>*”People are fooling themselves into thinking this will all be resolved very quickly,” said Emma Ashford, a senior fellow at the Stimson Center, a foreign policy think tank, and the author of a book titled “Oil, the State, and War: The Foreign Policies of Petrostates.” “It is not true. At some point this reality has to snap back together.”*
>*Many connected to the oil industry are puzzled by how cavalierly traders and investors are responding to a global disruption that will not be remedied quickly, regardless of what diplomatic breakthroughs happen in coming days. And they say Iran’s announcement that the Strait of Hormuz — a global choke point for about 20 percent of the world’s oil and natural gas — would be conditionally reopening is an incremental step, not the breakthrough lower oil futures suggest. Iran made clear it will only be permitting ships to pass through selectively and on certain routes. The narrow strait is still littered with mines. The U.S. is not lifting a military blockade of shipping traffic.*
*”If you had told me three weeks ago that the price of oil would be under $100 in the futures market, I would have called you a liar,” said Neil Crosby, head of oil research at Sparta, a market intelligence and analytics firm for the industry. “After Russia invaded Ukraine, price futures went to $130, and almost no oil was at risk. Right now, 20 percent of the world’s oil is still at risk and futures are doing nothing. It is crazy.”*
>*He said the erratic market response seems to be driven to a “fog of war,” where traders, unclear on the U.S. objectives and willingness to prolong battle, are guided by a presumption that President Donald Trump is scrambling to find an off-ramp from the conflict. The confusion has his firm’s investor clients treading nervously, he said, cutting their bets on oil markets. That much is underscored by the unprecedented spread between the amount buyers are paying for a barrel of oil for use right now — which in some parts of the world has soared past $140 — and the price traders are paying for a barrel of oil that would be delivered months from now, which on Friday dropped below $90.*
*[…]*
*”There is a disconnect between what the markets look like and what is actually happening in the world,” said Tibor Besedes, a professor of economics at the Georgia Institute of Technology. “The markets seem to be pricing this as a temporary shock even though people in the oil sector say this will be long term. It is not as simple as opening the faucet to get oil flowing again. I don’t understand why every time news comes out that we might have a ceasefire, the markets react this way. It is like investors do not realize we are still in a war.”*
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Green-Discussion6128 on
Could be a pump before making a big leg down, but I wouldn’t hold my breath to be honest.
At this point everything is so illogical that it’s possible it will keep making new highs for a while before a correction.
alemorg on
Funny how the media is posting this now when they’ve been shilling for trump and his comments citing him as the source for peace agreements and constantly writing articles saying this is a historic high that could go further.
4 Comments
>*”People are fooling themselves into thinking this will all be resolved very quickly,” said Emma Ashford, a senior fellow at the Stimson Center, a foreign policy think tank, and the author of a book titled “Oil, the State, and War: The Foreign Policies of Petrostates.” “It is not true. At some point this reality has to snap back together.”*
>*Many connected to the oil industry are puzzled by how cavalierly traders and investors are responding to a global disruption that will not be remedied quickly, regardless of what diplomatic breakthroughs happen in coming days. And they say Iran’s announcement that the Strait of Hormuz — a global choke point for about 20 percent of the world’s oil and natural gas — would be conditionally reopening is an incremental step, not the breakthrough lower oil futures suggest. Iran made clear it will only be permitting ships to pass through selectively and on certain routes. The narrow strait is still littered with mines. The U.S. is not lifting a military blockade of shipping traffic.*
*”If you had told me three weeks ago that the price of oil would be under $100 in the futures market, I would have called you a liar,” said Neil Crosby, head of oil research at Sparta, a market intelligence and analytics firm for the industry. “After Russia invaded Ukraine, price futures went to $130, and almost no oil was at risk. Right now, 20 percent of the world’s oil is still at risk and futures are doing nothing. It is crazy.”*
>*He said the erratic market response seems to be driven to a “fog of war,” where traders, unclear on the U.S. objectives and willingness to prolong battle, are guided by a presumption that President Donald Trump is scrambling to find an off-ramp from the conflict. The confusion has his firm’s investor clients treading nervously, he said, cutting their bets on oil markets. That much is underscored by the unprecedented spread between the amount buyers are paying for a barrel of oil for use right now — which in some parts of the world has soared past $140 — and the price traders are paying for a barrel of oil that would be delivered months from now, which on Friday dropped below $90.*
*[…]*
*”There is a disconnect between what the markets look like and what is actually happening in the world,” said Tibor Besedes, a professor of economics at the Georgia Institute of Technology. “The markets seem to be pricing this as a temporary shock even though people in the oil sector say this will be long term. It is not as simple as opening the faucet to get oil flowing again. I don’t understand why every time news comes out that we might have a ceasefire, the markets react this way. It is like investors do not realize we are still in a war.”*
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Could be a pump before making a big leg down, but I wouldn’t hold my breath to be honest.
At this point everything is so illogical that it’s possible it will keep making new highs for a while before a correction.
Funny how the media is posting this now when they’ve been shilling for trump and his comments citing him as the source for peace agreements and constantly writing articles saying this is a historic high that could go further.