The United States projects the Strait of Hormuz will become economically obsolete within two years through a massive domestic energy surge to isolate Iran. Meanwhile, global diesel prices have hit record highs, and Azerbaijan has launched its first fuel export to Armenia.
Global market
US Treasury Secretary Scott Bessent declared at the G20 that a domestic energy surge and economic isolation of Iran will turn the Strait of Hormuz into a “worthless piece of water” within two years. Despite current tensions, the US Department of Energy reported a record 17 million barrels of oil passed through the strait on September 1. Meanwhile, ICE diesel refining margins hit record highs this week due to Russia’s export ban and drone-related disruptions, according to ING commodities strategists Warren Patterson and Ewa Manthey. To offset global supply shifts, Kazakhstan plans to double its oil refining capacity to 29 million tons per year by 2040, as the US strategic petroleum reserve dropped to a 44-year low of 286.6 million barrels.
Russia & CIS
Russian Vice-Prime Minister Alexander Novak declared that Russian refineries are now better protected against drone attacks than similar facilities in the UAE, warning domestic oil firms that downtime from strikes costs far more than defense systems. At the Eastern Economic Forum, Russian Transport Minister Andrey Nikitin announced that Russia successfully avoided a jet fuel deficit at domestic airports despite local logistics hurdles. Additionally, Russian Energy Minister Sergey Tsivilev proposed renaming the planned Power of Siberia 2 gas pipeline to the “Power of Baikal” during an energy council. To ease local shortages, Crimean Prime Minister Yury Gotsanyuk announced that over 60,000 tons of fuel will be delivered to Crimea by the end of September.
Armenia
Azerbaijan will export almost 1,000 tons of diesel to Armenia, marking the first practical step under their new bilateral trade agreement. In Yerevan, energy officials stated that Armenia is not considering Iranian gas as an alternative to Russian imports, confirming that natural gas deliveries from Tehran will continue strictly under the existing “gas-for-electricity” swap mechanism without extra volumes. However, local energy analysts warned that Russia will still be obliged to raise natural gas prices for Armenia in the near future. This regional integration occurs as Armenia progresses with the construction of a new Iran-Armenia power line to boost electricity exchange, while its energy security remains shielded by duty-free fuel imports at fixed rates under the EAEU.