Look at the situation in Hormuz right now. Anything below $90 a barrel is literally high optimism.
Original ceasefire with Iran due to end on Wednesday. Strait closed, US shooting at Iranian ships, Lebanon ceasefire in tatters.
And when markets open the price jumps from $84 to a whopping $87? Gotta be satire…?
Posted by JerryBeansMan29
12 Comments
Tbh anything below 110 or 120 is insane. Physical oil has been trading at those prices for weeks, and the fact that there’s such a large gap between physical and futures is gonna leave a lot of people out on their ass in a few days.
Traders can keep doing swaps as long as there is inventory for EFP. Everyone is hoping this is resolved before supplies get tight
actual insanity
The price of oil should be addressing the shortages, that is it’s purpose. The countries that are being shorted oil supplies while the price remains low are the victims of economic terrorism. The shortages are only going to get worse. The market is acting like the shortages don’t matter/exist and even if they did, the shortages could be immediately rectified. Oil is being sold for upwards of 200 dollars and the shortages have yet to begun.
Well that’s for a contract expiring in May, by then there could be a new ceasefire or a peace deal – people are unbelievably optimistic.
The market is calling Iran’s bluff.
USG is shorting it with everything they have, and that is a lot. It will probably completely destroy the financial system eventually but they don’t care.
The current market is overly optimistic. Governments are taking measures to mitigate the short term impact of this war and the supply/Strait disruption (1-3 months), and operating on the assumption that this war will be over in around that time frame by say May-June at this point, with the longer term harm to the economy as a result over the next 1-2 years limited or manageable. It’s a big assumption too, and if the issue drags on longer than another month or two, the global economy is in real trouble.
In other words, they’re currently operating on ‘wishful thinking.’ The market cannot sustain an elongated 4-8% disruption in the production and supply of oil. The only way it can is if there’s significant demand destruction (which may be materializing), but that’ll mean a global recession.
Or investors are tired of the whipsawing and people are just overreacting….
Alot of people in the market and here grossly underestimate the strait of hormuz oil issue, the political effectiveness of the US, and the radical nature of the Iranian gov. The oil issue doesn’t stop at a ceasefire and the earnings from O&G companies will reflect this later.
Keeping futures prices artificially low also creates a worse situation in the future.
Boomers think we’re winning. They’re pouring their life savings into Trump’s war. And his guys are shorting them. The greatest wealth transfer in recorded history.
You aren’t trading against reality. You are trading against other traders.