LONDON — The Organization of the Petroleum Exporting Countries (OPEC) has enough spare oil capacity to compensate for a full loss of Iranian supply if Israel knocks out that country’s facilities but the producer group would struggle if Iran retaliates by hitting installations of its Gulf neighbors.

Iran fired hundreds of missiles at Israel on Tuesday in response to Israeli airstrikes and attacks. Israel’s Prime Minister Benjamin Netanyahu said Iran made a big mistake and would pay for it, and Iran threatened a crushing response if Israel retaliated.

Israel’s options include targeting Iranian oil production facilities among other strategic sites, US news website Axios reported on Wednesday citing Israeli officials. Iran is an OPEC member with production of around 3.2 million barrels per day (bpd) or 3% of global output.

Iranian oil exports have climbed this year to near multi-year highs of 1.7 million bpd despite US sanctions. Chinese refiners buy most of its supply. Beijing says it doesn’t recognize unilateral US sanctions.

“In theory, if we lost all Iranian production — which is not our base case — OPEC+ has enough spare capacity to make up for the shock,” said Amrita Sen, co-founder of Energy Aspects.

OPEC+, which includes OPEC and allies like Russia and Kazakhstan, has been cutting production in recent years to support prices amid weak global demand. So the group is sitting on millions of barrels of spare capacity.

Cuts by OPEC+ producers currently total 5.86 million bpd. Analysts estimated Saudi Arabia is able to raise output by 3 million bpd and the United Arab Emirates by 1.4 million.

OPEC+ met on Wednesday to discuss compliance with cuts. The group did not discuss the Israeli-Iranian conflict, OPEC+ sources said.

“The only thing mentioned about the geopolitical situation and the conflict was the hope for non-escalation,” said an OPEC+ source familiar with the discussions.

While OPEC has enough spare capacity to compensate for the loss of Iranian supplies, much of that capacity is in the Middle East Gulf region and potentially vulnerable should the conflict escalate further, said Giovanni Staunovo, analyst at UBS.

“The effectively available spare capacity might be much lower if renewed attacks on energy infrastructure on countries in the region happen,” he said, adding the West might have to tap strategic reserves if there were severe disruptions.

Israel has so far refrained from attacking Iranian oil facilities. Oil analysts and security experts have said Israel could target Iran’s oil refining sites and the Kharg Island oil port, which handles around 90% of the country’s crude exports.

During the Iran-Iraq War in the 1980s, Baghdad regularly attacked tankers around Kharg Island and threatened to destroy the oil terminal.

“Iran and its proxies could potentially target energy operations in other parts of the region in order to internationalize the cost if the current crisis devolves into an all-out war,” said Helima Croft from RBC Capital Markets.

In 2019, a drone attack by Iranian proxies on Saudi oil processing facilities briefly knocked out 50% of the kingdom’s crude production.

“In case of an escalation Iran’s proxies might launch attacks on Middle East oil producers, namely Saudi Arabia,” said Tamas Varga from PVM.

Riyadh and Tehran have had a political rapprochement since 2019, which helped ease regional tensions, but relations remain difficult.

Oil prices have traded in a narrow range of $70-90 per barrel over the past years despite the war between Russia and Ukraine and conflict in the Middle East.

A rise in US production has helped ease the fear premium in oil markets, said Rhett Bennett, chief executive at Black Mountain, which has operations in the US Permian basin.

The US produces 13% of global crude and almost 20% of global oil liquid production compared to OPEC’s 25% global crude production share and some 40% by OPEC+.

“This diversity of supply from US domestic sources, combined with healthy spare capacity within OPEC, is translating into the market feeling insulated from a dramatic supply shock — regardless of perpetual Middle East flare ups,” Mr. Bennett said.

A broad conflict in the Middle East, however, with a major impact on production would inevitably push oil prices up.

That would drive up fuel costs. A related rally in gasoline prices could hurt US Vice-President Kamala Harris in her campaign to win the Nov. 5 presidential election against Republican candidate Donald Trump.

“The United States will likely try to push Israel for a more modest response, wanting to avoid a significant escalation in tensions,” said Warren Patterson from ING. — Reuters

KASUKABE, Japan — Just after 5 a.m. on Aug. 30, water began flooding a vast underground chamber called the “cathedral” just north of Tokyo. The gushing water, captured by security cameras, was the rain that was drenching the capital region as Typhoon Shanshan lashed southwest Japan, 600 kilometers (kms) or 373 miles away.

The cathedral and its vast network of tunnels did their job: they prevented a vulnerable river basin in the metropolis from flooding. But as global warming causes more severe weather, authorities are having to give the system a major upgrade.

“As the temperature rises, the amount of water vapor in the atmosphere increases, resulting in relatively larger quantities of rainfall,” said University of Tokyo professor Seita Emori, who is a member of a climate science group that won a Nobel Prize in 2007.

“We anticipate that previously unseen amounts of rain will fall as the temperature rises in the future,” he added.

Japan is prone to numerous natural disasters, from earthquakes and volcanic eruptions to typhoons and landslides. And like much of the world, the nation is dealing with unprecedented weather due to global warming.

This summer was the hottest ever since records began in 1898, while record rainfall in northern regions resulted in disastrous flooding in July, according to the weather agency. In Tokyo, sudden, violent storms known as “guerrilla” showers have become increasingly common.

The cathedral complex, officially called the Metropolitan Outer Area Underground Discharge Channel, took 13 years and 230 billion yen ($1.63 billion) to build. Since coming online in 2006, it has already prevented more than 150 billion yen in flood damage, the land ministry estimates.

In addition to its engineering ingenuity, the complex is a popular tourist spot and filming location. The cavernous expanse has the capacity to hold the water in almost 100 Olympic-sized swimming pools.

Inside are 59 massive pillars, each weighing 500 tons (551 tons) and stretching 18 meters (59 ft) tall. When nearby rivers flood, the overflow courses through 6.3 km of massive underground tunnels before collecting in the reservoir.

Descending about six floors to the bottom of the chamber is an otherworldly experience. It has its own microclimate, much cooler than the surface in the summer and warmer in the winter. Clouds of mist obscure the top of the pillars.

The dim interior, punctuated by spears of natural light from apertures in the ceiling, and towering pillars evoke an ancient religious structure, giving rise to names such as “the cathedral”, “the shrine” or “the temple.”

The drop of the No. 1 shaft is deep and wide enough to comfortably hold the Statue of Liberty.

The system kicked in four times in June, more than all of last year. During Typhoon Shanshan, it captured enough water to fill the Tokyo Dome baseball stadium almost four times, before pumping it safely into the Edogawa River and out to sea.

“Compared to years past, there’s a tendency for a great deal of rain to come down all at once in what we call guerrilla downpours,” said Yoshio Miyazaki, the land ministry official in charge of the complex.

“If this facility didn’t exist, the water levels of the main Nakagawa River and its tributaries could rise much higher, leading to flooding of homes and even deaths,” he said.

Even so, the system couldn’t stop the inundation of more than 4,000 homes in the river basin from heavy typhoon rains in June 2023. Those floods prompted authorities to embark on a seven-year, 37.3 billion yen project to bolster levees and water drainage in the area.

And closer to the center of Tokyo, another major project is underway to link channels that take in overflow from the Shirako and Kanda rivers. When completed in 2027, it will carry floodwater about 13 kms underground out to Tokyo Bay.

Tokyo’s sewer network is designed to handle rainfall of up to 75 mm per hour, but increasingly there are localized storms bringing down as much as 100 mm, overtaxing the system, said Shun Otomo, a construction site manager for the project.

“For example, if there is a temporary downpour in the Kanda River basin, we can tap the watershed capacity in basin areas where it isn’t raining,” Otomo said. “We believe that will be effective against these guerrilla rains.” — Reuters

NEW YORK — Long lines of container ships queued up outside major US ports on Thursday as the biggest dockworker strike in nearly half a century entered its third day preventing unloading and threatening shortages of everything from bananas to auto parts.

No negotiations were scheduled between the International Longshoremen’s Association (ILA) and employers, but the port owners, under pressure from the White House to hike their pay offer to land a deal, signaled late on Wednesday they were open to new talks.

At least 45 container vessels that have been unable to unload had anchored up outside the strike-stricken East Coast and Gulf Coast ports by Wednesday, up from just three before the strike began on Sunday, according to Everstream Analytics.

“Many seem to have decided to wait it out, possibly in hopes of a prompt resolution to the strike action, rather than taking the proactive decision to divert,” said Everstream’s Jena Santoro in a video presentation seen by Reuters.

She said the vessel backlog could double by the end of the week, and that the resulting congestion could take weeks, if not months, to clear.

One alternative would be to sail to West Coast ports on the other side of the country, likely using the Panama Canal, a journey of thousands of miles that would hike costs and add weeks to delivery times.

The ILA launched its strike by 45,000 port workers from Maine to Texas, its first major stoppage since 1977, on Tuesday after talks for a new six-year contract with the United States Maritime Alliance (USMX) employer group broke down.

The ILA is seeking a big pay raise along with commitments to halt port automation projects it fears will kill jobs. The USMX had offered a 50% pay bump, but the ILA said it was insufficient to address its concerns.

“Reaching an agreement will require negotiating,” USMX said late on Wednesday. “We cannot agree to preconditions to return to bargaining, but we remain committed to bargaining in good faith to address the ILA’s demands and USMX’s concerns,” it said.

President Joseph R. Biden’s administration has sided with the union, heaping pressure on the port employers to raise their offer to secure a deal and citing the shipping industry’s bumper profits since the COVID-19 pandemic.

Economists say the port closures will not initially raise consumer prices as companies accelerated shipments in recent months for key goods. However, a prolonged stoppage will eventually filter through, with food prices likely to react first, according to Morgan Stanley economists.

The strike affects 36 ports – including New York, Baltimore and Houston — that handle a range of containerized goods.

The National Retail Federation on Wednesday, along with 272 other trade associations, called on Mr. Biden’s administration to use its federal authority to halt the strike, saying the walkout could have “devastating consequences” for the economy.

Mr. Biden’s administration has repeatedly said it will not use federal powers to halt the strike. — Reuters