Adam Butcher

So no, the market didn't suddenly get religion on supply. It's doing what it always does. Counting what it can see, ignoring what it can't. As always, headlines over barrels.

We handed the marginal barrel back to a sanctioned exporter at the exact moment our own guys are deciding whether the economics still work at these prices. The barrels came home. Ours are the ones that get squeezed.

Oil's in the mid-$70s this morning, down about 17% on the month. The headlines say "Strait closed, talks stalled, Trump threatening strikes." Every one of those points up. Crude went down. Now, I've spent two weeks telling you this market trades headlines, not barrels. So what gives?

My dad came home from Vietnam a Marine with no plan, got a shot as a landman in Houston, and never looked back. Ran land crews all over Texas. Taught me to do the work right even when right took longer. We lost him in 2019. Still think about him every Father's Day. This business is hard on families. Long hitches, weeks in a hotel far from home, missed dinners, all to give the people back home something better. To every dad in oil and gas carrying that load, and to the ones who showed us how, happy Father's Day.

I’ve had a lot of employees in my career. Thousands, to be sure. None are as well suited for their roles as @BuquoiMichael is for this role. Proud to have him!

Refilling the cushion to just normal is a year-plus of surplus. The SPR's a 2-to-3-year job. And we're cutting production right when we'd need it most, with demand climbing every year. That's not a crash setup. It's a hole we're still digging. As always, headlines over barrels.

So follow the loop. Drain the reserve to hold the price down. The low price thins out drilling. Drilling thins out production. And this time there's no SPR cushion left to cover the gap, because we already spent it. That's why folks in the patch are sounding the alarm. Hamm, Kobeissi, the shipping desks. Don't take my word for it. Take theirs.

The strait's open. Oil's flowing. Tankers are moving and the price is back near where it started the year. So here's the question nobody in the headlines is asking. We're told the world had a glut before this war. Did we?

The premium coming out is fine. Gas under $4 is welcome. I'm not going to pretend otherwise. But somebody spent the country's insurance down to a 42-year low to get there. Those barrels are owed back, with interest. American producers carried the supply side through all of it. Nobody in Washington is saying it.

And remember what the deal actually is. Same framework I broke down in May. Regime intact, clock reset, barrels promised later. They say it gets signed Friday. Nobody's seen the text yet. We've seen this movie before. The tank doesn't care what gets signed. 340 million barrels. Lowest since 1983.

Today's EIA print, week ending June 12. Commercial crude down 8.3 million barrels. The SPR fell another 8.9 million, to 340 million. That's the lowest the reserve has been since 1983...1983! Brent's down about $12 a barrel from a week ago. The screen fell. The tank drained. Same week.