Here’s what the stock market might have gotten wrong about the Iran war

I know people are frustrated with the disconnect between what is happening in the world and how the markets are behaving. I thought this was one of the better articles lately discussing all of that. The disconnect is real. Some selected quotes from the article:

Even investors rushing to tap into market optimism warned in interviews that it masks deep, underlying problems that threaten a reckoning in the not too distant future.

“We have to dance while the music lasts and hope you are near the exit door when it stops,” he said. “I am in that exact situation, despite talking to people in the background who know something is going to break.”

“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.

“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.”

“At any point during the day, Trump might tweet something and the trading algorithms are just going to react to it,” Crosby said. “It makes life very hard.”

“You can ride a bike faster than a tanker moves,” said Morton. “It will take weeks, possibly months, for tanker traffic to return to normal.”

Repairs to damaged facilities can take far longer. Industry officials know Gulf state production facilities have suffered significant damage, but they have not been able to tally the extent of it yet. Repairs won’t begin until bombs stop dropping for good.