Iran’s new leader said Thursday that the country will keep the Strait of Hormuz closed. Oil prices jumped in response. Brent crude, which is basically the type of oil that's no longer flowing out of the Mideast,
flirted with $100 a barrel.
Even with more than 170 million barrels of oil being released from the Strategic Petroleum Reserve, some of the refineries that convert crude oil into consumable energy just don’t have access to the raw material they need. The war could end up causing many refineries to shut down production. The kind of oil that’s getting cut off by this conflict mostly goes to Asia.
“A lot of that crude goes to China, Malaysia, Singapore. India is very important also,” said Anna Mikulska, head of analytics at CGCN Group. She said some Middle Eastern crude also heads to refineries in California.
“California has imported a lot of its crude from Iraq, for example. This is a lot of barrels that California will have a problem replacing,” Mikulska said. Refineries there can’t just switch to the heavier, sulfur-rich oil that comes from western Canada, because they aren’t set up to handle it.
“You have to build the infrastructure, you need the de-sulfurization infrastructure, and that takes a long time, and more importantly, it takes a lot of capital investment,” said Hugh Daigle, a professor of petroleum engineering at the University of Texas at Austin.
He said even though the U.S. produces a lot of its own oil around the Gulf of Mexico, California isn’t connected to that supply. “The easiest way to move crude around, domestically, is pipelines. There’s not a lot of pipeline infrastructure to get from Texas to California, believe it or not,” Daigle said. There’s none, in fact. | 
