Confirms storage capacity constraints have already been hit in Iraq. Estimates most of the six key Gulf exporters would hit storage constraints within the next month if disruptions are sustained, with some hitting constraints in days or weeks.

Identifies two key pipelines: East-West (Saudi Arabia) and Fujairah (UAE). Estimates 3.6 million barrels per day of extra pipeline spare capacity if all infrastructure is intact. Notes this still leaves 16-17 million barrels per day at risk. Highlights current fragility: Fujairah pipeline not at full capacity, ships running out of marine fuel, and vulnerability to attacks.

Acknowledges meaningful upside to the $100 number. Explains the scenario assumed 15% of flows would continue (currently seeing less), full pipeline redirection, and prices jumping to demand destruction levels similar to early 2022. States the current supply shock is significantly bigger than the 2022 Russian energy crisis (around 15 times bigger), making it plausible markets price demand destruction more quickly at higher inventory levels due to the faster speed of approaching limits.

Outlines two mechanisms for a persistent impact from a temporary disruption: 1) Inventory depletion leading to higher starting prices if production is shut in. 2) A stickier, longer-lasting security risk premium, especially in a world where Iran and its proxies have asymmetric warfare capabilities.

Says China is relatively well positioned with an estimated 110 days of oil demand stockpiled, while other Asian countries have lower buffers. Points to signs of shortages, citing jet fuel in Singapore above $200/bbl. Highlights a double whammy: Middle East exports a lot of jet fuel, and China (a major exporter) is cutting its refined product exports. Concludes the real economic impact is on refined products, where violent price action is already occurring.