Isolationists quickly forget how powerful it is for us for the world be doing business in USD. China would LOVE for the global reserve currency to be Yuan.

 

DOD budget for 2026 is how much?

$852.45 billion?
and supplementals will likely take it well over a trillion since Iran has burned up about $200 billion in ordnance.

Time for THE REST OF THE WORLD that ALSO benefits from world oceanic trade to pony up.

 

Too many people are too lazy to have anything other than one dimensional, ultra simplistic thoughts on what is a complex and nuanced issue. Throw CINC into that bucket as he stated yesterday that the US doesn’t “need” the straight of Hormuz. While we technically produce a lot of our own energy & get most of the rest from the western hemisphere, the energy market is global. That means energy independence doesn’t really matter if you allow something like the Hormuz closure. 20 percent less oil on the market (and a huge chunk of global natural gas production) is going to have an impact on gas, diesel, and jet fuel prices at home no matter how much you “drill baby drill”. Not only that, but with 1/3 of production infrastructure in the gulf having been destroyed, this is going to be a long term problem, even if the straights are open tomorrow.

All of that is really difficult to condense into a catchy soundbite though, so we end up with a bunch of Americans who are too lazy to read anything thinking that it’ll all get worked out in a couple weeks. Markets are not factoring real world events folks. We’re in for a tough next few years IMO. Hope I’m wrong.

 

So, should I be buying oil futures on the CME? The Mar 27 CL contract (CLH27) can be had for $74. Back up the dump truck....it's like taking candy from a baby especially if this is only gonna get worse and take years to recover. What fools those commodity traders are!

 

There are a whole lot of analysts who are scratching their heads right now at the way markets are reacting. I claim no expertise in commodities, but I imagine things will change rather quickly when reality sets in. Again, sincerely hope I’m wrong.

 

Most people aren't aware that the lack of stability in the ME (almost all Iran induced in 2026) is already baked into big-picture oil pricing and has been for decades.

If some folks believe (I have serious reservations) that this event will be over and stability will prevail within a relatively short time frame, that would tend to drive oil prices down. Ultimately lower than historical norms.

There are some fringe benefits to this conflict, if it can pulled off successfully.

 

Well, you doom and gloom guys have a chance to make a real killing if you are right:


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My hunch is governments are moving the market, keeping it calm, similar to what happened during covid.

 

6 months seems pretty optimistic. Given the hits that energy infrastructure has taken I'd be shocked if that were the case. I only see this going one if three general ways.

1. The US escalate, full land invasion, it costs us a couple trillion but oil prices come back down.
2. Status quo stalemate of Iran getting bombed, and Iran keeping up enough pressure to keep the US and it's allies from receiving oil, oil stays high for a long period of time, still costs us a trillion in rearmament costs.
3. Trump walks back almost all of his demands and is forced to be a security guarantor that Israel won't bomb them again.

All are bad. The scariest thing in all of this is having just spent so much of our ammunition there leaves Taiwan open to an invasion by China. Oil prices stay high, the West loses it's semiconductor manufacturer, and the US loses it's place as the dominant player in the world.

I'm really hoping I'm wrong, I'm far from immune from that, only a few people truly know what's going on behind closed doors here, but from where I'm sitting this looks like the biggest blunder in US foreign policy possibly in the countries history. I know, I know, I have TDS, but I just don't see another outcome. I would be happy to be pointed to a way in which this clears up better though.

 

I’m not going to debate any of this with you, I’m just stating the facts today:

The futures markets are discounting very high future oil costs and the experts are discounting very high future oil costs, if you think they are wrong you can certainly bid against them and if you ARE right, you can make a killing on the crude oil futures exchange.

Of course if you are wrong, like Randolph and Mortimer, you are going to lose big.

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But then talk is cheap, actually putting your money where your doom and gloom is might cost you a bundle. But if you are smarter than current traders and advisors, go for it.