number of vessels that can travel through the waterway each day.
At the start of the month, the number of slots available fell from 38 to 34. Next week, it will be cut to 32.
This is not the first time a drought has affected shipments through the Panama Canal. In 2023, severe water shortages pushed daily transits down to 24 per day.
The Mississippi
On the Mississippi River, which carries the barges that transport almost half of U.S. corn and soybean exports, the American Commercial Barge Line implemented its low-water protocol this month, setting limits on how low vessels can sit on certain parts of the river. That means operators have to lighten their loads or use smaller boats.
Low water levels in the Mississippi have caused problems off and on for several years now, Gantz said. The waterway offers a cost-effective means of transporting agricultural goods from the Corn Belt to the Gulf Coast. A single barge can carry the equivalent of more than a thousand trucks or 200 rail cars, according to the American Farm Bureau.
The Rhine River, one of Europe’s main shipping arteries, hit all-time lows this year, exposing sunken ships and forcing barge operators to lighten their loads. The drought fell outside of typical periods of low flow, which have historically happened in the fall. A 2018 drought that affected the Rhine shaved 0.3 percent off Germany’s economic output that year.
“We’re seeing this kind of water crisis a lot earlier than normally we would expect to be dealing with it,” said Alexandra Naegele, research scientist at the Woodwell Climate Research Center.
Woodwell’s projections suggest that in the next few decades, the Rhine could see two additional weeks per year when water levels fall so low that barges have to reduce their volume by at least half.