TotalEnergies Profits From Strait of Hormuz Market Disruptions
TotalEnergies is capitalizing on discounted Middle Eastern crude oil while investing in pipelines to reduce long-term dependence on the Strait of Hormuz.
TotalEnergies SE is utilizing its integrated business model and trading operations to profit from significant price dislocations caused by market disruptions in the Strait of Hormuz. CEO Patrick Pouyanné reported that the company is profitably transporting crude from Iraq and Qatar, which currently sells at discounts of $50 to $60 per barrel compared to Brent prices exceeding $90.
This pricing cushion allows the company to absorb a $10-per-barrel increase in transportation costs for Very Large Crude Carriers. While the company has already earned over $1 billion from these Middle Eastern crude trades, it is simultaneously pursuing strategies to mitigate the risks associated with the chokepoint.
To reduce its reliance on the Strait of Hormuz, the company plans to invest in alternative export infrastructure. These efforts include the Baghdad-Syria pipeline and the expansion of the Habshan-Fujairah pipeline in the United Arab Emirates, which the UAE government intends to double in capacity.
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