Energy Sector

[Blake Hampton]

It's only 15 million barrels a day of global supply guys, I don't understand what the big deal is here. It's not like energy is the most important thing for running a global economy or anything. And at least we're safe knowing that global debt levels are at all time lows.

Our great leader, some would say the greatest leader in the history of leaders, announced for the 57th time yesterday that we had a deal with Iran. I'm just really glad that we have a man in charge who is taking control and understands what's at stake.

[yesman182]

Unless Irans leaders feel like they are about to collapse I don’t see why they would compromise with the US. And since the US economy is holding up with oil at $100, I don’t see why they would make large compromises to Iran. It seems like neither economy is being hurt enough to make a deal. I also think more of irans oil is getting to market than we realize, via trains, trucks and captain.

[SharperDingaan]

20 hours ago, Gregmal said:

He was lamenting the stupidity of the London regimes energy policy. His gripe was with the economy struggling, and all that oil in the North Sea, why are they refusing to do anything active? What happens in the rest of the world if, you know, we actually really ever do need more oil? Cuz it's EVERYWHERE

 

UK energy policy: https://www.gov.uk/government/publications/net-zero-strategy/executive-summary

 

Unsaid, is that the UK no longer has the North Sea o/g to meet forecast future requirements, and will not be able to import the shortfall without wrecking its Balance of Payments and devaluing the pound. The solution is a mass move to electric (nuclear/green energy), and keep the diminished o/g component within what the UK can actually afford. The last time out, the discovery of North Sea oil in the UK sector, bailed the UK out ... now they need another miracle.

 

The global thing is because most countries have that same balance of payments problem. Green energy scales up with few issues, whereas coal doesn't (air becomes too dirty). Nuclear has trust/expertise issues, and green gets cheaper as adoption rises.

 

Everyone knocks carbon pricing, but the reality is that it is the mechanism enabling the business case to reduce pollution, and the economic reuse of old fields via carbon sequesture. Not what many want to hear.

 

SD

 

Edited May 27 by SharperDingaan

[influx]

On 5/27/2026 at 1:05 AM, rogermunibond said:

Oil price + crack spread > $180 over a sustained period leads to recession.

 

So the US is not there at $90 WTI and a $50 3-2-1 crack spread.

 

https://rbnenergy.com/market-data/3-2-1-crack-spread

 

Yes, that's very important oil price + crack spread. I am a generalist too but have learnt a lot more about the oil market over the past 6 years (since covid).

 

I think @kab60 is right in saying "I agree with a lot of different views in this thread and think it's possible that a number of them can be true at the same time.  ".

 

My summary:

1. The USA and Japan intervene in the markets. Maybe others too. I am surprised the crack spread is not jawboned / managed as well  That may be harder because it is physical or something else? I guess that's where the SPRs help. 

2. They all use the SPRs.

3. The constant jawboning / volatility has slowed the futures trading (leverage, margin increase, and all that).

4. Most of the futures liquidity is in the front 3 to 6 months, therefore not much price discovery in the backend of the curve, especially 2027 (via Art Berman)

5. There is some demand destruction (due to price and oil not being available)

6. Various other items: Russia may be selling more, Iran sells, re-routing, other unknown workarounds, China not importing less (weird ?!), etc.

 

Bottom line, I am still bullish but more cautious / skeptical. I think the following is a real BEARISH possibility in the next 3 or more months:

they will manage the oil futures as they have done so far, while more demand destruction is happening because oil is increasingly unavailable which helps keep the price from spiking. Markets don't work?!  

What do you guys think about this?

[SharperDingaan]

You might want to look closer at China. Now both a significant o/g producer, and a material user of green tech; they could drop their SPR entirely, and rely on surplus domestic o/g production capacity ... as does Canada. China has one of the largest SPRs in the world, and much of it is floating.

 

Demand destruction isn't from high price; it's from everyday cheaper green substitutes (solar, wind, EV/Hybrid, etc. ) that don't use as much o/g. The poorer the nation, the more incentive; now underlined by what happened to Cuba (US tanker embargo).

 

Price discovery relies on a short time horizon, and liquid markets. Anything longer term relies on independent specialist forecasting; the pay for the reports of 2-3 specialists, and adjust for your local conditions.

 

Price will come down once the SOH reliably reopens; the when and how much is a mystery.

 

SD

 

 

Edited May 28 by SharperDingaan

[ratiman]

 Neil Chapman, SVP of Exxon today at the Sanford Bernstein Strategic Decisions Conference (via Eric Nuttall) 

 

 

[influx]

11 hours ago, SharperDingaan said:

You might want to look closer at China. Now both a significant o/g producer, and a material user of green tech; they could drop their SPR entirely, and rely on surplus domestic o/g production capacity ... as does Canada. China has one of the largest SPRs in the world, and much of it is floating.

 

Demand destruction isn't from high price; it's from everyday cheaper green substitutes (solar, wind, EV/Hybrid, etc. ) that don't use as much o/g. The poorer the nation, the more incentive; now underlined by what happened to Cuba (US tanker embargo).

 

Price discovery relies on a short time horizon, and liquid markets. Anything longer term relies on independent specialist forecasting; the pay for the reports of 2-3 specialists, and adjust for your local conditions.

 

Price will come down once the SOH reliably reopens; the when and how much is a mystery.

 

SD

 

 

 

Yeah, the fact China imports so much oil and has a huge storage tells me oil is really important to them. So, China's actions disagree with you. Yes, they use Coal for electricity. That's smart. In the long-term you could be right - I am not going there.

[influx]

54 minutes ago, ratiman said:

 Neil Chapman, SVP of Exxon today at the Sanford Bernstein Strategic Decisions Conference (via Eric Nuttall) 

 

 

 

Yeah I read it too...  

 

I was listening some pods today (as usual).

1. This one was is a wild one especially about why Trump wants the nuclear dust and how she sees the situation (4D chess is my interpretation): https://macrovoices.podbean.com/e/macrovoices-534-dr-pippa-malmgren-superpower-war-or-superpower-hug/

My read: she is bullish on Trump. 

I have to entertain all sides.  

 

2. https://competentinvestor.com/will-spacex-ipo-mark-the-market-top/

I respect Kevin - he is really balanced and is explaining things really well. 

I have an interesting remark / summary: He is kind of saying the world is probably right in not caring about oil (so the price may be right; even though the supply situation is an issue, it's not crowded), yet he says semis is likely to end in tears (because very crowded, expensive, etc); so oil is not crowded but he is not bullish either; with semis he is not bullish because it is crowded and expensive. Well that was my read. I guess you can have it both ways  

[SharperDingaan]

On 5/28/2026 at 10:44 PM, influx said:

Yeah, the fact China imports so much oil and has a huge storage tells me oil is really important to them. So, China's actions disagree with you. Yes, they use Coal for electricity. That's smart. In the long-term you could be right - I am not going there.

 

China plays the long game, and plays it very well.

China generates a lot of electricity via hydro, solar, and wind; augmented with coal and gas fired electricity when the wind ain't blowing, or its dark. Nuclear is additional, they have ability to shut down heavy users (BTC mining, AI data centres) on the public grid, a material portion of energy demand is now electric, and there is quite a bit of domestic on/off shore production, along with discounted Russian supply. The nation is also well known for its mercantile prowess.

 

Should global inventories actually bottom out as forecast, much of their floating SPR will be sold off at inflated prices, and replenished from domestic production and Russian imports.

 

SD    

Edited Saturday at 11:12 AM by SharperDingaan

[Cor]

It seems the Exxon exec is putting his reputation on the line making predictions such as these - both in terms of dollar range and approximate timeline, all based on depleting inventory levels. I don’t think he would saying that publicly unless Exxon actually believed this?

 

Interestingly, at least in this excerpt, he doesn’t mention the SOH reopening timeframe and ongoing negotiations. Wouldn’t that be a counteracting factor? It seems a lot of oil volatility in recent oil peaks and troughs has been speculative, and most strongly correlated with tone/press releases of the ongoing negotiations? Today the negotiation statements make it seem as if the deal is almost inked? 
 

What do you gents think? 

[ratiman]

There's been some speculation that the futures are manipulated. Usually talk like that is just sour grapes but I might believe it in this case. If so you might expect price to go higher not lower after a deal. I continue to think that real pain is the only way we get a deal. Trump is still in the bargaining stage. 

[influx]

On 5/30/2026 at 6:17 AM, ratiman said:

 I continue to think that real pain is the only way we get a deal. Trump is still in the bargaining stage. 

 

Spot on  

I've been thinking along those line as well and for some time, but I've been wrong in the interim (judging by the oil price)

 

On 5/30/2026 at 6:17 AM, ratiman said:

There's been some speculation that the futures are manipulated. Usually talk like that is just sour grapes but I might believe it in this case. If so you might expect price to go higher not lower after a deal.  

 

It'll go higher if there is demand and they stop jawboning the market (to incentivize higher production). Otherwise I am not so sure price discovery returns  but I haven't sold my oil equities yet. The supply situation is certainly not bearish. I'll meet Trump on the other side in a month or three or so.

Re the manipulation: they have incentives to prevent a spike. That's all I need to know. I don't know how they do it (Japan, sell/loan from SPR and sell into market, etc)

[influx]

On 5/30/2026 at 5:53 AM, Cor said:

It seems the Exxon exec is putting his reputation on the line making predictions such as these - both in terms of dollar range and approximate timeline, all based on depleting inventory levels. I don’t think he would saying that publicly unless Exxon actually believed this?

 

Interestingly, at least in this excerpt, he doesn’t mention the SOH reopening timeframe and ongoing negotiations. Wouldn’t that be a counteracting factor? It seems a lot of oil volatility in recent oil peaks and troughs has been speculative, and most strongly correlated with tone/press releases of the ongoing negotiations? Today the negotiation statements make it seem as if the deal is almost inked? 
 

What do you gents think? 

 

I think there will be no deal, more pain required from both sides.

 

Re Exxon, read this, this is all you need to read:

https://www.hfir.com/p/public-we-are-going-full-speed-into

They have a couple of more public articles.

Are they roughly right? I think so.

What's the risks?

1. China floods the market . Low chance.

2. Price discovery doesn't work. Medium.  

3. There is something else NOBODY but Trump/USA knows. Low. If that was the case, he wouldn't have stopped, looking for alternatives, etc. 

[influx]

On 5/30/2026 at 1:34 AM, SharperDingaan said:

 

Should global inventories actually bottom out as forecast, much of their floating SPR will be sold off at inflated prices, and replenished from domestic production and Russian imports.

 

SD    

 

100% including Iran

Buying at discounted prices

 

I am just wondering why Chinese imports are low, assuming that is correct?

Few possibilities:

1. Currently buying at discounted prices and re-selling at higher price. Buy low sell high. Replenish later. High chance.

2. Currently not buying and helping others. Low chance.

3. Something I don't know?

[Gregmal]

Well, there’s still the issue that seems to be completely ignored from the “why isn’t oil higher” crowd; and that’s “isn’t oil already ~$25-30 a barrel higher”….pre war, we had $60 oil. Now it’s $90 +/- a few daily swings. Yet people talk as if we re at $65….

[SharperDingaan]

China. Western reporting measures flow as the change in total SPR. Sell X barrels at high prices, replace with the same X barrels of discounted Iranian and Russian crude, at the same time ...... and there was no activity . Of course ....

 

Higher prices. Relative to the pre war price, USD 85-90 is about the right price net of existing damage. Futures indicate that it lasts for a lot longer than many had hoped.

 

Inventory IS depleting, but we're some way from the USD 150-200 barrel. When China starts jumping up and down ... then it'll be time to believe it.

 

SD

Edited Sunday at 11:29 AM by SharperDingaan

[ratiman]

If conservatively estimating 10mm barrels a day is missing and assuming $5 per barrel of elasticity and assuming $65 price (WTI) before the conflict we would expect at least $115 but price should price in that this does not seem to be ending any time soon. Consider that US senators on left and right are both against a deal, as far as I can tell. This is nowhere close to being solved. 

Edited Sunday at 12:42 PM by ratiman

[influx]

18 hours ago, Gregmal said:

Well, there’s still the issue that seems to be completely ignored from the “why isn’t oil higher” crowd; and that’s “isn’t oil already ~$25-30 a barrel higher”….pre war, we had $60 oil. Now it’s $90 +/- a few daily swings. Yet people talk as if we re at $65….

 

Oh, I keep asking all the time and we don't know for certain why that is. I don't and most of my explanations are ex post. However, we'll find out. 

What is your response to "why isn't oil higher" ?

[Gregmal]

25 minutes ago, influx said:

 

Oh, I keep asking all the time and we don't know for certain why that is. I don't and most of my explanations are ex post. However, we'll find out. 

What is your response to "why isn't oil higher" ?

Because oil isn’t scarce and 20% of the supply being disrupted is probably appropriately reflected by a 40-50% increase in price. In fact, it’s probably overstated by the degree of the price increase which is why the bias seems down. 

[Blake Hampton]

No one knows where the price of oil is going.

[Paarslaars]

Down on the short term when the war is resolved, up on the long term as energy is going to be a bottleneck in human technological development.

[Gregmal]

Another day, another attempt to pump oil….only question is, how many suckers will they rope in this time?

[SharperDingaan]

5 hours ago, Gregmal said:

Another day, another attempt to pump oil….only question is, how many suckers will they rope in this time?

 

So many bunnies ... and so little time 

 

SD 

Edited Monday at 08:23 PM by SharperDingaan

[influx]

On 6/1/2026 at 4:21 AM, Gregmal said:

Because oil isn’t scarce and 20% of the supply being disrupted is probably appropriately reflected by a 40-50% increase in price. In fact, it’s probably overstated by the degree of the price increase which is why the bias seems down. 

 

Could be

[influx]

On 6/1/2026 at 4:21 AM, Gregmal said:

Because oil isn’t scarce and 20% of the supply being disrupted is probably appropriately reflected by a 40-50% increase in price. In fact, it’s probably overstated by the degree of the price increase which is why the bias seems down. 

 

Actually, let me ask you a question then:

What would cause you to change your mind? Do you have any parameters / variables that you are watching, assuming you are following this closely?

 

Please let me know. Thanks.