No. of Recommendations: 10
-It's a race, isn't it? How long can Iran hold out? According to all of you the answer is "indefinitely". I don't believe that's realistic.
Reminds me of the two men being chased by a bear. First man says to the other: “This is no use. You can’t outrun a bear.”
Second man responds: “I don’t have to outrun the bear. I just have to outrun you.”
Which reframes your question from:
“How long can Iran hold out?”
to
“Which of us can hold out the longest?”
Here's a counter question for you: Why isn't oil at $200 a barrel and rising? Why, despite the strait being closed for ~6 weeks or whatever it is, has the price of oil largely stabilized in the mid $90s?
Many reasons, none of which will be improved by time:
In the first month- arrival at destinations by tankers that left the gulf before hostilities
Drawdown of strategic reserves
Draw down of above ground storage
Some contraction of demand
Trump’s jawboning of markets and promises of an imminent deal
Oil markets DID seem to stabilize in initial weeks, but now are starting to rise again.
WTI for immediate delivery today- 100 dollars
Brent Crude is at 110.
What really surprised me initially was the differential between front months contracts and forward month contracts in the COMEX futures.
Right after Trump started this war, all months jumped in price, but the near term immediately rose much further than the months further out.
Interpretation: traders expected a short war, with prices returning to normal in a few months.
But now, reality intrudes, and a contract six months out is much closer in price to the front month.
Interpretation: traders now expect the war to continue longer than they did a few weeks ago. They’re no longer willing to put their money on the happy talk emanating from the White House. (Why they did to begin with, I’ll never know)
The price crunch is coming, dope.
