Nanyang Storm 1864

Chapter 483 The U.S. crude oil market was severely impacted
While the King of Chu and his entourage were visiting Britain with great fanfare, the United States on the other side of the Atlantic was in big trouble.

When the news came out that the King of Chu promised to double the amount of crude oil shipped to Europe and lower the price to half of the original price, the U.S. Wall Street stock market immediately plummeted.

For a week in a row, the stock prices of all listed companies and crude oil producers involved in crude oil trade plummeted, and their market capitalizations were less than 1/5 or even 1/10 of their peak levels.

Many bankrupt stock brokers went directly to the roof and jumped down with despair.

The New York Times dubbed it "Black September" and pessimistically predicted that "9 will be a year in which U.S. crude oil exports to Europe will suffer a severe blow, and the outlook is extremely bleak."

"The average price of crude oil at $25 a barrel is already below the cost line. Every barrel sold will result in a loss of two to three dollars, and this is just the beginning."

"Chu State launched a backstab against the U.S. oil industry. This is a trade war. U.S. oil is now at a great disadvantage due to the high tariffs in Europe."

"Easterners are entering the European market in large numbers, using oil as a weapon to stop the Americans. We must find a feasible way to overcome these difficult times with our European trading partners..."

Wall Street analysts are very pessimistic about the prospects of the oil trade war. If Washington's high tariff barrier policy does not change, U.S. oil will be inherently at a disadvantage.

Pennsylvania's oil creeks are in an extremely unfavorable competitive position due to high mining costs, high transportation costs, and heavy tariff burdens for entering the European market.

Now that the State of Chu has wielded the price stick, everyone knows that $25 a barrel is not the final result.

Comparison
The transportation cost of the Texas oil field is much lower, and it does not require long railway transportation and port oil depot storage and transportation, so the development prospects are quite good.

But the problem is

Building new oil fields requires a lot of money, including short-distance transportation trains, tank trucks, extraction equipment and land and labor costs, as well as the huge risks of drilling.

It is true that the Texas oil fields have abundant reserves, but this stuff is underground. Who knows which oil well has the highest output?

It is possible that dozens or even hundreds of oil wells have been drilled, but only a few can produce oil. A large amount of investment has been thrown into the water, and the losses are so great that even grandma cannot recognize them.

Stocks of oil companies related to Wall Street plummeted, and a large amount of speculative capital waited and watched. Due to the sharp shrinkage of capital caused by the stock market crash, the wallets of major American oil companies also shrank.

Investing heavily in the Texas oil fields is a gamble. If you lose, you will lose everything. American capitalists and speculative hot money have also become hesitant.

One piece of bad news shook the American Wall Street capital, causing huge losses in interests, and naturally they hated the State of Chu.

High transatlantic tariff barriers keep U.S. oil costs high, putting it at a disadvantage.

Washington, The White House
Inside the Oval Office

President Rutherford Hayes, who was under tremendous pressure from Wall Street, was convening several cabinet members to discuss countermeasures, and the US side could no longer sit still.

He knocked on the table and emphasized:
"The Chu State and Britain are colluding with each other and launching an oil trade war against the United States. This is a mad counterattack by a backward feudal country against a democratic system. The United States must not allow them to act recklessly.

We must fight back resolutely.

Mr. Wilson, I need you to lead an American delegation to various European countries as soon as possible, especially France, with whom we have a long-standing friendly relationship.

The United States and France, two democratic countries, must stand firmly together.

I will also personally write a letter to German Chancellor Bismarck. Close transatlantic trade relations are very important to both the United States and Germany.

The United States will create smoother and more favorable conditions for industrial products from France and Germany to enter the North American market.

But this takes time. The government will push relevant bills through parliament to reduce customs duties on some industrial products and demonstrate the sincerity of the United States.

In the future..."

US President Rutherford Hayes kept waving his powerful arms to emphasize his tone and show his unquestionable determination.

Secretary of State Woodrow Wilson frowned and glanced at Secretary of Commerce William McAdoo. He didn't pay much attention to what the president said, but was troubled by this trip to Europe.

In the face of huge interests, any way of emphasizing traditional friendship is ridiculously fragile.

President Rutherford Hayes couldn't come up with any practical and effective measures, nor could he offer any real preferential prices. What's the point of just talking about traditional friendship?
There are dozens or even hundreds of oil producers and traders in the United States, all of whom operate independently. They have been thrown into disarray by the fierce "price reduction stick" policy of the Chu State.

The quotes for U.S. oil in the European market subsequently dropped significantly, ranging from $33 per barrel, $28 per barrel, to $27 per barrel. Some traders even called out the lowest price of $25 per barrel.

At this moment, their hearts must be filled with blood and they must want to jump off the building.

Because the production of Oil Creek is reserved by these traders, the price is generally above US$25 per barrel. After shipping it to Europe and adding customs duties, there is still some profit.

The price of a barrel in the European market has dropped so much that it is already lower than the purchase price. Add to that the capital cost, transportation cost and high customs taxes paid to Europe, and the loss is so huge that even my grandmother can't bear it.

Now a large number of American oil traders and oil companies have gathered near Oil Creek in Pennsylvania and the Texas oil fields to urgently negotiate new supply prices.

The price must be reduced significantly, but by how much?

That is the most painful decision. American oil traders hope that the price of oil field supply will be as low as possible, and it must not exceed $12 per barrel, otherwise they will lose money on every barrel they distribute.

It would be best if the price could be lowered to around $10 a barrel to cope with the oil trade storm initiated by the State of Chu.

The oil fields also have to bear the cost of transportation to the port and the storage costs of the oil depot. With the price as low as $12 per barrel, they are already making a huge loss, so of course they won't do it.

You come to me now that you are losing money, but why didn’t you tell me when you were making a lot of money?

The positions of both sides are so different that it is difficult to reach an agreement in a short period of time.

A chain reaction has already occurred in Europe. American oil can no longer receive new orders, and all the orders have gone to the State of Chu.

France imports crude oil worth more than one billion francs a year, and now the price has plummeted by half. How big a tumor must the French have in their heads that they still insist on importing American oil?

As a popular imported product, the operating method for crude oil is to sign a contract first and pay the purchase price in advance. Generally, a balance of 10-20% of the value will be left, which will be paid together after the oil tanker arrives at the port.

If the oil tanker does not pay the final bill after arriving at the port, it will not be unloaded.

After a certain period of time, if the crude oil purchase contract is violated, a large amount of liquidated damages will be paid, and the crude oil exporting country has the right to find a new buyer.

The purchase contracts for crude oil for the first quarter of 1885 were now being signed. Bad news came from the American embassies in Europe.

Today, crude oil importers from European countries such as Britain, France, Germany, Italy, Austria-Hungary, Belgium, the Netherlands, and Spain are all rushing to London like crazy to buy large amounts of Bandar Seri Begawan oil at $25 a barrel.

The European headquarters of Chu's Royal Bright Petroleum Company, Royal Shell Petroleum Company and Royal United Petroleum Company are all in London. It is Chu's most important export market and naturally gathers its most important branches here.

The total value of orders signed by the three major oil companies in Chu State has exceeded US$4.5 million, which is 1.87 times the crude oil export volume of Chu State in the same period last year. A large part of it has encroached on the market of US oil and Russian oil.

$25 per barrel is the tax-paid price for oil tankers arriving at European ports. Compared with the current crude oil price of $ or $ per barrel, it can be said to be a bargain, which is why European traders are crazy about it.

Subsequent large orders are still under discussion. It is entirely foreseeable that the oil export volume of Bandar Seri Begawan will suddenly increase by more than double, and Daifu will erode the US oil and Russian oil markets.

By the way, there is also the issue of the Tsarist Russia. The US and Russia can join forces to put pressure on it!

In terms of cost, the Baku oil field in Saudi Arabia is more expensive.

Baku is located in the southern part of the Absheron Peninsula on the west coast of the Caspian Sea. It belongs to the Transcaucasus region and is an important economic lifeline of conquered Azerbaijan. The oil fields here have been industrially exploited since the 19s.

Oil from the Baku oil fields was one of the few products that Tsarist Russia could export to Europe. Another major commodity was grain.

Now the top two players in the European market are fighting, and the third player has been wiped out.

Why are Baku oil prices so high?
This is because the oil exported from the Baku oil field to Germany is transported via tank trains. The Tsarist Russian territory directly borders Germany and can enter the European market without interruption.

However, the transport capacity of the tank train is limited, and the power of the steam locomotive is also limited. It can only carry about 20 tank trucks at most, and each tank truck can transport more than tons.

Each train can only carry 500 to 600 tons of crude oil, but it transports hundreds of thousands of tons of crude oil to Germany every year. This railway line from Tsarist Russia to Germany is basically a dedicated oil export line.

Tsarist Russia and the Ottoman Empire were sworn enemies. The Ottoman Empire, which occupied the Bosphorus Strait, a major import and export route for the Black Sea, would never allow Tsarist Russian tankers to pass, even if French or German tankers were used instead.

Britain's Fourth Battleship Fleet was stationed in the port of Istanbul, restraining Russia openly and covertly and supporting the Ottoman Empire.

This sea route was actually blocked, and the possibility of Baku oil fields exporting crude oil by sea transportation was completely destroyed.

This results in high transportation costs for the Baku oil fields, which are more expensive than the Chu and American oils that are transported thousands of miles by sea. This is the secret.

In the Oval Office
The US President and cabinet members discussed for two or three hours but could not come up with any effective ideas, and finally had to adjourn the meeting with serious expressions.

Secretary of State Woodrow Wilson had to make this trip to Europe to convey the United States' strong opposition to the malicious trade war provoked by the State of Chu, firmly defend its own interests, and seek support from close partner countries such as France.

But empty talk is useless, we must take effective measures.

This powerful measure is bound to be related to the reduction of high tariff barriers, which invisibly affects the interests of the American industrial sector. It is bound to arouse strong opposition and will face great resistance in its implementation.

Why should other American industries bear the losses of the oil industry?

Firmly maintaining the policy of high tariff barriers is one of the important policies that the United States has implemented for decades, and it is extremely difficult to change it.

With the help of preferential low tariffs, a large number of European industrial products have flooded into the North American market, which will inevitably cause serious impact on the underdeveloped American industry. The impact is too great.

September 22th, 2025

The U.S. Congress urgently launched the Transatlantic Industrial Product Tax Reduction Act, which caused a huge uproar in Washington and the heavy industrial areas of the U.S. East Coast and the Great Lakes, and stirred up a hornet's nest as soon as it was proposed.

Just four days later
Commerce Secretary William McAdoo, who had publicly expressed support for the tariff reduction bill, was shot while attending a campaign rally.

The gunman emptied the six bullets in his Colt revolver and was then shot dead by police while fleeing. He was clearly a desperado.

Now, even the important clues are gone.

William McAdoo was shot three times, once in the arm, once in the chest, and the most fatal shot in the lower abdomen.

In today's era when medical conditions are not yet developed, lack of doctors and medicines is a common phenomenon.

After tossing and turning in agony for a day and a half, Mr. William McAdoo finally died, paying the price with his life for the Transatlantic Industrial Product Tax Reduction Act, which he firmly supported, which shocked Washington.

Parliament was silent, and many MPs felt the wrath of industrial capital.

At McAdoo's funeral, President Rutherford Hayes angrily condemned this unscrupulous assassination, saying it was beyond the moral bottom line and absolutely unacceptable.

However, he did not mention whether he supported the Transatlantic Industrial Tariff Reduction Act, and when asked by reporters, he avoided the question.

This is simply a death sentence. McAdoo is already dead, so who is next?
Never underestimate the moral bottom line of industrial capital. When their cake is touched, the president or the secretary of commerce will all die.

The US President has no power to decide the price of US oil sold to Europe. That is the power of individual oil companies and US oil traders, and there is very little they can do.

When Secretary of State Wilson spoke out loudly in Europe, few responded. The French, known as "Europe's close friends," behaved particularly honestly.

In this major market for American oil, orders for Bandar Seri Begawan oil soared, totaling more than 1885% of France's imports in the first quarter of , several times more than the same period last year.

The remaining market orders were filled by a small number of American oil suppliers who gritted their teeth and followed suit, offering a staggering price of $25 a barrel, willing to suffer heavy losses in order to maintain their market share.

But how long can such efforts last?
There is a big question mark. In mid-to-late October, 2-ton tankers transporting oil from the Chu State will be fully loaded with crude oil and arrive at various European trade ports one after another.

After that, every two or three days, a large tanker with a capacity of 2 tons would dock at the port, delivering high-quality and low-cost Chu crude oil. Combined with the earlier crude oil fleet, the new offshore crude oil transportation capacity was astonishing.

The U.S. oil market is about to face a real shock, and the U.S. is completely unprepared.

The export of Chu's oil can reflect the country's strength. This is a royal enterprise in which the Chu royal family and government hold the vast majority of the shares, while the Malayan Governor's Office, where the oil fields are produced, only holds 10% of the shares.

Chuyou is strong, has strong execution capabilities, and has the right to set prices for crude oil exports, which is an absolute killer weapon.

However, American oil is different. There are dozens of oil producers in the Oil Creek area, and hundreds of oil companies and traders. It is very difficult to reach a consensus on opinions and prices.

There will always be people who drag their feet, there will always be people who strongly oppose, and there will always be people who stubbornly insist on their own interests while disregarding the overall interests and the lives and deaths of others.

How to talk in this situation?
(End of this chapter)