fatking

I think the sell-side community will have an incredibly hard time coming up with an oil price to offset an 11 to 13 million b/d supply outage. We tried. Zero confidence in the result. But all I can say is that it's not $99 or whatever the fuck Brent is currently trading at.

Was thinking about that (why aren't crude futures higher) as well ... One reason that the disruption did not force prices higher despite "jawboning" is that onshore inventories are not hit hard yet and the market is still able to "look through" the problem. Here are some back of the envelope numbers: 1) In the context of nearterm fireworks ex-Gulf storage draws are more important than underproduction or the global draws. Assuming that Hormuz remains closed and Gulf storage is trapped behind it. 2) Hit to flows is prob. around 14mbd now, but was actually higher in the beginning of March when pipeline redirections did not yet work at current rate (note - this is different from underproduction or hit to global inventory). Let us assume 14mbd for 2 months. This is offset in part by pre-existing surplus (say 2mbd) and demand destruction (1mbd). So you have 670mb ex-Gulf draw over 2 months. 3) It is clear that this disruption mostly did not hit commercial storage yet: - tankers that departed pre-war were still arriving until late March or early April - there were/are temporary offsets from sanctioned oil on water or SPR - given high refinery run cuts (up to 4mbd in March and 7mbd in April, mostly Gulf and China - credit to @OilCfd for the data) much of the draws are in the product space 4) The stress can manifest itself as either flow problem or stocks problem. For instance, April 2020 was more of a flow problem - technically global storage was never at full capacity or even at what was thought as an operational capacity (circa 75%). But the flow of builds were so large that we did hit negative WTI and Dated Brent @ $9. Looking into the current crisis I would classify the problems into 3 categories A) We have already guaranteed ourselves a pretty sizeable stock problem - due to already underproduced barrels and those that will be underproduced during the ramp-up period after Hormuz opens. Likely if SOH does not open in the next 2 weeks we will hit close to 1bln liquids underproduction and 800mb of global inventory draws - and under normal demand conditions we would need 1.5-2 years of healthy surplus to cover just for that. But this issue does not necessarily mean crisis or global recession - it just means significantly higher prices than pre-war. Post-opening draws due to underproduction would be partially met with Gulf storage barrels that will become available (does not change the overall inventory math, but helps with the flow problem). B) There are also other - more localised stocks problems - related to operational minimums that @JH writes about here: x.com/CRUDEOIL231/st… Linefill (oil in the pipeline, tank bottoms, working stock). So the real available capacity is far lower than nominal stocks (2bln of crude). C) Also the flow problem is getting materially worse as we speak - since many of the mitigants that existed 2-3 weeks ago (oil on water - both from sanctioned barrels and from tankers completing transit) are gone. I imagine that if we end up with crazy price spikes it would be because of B and C.... 5) Ultimately demand destruction will happen/is happening on product side. So once the market gets into demand destruction mode, we won't really have 10mbd crude draws - we will have demand destruction on product side. But I imagine that before that we will draw whatever is the real withdrawable crude inventory ...? 6) I do not necessarily think that $25-30 difference between prompt (1st) ICE Brent contract (June) and Dated Brent is "wrong" - given the time difference (10-30 day loading for Dated vs end of June for ICE Brent) and extreme stress we are experiencing. E.g. WTI May/June spread was as high as $16 last week - and the spread between Dated and ICE Brent is "closer" to "now" and in a more affected region. @JH, @Rory_Johnston, @HFI_Research, @OilCfd - curious what you think.

@OilCfd @JavierBlas Not really ;-)

@JavierBlas So did Merc in Dubai

A team at Vitol led by a star trader took a several hundred million dollar hit early in the Iran war after bets in the oil market went awry, people familiar with the matter said wsj.com/business/energ…

@BarakRavid Fuck you motherfucker.

🚨🚨🚨Prime Minister of Pakistan Sharif: Diplomatic efforts for peaceful settlement of the ongoing war in the Middle East are progressing steadily, strongly and powerfully with the potential to lead to substantive results in near future. To allow diplomacy to run its course, I earnestly request President Trump to extend the deadline for two weeks. Pakistan, in all sincerity, requests the Iranian brothers to open Strait of Hormuz for a corresponding period of two weeks as a goodwill gesture. We also urge all warring parties to observe a ceasefire everywhere for two weeks to allow diplomacy to achieve conclusive termination of war, in the interest of long-term peace and stability in the region.

@BarakRavid @MarcACaputo @axios Fuck you motherfucker

From glutted to gutted, a 2026 oil market tale

Totally normal and sane thing for the President of the United States to post as a reaction to the former Director of the FBI dying.

> Israel will escalate. > Probably hit some energy stuff. > Iran will counterattack against other Gulf energy stuff. > Prices will spike. > Trump will say he had no idea about the energy attacks > Israel will say they won’t do it again > Prices will ease > Israel will escalate

@BenniKim Do you have a credible source for the death of Ben Gvir son ?

As if the hardliners in Netanyahu's govt like Ben Gvir (whose son was killed last week) or Smotrich would tell Donnie in advance ... First use by Israel against Iran would have catastrophic consequences.

@UnintendedCons5 If they could use "pure decimation" they would have done it already. The US cannot win that war. They couldn't even before starting it. Pure asymmetrical warfare. Either they back off soon or need to send troops on the ground and this won't be "just" a strategic loss.

Iran needs to agree to stop attacking vessels and do it for a some period of time. I really don't see their motivation at this point. Or the US can keep it open via pure decimation of Iranian capability.

@mathlonning 200m$ is nothing for the oil market.

Yep. It’s going back to $70.

@zriboua Then why do they blow up everything everyday? Look at what they do not what they say 🤌🏻

Most of the tankers and commercial ships transiting the Strait of Hormuz aren’t American or Israeli…. Total surrender. I’ve said this before: closing the Strait was always their most powerful card and it’s not the smartest one since it needs to be done fast and in a way that inflicts maximum economic damage. Now they’re backing down while trying to frame it as a deliberate, selective choice rather than the result of pressure. They’re really cornered, nothing in the playbook is working.

@badcharts1 You don't put gold in your car.

Not sure why $200 crude oil is seen as the Boogeyman. Price compared July 2005 vs today: -> Gold was $425, now over $5000 -> Silver was $7, now over $80 -> Oil was $60, now only $96 It's still one of the cheaper assets. Wake me up when oil is above $500.

@Arbitrage_econs @CRUDEOIL231 China can survive longer than any other countries with SoH closed. Yanbu, Russian, Iranian, SPR, plenty of refinery capacity.

The most important thing to watch will be how the other Middle East countries/China begin to react. Iran is playing hard ball now in the Hormuz, but you risk things getting far worse for Iran the longer this goes on. The Middle East countries rely on a lot of food and other things to transit the Hormuz outside of oil, and China is incredibly dependent on it.

Honest question here. I’m not doubting Israel’s surgical precision or the insane firepower of the US military. But do you seriously believe they can just wipe out every single threat and keep Hormuz wide open against a country that’s basically one giant natural fortress? Iran’s southern coastline is over 2,000km long, and most of it is nothing but rugged mountains dropping straight into the sea. You really think they can spot and take out every single threat across that whole stretch? I guess everyone’s already forgotten about the USS Stark getting hit in ’87 or the USS Samuel B. Roberts getting blown up by a mine in ’88. Look at the South Korean military—over 500k active troops, and their only job for decades has been watching and hitting North Korea. Even they can’t fully monitor the southern coast of Hwanghae Province, and that’s a tiny joke compared to southern Iran. Get real. Iran has been prepping for this exact moment since the Tanker War in the 80s. How many weapons do you think they have aimed at Hormuz right now? Can you really flush out every single one hidden in those hellish mountains? We already learned this lesson the hard way in Afghanistan. Most of the ppl who shorted oil bc of that blind "nothing’s gonna happen" optimism lost their jobs this week. It’s wild how many people still haven't learned a damn thing. #oott #iran

@CRUDEOIL231 Well put. This is only the beginning as too early for a Taco. We must hope the window for taco doesn't disappear otherwise this will end up in the fall of the USA.

@CRUDEOIL231 This is way too optimistic. We are already near 10mbd shut in. Heading to 13/14 next week.

I just got around to reading the JPM report that Treasury Secretary Bessent blasted. Tbh i felt like they were being pretty fair with their assessment, so I’m not really sure why he’s so worked up about it. #oott #iran

@utopia_escape @UnintendedCons5 I think there is a strategic window for China to let the conflict last 1 month in order to deplete us ammunition, spike oil price (they bought spr especially for that), and have huge leverage on Trump for his visit end of march.

@UnintendedCons5 I agree. They are actively pursuing one, but their actions say they don't expect one. Ceasing exports harms all Asian economics sooner rather than later. It will harm GDP and yet they're doing it because they see the writing on the wall. Iran isn't letting go of its choke hold.

I'm starting to wonder if a ceasefire is coming in Iran. Its to the US advantage to get drone defenses in place. While the US is burying Iran, the lack of focus on the drone/Hormuz issue is nutty. No adaptability.

@TheSizzmeister @DeepDishEnjoyer Also spr are useless, as it's a refinery problem on the spot market. It's def resetting the crude higher though for bal year

@DeepDishEnjoyer Agree - the fact they havent used spr yet also suggests they know prices will rise even more

to be honest this is probably bullish energy prices because this seeps of desperation