- Feels like every day for three months there's a piece about how tomorrow the price of gas is going $200/barrel. It never does though. Gas may just be a lot more elastic now than it was 50 years ago, or even 3 years ago. I have no idea, but I'll believe it when I see it.
- It's a lot more interesting to actually look at the mechanisms, then just to play "I'll believe it when I see it." Right now there are huge drawdowns of storage capacity in the US and Europe and China. Those have finite lifespans, although China has a lot of storage (120 days at 2025 rates.) Also, Chinese refiners have stopped processing as much fuel. Lastly, there's been a big reduction in consumption of transport fuels (again, mostly in China). These have combined to reduce prices in the US and take China off the buying market, so we're seeing lower prices than you might expect.
But this stuff won't last forever. If the Hormuz blockage doesn't resolve, things will get bad. You're seeing a patient that's a little more resilient than we thought, but who is mostly being carried through by massive blood transfusions. This buys time, but does not heal the patient.
- TLDR: due to the conflict in the Middle East, the U.S. is exporting most of the oil that used to fill these tanks. If the conflict ends, or the U.S. stops exporting the oil, the tanks will fill up again, but in the case of the latter there are unpleasant political ramifications for Trump and his supporters so they'd rather see 100% inflation instead.
- It's why Trump is pissing himself trying to get a deal. If the straight stays closed, everyone is fucked.
- That's not going to help, price spikes are locked in at this point, even if we got a deal this minute. It would be marginaly better simply because it would improve sentiment.
- Gosh he's not behaving as if he wants to make a deal.
- He wants one.
He's just never really been good at it.
- I have been reading that the deal basically includes almost everything Iran has been asking for. Perhaps, the folks around Trump understanding the cliff we are racing for are keeping Trump out of the loop and hope he will just sign something because the pain that is coming has the potential to force a ground war America is not prepared for.
