Energy Sector

[Spekulatius]

8 hours ago, Dalal.Holdings said:

Well if high prices last a little while (say months), then everyone around the world boosts production. Then if the Strait gets resolved and all the Gulf supply hits the market, it will tank oil...

 

Right now the only major scenario where oil squeezes much higher is if Iran goes all out against Gulf suppliers & infrastructure (such as East-West pipeline and others, production facilities, refiners, ports, etc)...one would hope that the U.S. posture in the region has made it so that Iran would not be capable of achieving that, but we'll see

If oil prices stay high around $100-120 for a few month, we pretty much guaranteed a world wide recession first.

 

Building up additional suppliers will take years. The feedback loop is not that quick with energy. Even shale has at last a 6 month lag between price and more supply and with conventional energy resources  this is  2 -5 years.

 

The other source of demand is that everyone will likely increase their strategic stockpile of crude. this was one of Trump’s strategic  mistakes, He stopped refilling the strategic oil reserve despite low prices, because he wanted to push prices lower.

Edited April 4 by Spekulatius

[Dalal.Holdings]

21 minutes ago, Spekulatius said:

If oil prices stay high around $100-120 for a few month, we pretty much guaranteed a world wide recession first.

 

Building up additional suppliers will take years. The feedback loop is not that quick with energy. Even shale has at last a 6 month lag between price and more supply and with conventional energy resources  this is  2 -5 years.

 

The other source of demand is that everyone will likely increase their strategic stockpile of crude. this was one of Trump’s strategic  mistakes, He stopped refilling the strategic oil reserve despite low prices, because he wanted to push prices lower.

$100-$120 oil is actually not that expensive in inflation adjusted terms. Oil peaked at $150 around 2008 which would be over $230 today. 
 

$100-120 a barrel today is like $70 a barrel in 2008…not economically devastating. A lot has changed since then too in terms of GDP growth, EVs around the world, U.S. shale revolution in oil and gas…

 

Now if we get sustained $200 plus, it could be a problem…

[Dalal.Holdings]

As highlighted by Doomberg, what’s hilarious is U.S. nat gas prices have collapsed in the past few weeks…because gas is co-produced with oil from these shale wells and gas is expensive to transport. So in some ways, energy for Americans (who use nat gas in a lot of ways) might actually get cheaper…lol.

 

Can’t say the same for those who rely on LNG though like Europe which has chosen the path of energy fragility the past decade+

[SharperDingaan]

Have to think that after the bridge/power-generation  targeting, and the targeted oil/water facility responses; crude jumps quite a bit after Easter break. Highly likely that it is intentional, as the US treasury has magically disappeared from the spot market . Good time to selectively lighten up in stages .

 

Orange Boy begging for a deal, the drones continue to fly, the mighty US air force now getting shot down?, and USD 60K/head on aircrew? This time .... recovered before the Iranians could get to them ..... but next time, maybe not so lucky?.

 

Doubtful the SOH opens next week (vs discussion), and most would expect a strike in the Bab-el-Mandab. All that Red Sea crude arriving by pipeline, suddenly threatened as well.    

 

Interesting times.

 

SD

 

 

Edited April 5 by SharperDingaan

[Spekulatius]

3 hours ago, Dalal.Holdings said:

As highlighted by Doomberg, what’s hilarious is U.S. nat gas prices have collapsed in the past few weeks…because gas is co-produced with oil from these shale wells and gas is expensive to transport. So in some ways, energy for Americans (who use nat gas in a lot of ways) might actually get cheaper…lol.

 

Can’t say the same for those who rely on LNG though like Europe which has chosen the path of energy fragility the past decade+

Retail prices for NG to go up, albeit at a measured rate.

 

FWIW, I paid  up to $700/ month for heating my too large home in MA with NG in peak winter month. I really don’t know anyone in Germany who pays this much for heating due to generally smaller and much better insulated homes, as well as much milder winters.

 

NC is much cheaper…

 

Edited April 4 by Spekulatius

[SharperDingaan]

On 4/4/2026 at 9:30 AM, SharperDingaan said:

Orange Boy begging for a deal, the drones continue to fly, the mighty US air force now getting shot down?, and USD 60K/head on aircrew? This time .... recovered before the Iranians could get to them ..... but next time, maybe not so lucky?.

 

It would seem that the market reopening could be quite impressive, and then there's Tuesday .

https://x.com/Energy_Tidbits/status/204076745032173618

 

Sometimes .... all that military might and war training at a West Point, Sandhurst, etc. means squat. What's Orange Boy really going to do comes Wednesday, should the SOH still not be open, and everything has already been bombed? 

 

Drowning man, who can't swim.

 

SD

 

Edited April 5 by SharperDingaan

[Spekulatius]

1 hour ago, SharperDingaan said:

 

It would seem that the market reopening could be quite impressive, and then there's Tuesday .

https://x.com/Energy_Tidbits/status/204076745032173618

 

Sometimes .... all that military might and war training at a West Point, Sandhurst, etc. means squat. What's Orange Boy really going to do comes Wednesday, should the SOH still not be open, and everything has already been bombed? 

 

Drowning man, who can't swim.

 

SD

 

Orange boy should take his ball and go home, but I don’t think he will. The SOH will magically open - it actually is already opening as 10-15 tankers made it through according to Citrini As well as other sources.

I mentioned it before $2M per VLCC tanker is only ~$1/ barrel. Crude is up $40/ brl from the lows this year due to the closure. Everyone can do the math here.

Edited April 5 by Spekulatius

[SharperDingaan]

The reality is that the SOH is already open, to those in Iran's 'neutral' and 'friendly' categories; and tankers are transiting. Most in the 'neutral' category paying a levy that isn't unduly harsh. Oman/Iran also in diplomatic talks with the UN to restore transit.

 

However; it remains closed to anything US, or US allied. As the US likes to keep saying that it doesn't need the oil ... no reason to change soon. US inability to open the SOH is not the protection those allies are paying for; so little reason to continue paying, or continue buying US weapons ... once this is over (petrodollar recycling) .  Buy Ukrainian instead ! 

 

3 US aircraft carrier groups in the region ... all kinds of bombing, drones still flying, uranium destruction/recovery still a mystery, and not one boat offered up for tanker escort. Orange Boy bombing the place isn't going to do anything but drive up crude prices  

 

Today its a war zone; but tomorrow after SOH negotiations are done, and the US goes home ... there is little reason for crude to stay at such elevated prices. Use the opportunity .

 

https://eadaily.com/en/news/2026/04/04/al-jazeera-iran-divided-tankers-in-the-strait-of-hormuz-is-divided-into-three-categories

 

https://ca.video.search.yahoo.com/yhs/search?fr=yhs-fc-5918_3&ei=UTF-8&hsimp=yhs-5918_3&hspart=fc&param1=7&param2=eJwtjstqwzAURH9FywQk%2BV5bkqVoFTfNB5SuKrRQHNURfmI7uPTri0uYzcCcgdOku7P%2B44IAUpbKUT846wWAcNTvk6O%2BdtYbYxz1aXLWYym41hyF4SU46ps4Ouvr4Kh%2FBmd9P%2F6mrguZ5EAOWxru47aQYSUIHCzZ0qCEJT9KHEmYpi5u8damNZNFyQtFDu1j7TtKutRG0sS6HY%2BkfsxjHzMUisMesoTvMKfXZdda0kv1ucT5v78VQsp3DQxAVQzxiszoa8E0XtRZF1idVbXz9Q7nkCsGOYP8E80JyxMonmv4%2BgMi31GY&p=iran+strait+of+hormuz+news&type=fc_A0DBACA6D59_s69_g_e_d_n4004_c999#id=5&vid=11482f842b3d91edda94df2bcf8ae571&action=click

 

SD

 

Edited April 5 by SharperDingaan

[james22]

 

https://www.citriniresearch.com/p/strait-of-hormuz-a-citrini-field

[Spekulatius]

1 minute ago, james22 said:

 

https://www.citriniresearch.com/p/strait-of-hormuz-a-citrini-field

Great storytelling right there.

[rogermunibond]

More ships than appears are transiting SoH with AIS turned off...  Also a report from Citrini today says pretty much the same.

 

https://www.aljazeera.com/news/2026/4/3/french-owned-container-ship-transits-hormuz-strait-in-first-since-iran-war

[SharperDingaan]

6 hours ago, rogermunibond said:

More ships than appears are transiting SoH with AIS turned off...  Also a report from Citrini today says pretty much the same.

 

https://www.aljazeera.com/news/2026/4/3/french-owned-container-ship-transits-hormuz-strait-in-first-since-iran-war

 

Notice that they are all in either the 'friends' or 'neutral' categories. Iran can see the ships, ships don't need the AIS turned on once they have permission, and there is no need to show the ships transiting. Nothing prevents a foe from selling their ship to a neutral (one-time sale and repurchase net of toll fee's), and the cargo to a friend; the crude/LNG still flows, courtesy of some of the best smugglers in the world . 

 

Or ...... Orange Boy could just blow things up, and the ships and cargo's of foes remain trapped. 

 

SD

Edited April 6 by SharperDingaan

[Spekulatius]

5 hours ago, SharperDingaan said:

 

Notice that they are all in either the 'friends' or 'neutral' categories. Iran can see the ships, ships don't need the AIS turned on once they have permission, and there is no need to show the ships transiting. Nothing prevents a foe from selling their ship to a neutral (one-time sale and leaseback net of toll fee's), and the cargo to a friend; the crude/LNG still flows, courtesy of some of the best smugglers in the world . 

 

Or ...... Orange Boy could just blow things up, and the ships and cargo's of foes remain trapped. 

 

SD

[Spekulatius]

Also

 

[SharperDingaan]

Very good! 

 

Propaganda on both sides, but ultimately the idea of the SOH being a toll booth is already functional. The US can do what it wants with Iran, but it's very unlikely that the Gulf is ever going back to 'free' transit through the worlds maritime choke points. All these choke points need security; it's now just how users pay for it, and who receives the protection money.

 

Destroying power plants and above ground precursor chemical production, doesn't stop missiles flying. Generators and batteries are widely available, and Iran has been planning/building for decades .... the US, not so much. Walking away afterwards is also not as simple as simply flying/sailing home.

 

Seems good for a healthy price spike, but it's time to take the funny money off the table.

Good luck 

 

SD

 

  

[Spekulatius]

9 minutes ago, SharperDingaan said:

Very good! 

 

Propaganda on both sides, but ultimately the idea of the SOH being a toll booth is already functional. The US can do what it wants with Iran, but it's very unlikely that the Gulf is ever going back to 'free' transit through the worlds maritime choke points. All these choke points need security; it's now just how users pay for it, and who receives the protection money.

 

Destroying power plants and above ground precursor chemical production, doesn't stop missiles flying. Generators and batteries are widely available, and Iran has been planning/building for decades .... the US, not so much. Walking away afterwards is also not as simple as simply flying/sailing home.

 

Seems good for a healthy price spike, but it's time to take the funny money off the table.

Good luck 

 

SD

 

  
 

I think if you leave them to be, the Gulf states will come to an arrangement over the SOH and open it. It doesn’t have to be pretty or looks great legally as long as it works . I think the folks there are better at making deals under or above the table than Trump is. THey have more interstellar then anyone to do so, since their livelihood depend on it and it’s their neighborhood, not the US or the Europeans. Trust the incentives.

Edited April 6 by Spekulatius

[Mephistopheles]

15 minutes ago, SharperDingaan said:

Very good! 

 

Propaganda on both sides, but ultimately the idea of the SOH being a toll booth is already functional. The US can do what it wants with Iran, but it's very unlikely that the Gulf is ever going back to 'free' transit through the worlds maritime choke points. All these choke points need security; it's now just how users pay for it, and who receives the protection money.

 

Destroying power plants and above ground precursor chemical production, doesn't stop missiles flying. Generators and batteries are widely available, and Iran has been planning/building for decades .... the US, not so much. Walking away afterwards is also not as simple as simply flying/sailing home.

 

Seems good for a healthy price spike, but it's time to take the funny money off the table.

Good luck 

 

SD

 

  

What’re your thoughts on global inventory depletion? Those inventories need to be refilled perhaps more than the levels they were originally at. Any thoughts on oil futures 3-6 months out? 

[SharperDingaan]

2 minutes ago, Spekulatius said:

I think if you leave them to be, the Gulf states will come to an arrangement over the SOH and open it. It doesn’t have to be pretty or looks great legally as long as it works . I think the folks there are better at making deals under or above the table than Trump is. THey have more interstellar then anyone to do so, since their livelihood depend on it and it’s their neighborhood, not the US or the Europeans. Trust the incentives.

 

+1 

 

The reality is that it's just money, and USD 2-3/bbl isn't going to change trade decisions.

 

The positive is that the pot will also be large enough to keep everyone honest; those who stray, hung from a bridge as a message to others. There is a reason why the Iranians are so good .

 

SD

[Dalal.Holdings]

1 hour ago, SharperDingaan said:

Very good! 

 

Propaganda on both sides, but ultimately the idea of the SOH being a toll booth is already functional. The US can do what it wants with Iran, but it's very unlikely that the Gulf is ever going back to 'free' transit through the worlds maritime choke points. All these choke points need security; it's now just how users pay for it, and who receives the protection money.

 

IMO this is wrong. Not going to happen. Iran charging a toll for transit indefinitely would be casus belli for the Gulf States. No way they tolerate that in the long run. Saudi Arabia and UAE in particular would be livid if Iran was milking off the top of their exports. Add to that China, India, and every other importer won't stand for it. Iran is only on one side of the Strait--they have no right to control it.

 

Iran may use the Strait as leverage to get what it wants, but if they attack a ship with a mine or missile for bypassing its toll once a ceasefire is in place, it would trigger an immediate war--and the Gulf States would likely join in against Iran.

[SharperDingaan]

5 hours ago, Mephistopheles said:

What’re your thoughts on global inventory depletion? Those inventories need to be refilled perhaps more than the levels they were originally at. Any thoughts on oil futures 3-6 months out? 

 

Most would expect that SPR's will be filled from incremental production over the next 4-24 months. VZ heavy oil production/egress (as it occurs) going to the US, CAD heavy going to Asia. Delivery via in-kind fulfilment on forward contracts at different terms. No impact on price; for producers, higher production for longer. Upward bias on forwards throughout 2027.

 

No one wants to refill at today's high prices. 4 months out, when spot and forwards are lower across the curve .... a different story.

 

SD   

Edited April 7 by SharperDingaan

[Spekulatius]

It’s just business- a  $1 -2$ surcharge but the fear factor  keeps crude $10-20 higher than it otherwise would have been is good business. Thugs know how to deal with thugs and indefinitely is a long word and lasts a long time. You deal with the future as it comes.

 

@SharperDingaan is right that now everyone needs to fill up their reserves again, especially the Asian countries but also the US and Europe. That alone will keep crude prices elevated.

[Blake Hampton]

An interesting thing I learned the other day is that the SPR actually requires a minimum of 160 million barrels simply to maintain the structure of the salt caverns the oil is stored in.

[Dalal.Holdings]

1 hour ago, Spekulatius said:

It’s just business- a  $1 -2$ surcharge but the fear factor  keeps crude $10-20 higher than it otherwise would have been is good business. Thugs know how to deal with thugs and indefinitely is a long word and lasts a long time. You deal with the future as it comes.

 

@SharperDingaan is right that now everyone needs to fill up their reserves again, especially the Asian countries but also the US and Europe. That alone will keep crude prices elevated.

When there is a ceasefire, exactly what means will Iran use to enforce the toll? What will the penalty be to any ship that goes through without paying? They'll attack the ship and break the ceasefire? Iran has no way to enforce a toll in peacetime.

[Spekulatius]

37 minutes ago, Dalal.Holdings said:

When there is a ceasefire, exactly what means will Iran use to enforce the toll? What will the penalty be to any ship that goes through without paying? They'll attack the ship and break the ceasefire? Iran has no way to enforce a toll in peacetime.

Bilateral agreements not a general ceasefire. It’s not debatable that it happens already . I linked in an article that Philippine flagged ships got through. I guess they made some sort of under the table deal with Iran.

 

The Philippines needs the oil, they don’t have the storage and without oil, their gas stations run out. They are smart enough not to expect that Trump or anyone else does come up with a solution for them. Japan also seemed to make some sort of deal a week or so when Japanese ships went through.

 

The toll needs to be low enough to not be burdensome and high enough to matter for the Iranians.

Edited April 7 by Spekulatius

[Sweet]

Some predictions this morning about $200 oil on MarketWatch which normally heralds a top.  This time though I could see it get near those levels if there is escalation in Iran.