Research & Invest
Investor, Institutional Asset Management Background
Sustained high energy prices strain US farming, logistics, manufacturing and consumers, so crude oil should fall dramatically from its elevated level. Middle East and Russia tensions are lifting WTI, shown near $103, while Trump will likely step in at some point to reduce uncertainty. x.com x.comÂ
The oil trade is over because crude can no longer make higher highs, even with Middle East crude exports back near their peaks. Oil is trading around its average price of the last eight months and set a lower high in September, so it is only a matter of time before the market gives up. Crude looks about to fall through the floor, with rates following and high-beta stocks then going vertical as every dip gets bought. x.com x.com x.comÂ
Crude oil's 4 million-barrel-a-day global inventory draw despite weaker exports and refinery demand signals physical tightness. Chinese exports and refinery demand in Russia and China are each down a few million barrels a day, yet Brent is at a more than four-year high. Bessent says Persian Gulf exports exceed prewar levels, but cash and dated Brent trade well above front-month futures. Rising backwardation and inventory draws leave smaller buffers if escalation continues. x.com x.comÂ
Crude oil should fall back into the $60s and likely well below over time once the Iran war is resolved. Middle East producers are overproducing but cannot export the barrels, so when the Strait fully reopens they will flood the market. Oil tried to break down from its trend line but was rejected, and bigger resolution news is likely needed to push it much lower. Cheaper oil would remove current inflation fears, setting up a deflationary boom. x.com x.comÂ
Crude oil faces near-term pressure as Trump said US-Iran talks were productive and pledged no strikes before the November 3 elections; Brent fell to $103.36. Supply risks persist, however, with attacks on tankers near the Strait of Hormuz and 1.3 million barrels a day of Gulf of Mexico production shut in ahead of Hurricane Isaias. x.comÂ
Crude oil has been suppressed for a long time and may be about to break higher. SPR releases and constant manipulative tweets have held WTI down, leaving Strategic Petroleum Reserve levels depleted. Oil is now driving interest rates tick for tick, which makes it the number one problem. x.com x.comÂ
More oil passing through the Strait of Hormuz and continued OPEC and Russian production should push crude oil lower. It has fallen from about $106 to $96 over the past month. x.comÂ
US crude and Chevron face a potential domestic glut: supertanker export costs are said to have risen from $8 million to $80 million, pushing Asian and European buyers toward Saudi and South American oil. Limited US refining capacity could leave the surplus unused and bankrupt smaller producers, though the author still says earlier exports caused a shortage. x.com x.com x.comÂ
Crude oil can fall to $45 WTI only briefly, because a sustainable price has to fund replacement barrels, not just keep old wells pumping. At $45, drilling gets cut, and without enough reinvestment global production naturally declines about 5-8% a year. The long-run WTI equilibrium is about $65 a barrel. x.comÂ
WTI crude is headed into the $50s as it becomes apparent the US has control of the strait and Iran has lost its grip. Tanker trackers count at least 15 ship-to-ship transfer sessions in the Gulf of Oman carrying 25 million barrels of crude from almost every country in the region except Iran. x.com x.comÂ