Guest Post by Gold & Geopolitics
Oil… Oil… I’ve already written a few times about oil and I will keep writing about it. Not because I know a lot about it – I don’t, but because I hate dislocations and manipulations with a passion.
Of course, great opportunities reside there too… But with great risk comes great fortuity as Uncle Ben used to say.
Half a year ago the war started…
·
Feb 27
Read full story
·
Feb 28
Read full story
Today – 2 days later – oil’s a tad higher. Not too much, nowhere where it should be at least. People that I read, that I trust know their profession through and through, are telling that it should be around $140 to $200.
Why you ask? I thought you never would …
source
The US Strategic Petroleum Reserve (SPR) fell to 293 million barrels this week. First time since January 1983. We’re beating records here!
The latest release was about 5.3 million barrels, and at this rate, all those leased out barrels will be gone in about 3 weeks.
The EU and JP are running a similar game. Running dry too.
Drop Site@DropSiteNews
Former White House senior adviser Amos Hochstein dismissed Trump’s claim that the U.S. has “total control” of the Strait of Hormuz, telling CNBC: “We’re not in full control. It’s all nonsense.”
Iran exercises effective control by threatening only one or two ships, requiring
1:13 PM · Aug 13, 2026 · 44K Views
10 Replies · 70 Reposts · 266 Likes
Click on the link and listen to the video. Posted a week ago, Amos Hochstein delivered a pretty digestible commentary on the current state of affairs.
“The market is treating SPR releases like production. They’re not production. Not renewable, not sustainable, not coming back once they’re gone.”
·
Jul 4
Read full story
In the article linked above, I went through the mechanics. At that time, there was still some room. Remember that those caverns aren’t a bank account where you put oil in and you get oil out.
They’re salt caverns a kilometre down that need water pumped in at the bottom to float the oil up, up and away. Every time the water you pump in eats at the salt, so you can only “draw down” a few times. So we’re getting into the terrain of “cavern damage” right now, not simply “cavern emptiness”…
Previously the supply came from the Strait that is now firmly under Iran’s control (and why shouldn’t they do what Panama and Egypt do? especially with how they were treated for the past few decades?).
source
Not much is going through there. If Iran isn’t blocking it, the US is with their (ineffective) blockade.
And we don’t really have a demand-side destruction either. Even when I chose to believe the bull’s own numbers that demand fell 4-5 million barrels a day – which is REAL destruction, not Corona-like one, but still a lot.
Also consider that I didn’t really see much increase in the price of airplane tickets, or in gas prices at the pump. Well both did rise, but nowhere near where I would consider switching transportation modes.
Considering all that, the world is still short ~8-12 million barrels a day.
Supply is also eroding. Not only from the Gulf where missiles are lobbed all over the place and sometimes hit something sensitive like Jazan (yep, looking at you Houthis!).
But also a few thousand miles north-west where Ukrainian mass drone strikes are setting Russian things on fire.
Ok it might be that it’d be repaired in “a couple of days” if you believe their timeline. But a few days earlier, over 500 drones went at Moscow’s refinery complex. “Every last one was intercepted”. Or so they say.
Either way, that’s going to cost. 500 drones isn’t free, nor are three rings of air defence.
Russian refining runs are down ~2.5 million barrels/day. But crude exports didn’t budge much.
Which is kind of interesting.
What DOES get restricted though is the refined output (diesel and petrol). The fluid that runs the economy. Oh, and the war of course. Either way, if you don’t have refined oil, No1’s trucks aren’t going to run.
BTW, I want to dub the recent phase of the Ukraine war: “The War of the Warehouses”. Ukr hits Wildberries (Russia’s Amazon), Rus hits whatever looks like a warehouse back.
Iran is willing to wait out Trump’s term. I think they mean till the midterms.
Although I don’t know what that will gain, because every 4 years there’s another sock puppet that can tear up any paper of The Ones That Came Before.
So Trump’s options are very limited:
1) do nothing – I doubt this will fly with all the egos around
2) bomb some more in Sept (markets are closed for 88h after all) – last chance!
3) ?surrender?
4) declare victory and prepare for a reenactment of the Bay of Pigs?
5) an extreme volatile credit event? Like the AI bubble imploding? Huge demand destruction?
Either way, tankers take roughly a month to get anywhere in the world. A month to get back (because storage tanks are full) – if they’re even allowed through that is. Only after these 2 months production can restart, and that is under the assumption that insurance is fine with covering whatever the heck this thing is.
Which is hard for actuaries. They need to know the exact risk, and at least for now: if you pay Iran, London says you’re not covered… Uninsured, but at least your boat is safe. On the other hand, if you use the Oman side to pass, you’re risking getting a sudden case of “laundry fire” by account of Iran.
So I’m not seeing the oil starting to flow very soon. This will take multiple years to get back to anything resembling normal.
But the SPR isn’t the only hole that’s running dry. Europe got one too. And it’s arguably worse!
source
German gas storage sits around ~50%. Lowest ever for this date. Normally it’s around 70%.
Average for Europe sits at 60%. Current fill rate? 0.1%/day. 60% by Nov 1.
Every winter scenario assumes that storage is around 75%.
Woops
I’ve been told by anonymous sources, speaking on the condition of anonymity because they were not authorized to speak publicly and feared retaliation from their superiors, that according to sources familiar with those sources, their sources were themselves unable to confirm the information, having been instructed by their sources not to tell anyone that the situation is officially described as ‘stable’, even though stress-tests are still in progress and are expected to be evaluated by 2035 earliest.
All joking aside. How the hell can you NOT fill your tanks when gas is this cheap?! Unless – and here I go out on a limb – there’s no gas to be found. Colour me shocked!
But don’t worry! The gov is on it. They’re building a strategic reserve which will get online some time in 2027. The thought will keep you warm!
So the storage is there, but the supply isn’t. There’s something about summer gas and winter gas, and the former is more expensive than the latter – but I didn’t dig much into it. If you know about it, please head to the comments to enlighten everyone a bit. My thanks for that.
Anyway, Hormuz is choked off not only for oil tankers, but also for LNG (and a bunch of other stuff that we’ll find out in a few months):
·
Mar 26
Read full story
Hormuz normally transits around 20% of global gas trade. Asia is bidding up everything that can be bought. And in its infinite wisdom, the EU sanctioned Russian LNG. Still some is allowed in the EU, but a full ban is expected on Jan, 1 2027. That’s the coldest point of the year by the way, in case you’re wondering. At least those bureaucrats didn’t even check what period of the year a January generally falls in…
And Norway, which supplies about 44% of Germany’s gas, just had a major compressor failure at Ormen Lange. Output’s down 40% until at least February.
Woops
Doesn’t matter that French nuclear power is cheap either. Germany’s electricity prices are set by the marginal gas plant. Doesn’t matter that you can import cheap power if it’s billed like the most expensive one.
And if you’re living in the EU, you won’t feel it for another 6-9 months. By that time everyone will assume that the crisis passed quietly. Let me lift the veil: IT DID NOT.
The industry already gave up 15% of its gas use during the last crisis. Energy-intensive production (if any are still operational in the EU) is running 15% below 2022 levels, chemical plants sitting at historic lows.
Next squeeze, they won’t restart.
The gov thinks the situation is stable. Well, in Germany the early-warning gas stage has been active since July last year. Stage 2 is state allocation. Stage 3 is controlled load shedding.
I’m sure they have a very fanciful explanation of the word “stable”.
And gas plants don’t keep fuel sitting on site the way a coal or oil plant does. A shortfall and the plant goes down. Not tomorrow, not in a week. It’s calculated in hours and minutes.
I don’t want to scare people or write some doom-porn here, but c’mon. This is just getting ridiculous.
It’s like “they” want to make everyone feel everything is normal, and then let the runaway train crash into the concrete wall.
“Ich habe das nicht gewusst!”
source
Heating oil and the “crack spread” is signaling something is amiss, but both Brent and WTI are massaged to not signal very much.
I’m foreseeing a major repricing, absent any real ceasefire, or EVEN with a real ceasefire, oil’s not going to run very soon.
Same story as with silver: huge deficit, above-ground vaults being run down. The big difference is that oil is a visible product. If it’s not there, everyone will notice.
So line up your calendars: Nov: midterms, Jan 27: no Russian gas for the EU, early Feb: Norway should finish their repairs. And through all this time, the Red Sea and the Strait of Hormuz are blocked.
Yep, everything’s fine.
The gov says so.
And they should be believed and respected at all times.
There you go, I said it.
Everything will be stable.
Until it isn’t.
Tweet
Continue reading...
[ H/T The Burning Platform ]
Oil… Oil… I’ve already written a few times about oil and I will keep writing about it. Not because I know a lot about it – I don’t, but because I hate dislocations and manipulations with a passion.
Of course, great opportunities reside there too… But with great risk comes great fortuity as Uncle Ben used to say.
Half a year ago the war started…
The Iranian standoff
No1·
Feb 27
Read full story
The opening salvo
No1·
Feb 28
Read full story
Today – 2 days later – oil’s a tad higher. Not too much, nowhere where it should be at least. People that I read, that I trust know their profession through and through, are telling that it should be around $140 to $200.
Why you ask? I thought you never would …
source
The US Strategic Petroleum Reserve (SPR) fell to 293 million barrels this week. First time since January 1983. We’re beating records here!
The latest release was about 5.3 million barrels, and at this rate, all those leased out barrels will be gone in about 3 weeks.
The EU and JP are running a similar game. Running dry too.
Drop Site@DropSiteNews
Former White House senior adviser Amos Hochstein dismissed Trump’s claim that the U.S. has “total control” of the Strait of Hormuz, telling CNBC: “We’re not in full control. It’s all nonsense.”
1:13 PM · Aug 13, 2026 · 44K Views
10 Replies · 70 Reposts · 266 Likes
Click on the link and listen to the video. Posted a week ago, Amos Hochstein delivered a pretty digestible commentary on the current state of affairs.
“The market is treating SPR releases like production. They’re not production. Not renewable, not sustainable, not coming back once they’re gone.”
The 4th of July
No1·
Jul 4
Read full story
In the article linked above, I went through the mechanics. At that time, there was still some room. Remember that those caverns aren’t a bank account where you put oil in and you get oil out.
They’re salt caverns a kilometre down that need water pumped in at the bottom to float the oil up, up and away. Every time the water you pump in eats at the salt, so you can only “draw down” a few times. So we’re getting into the terrain of “cavern damage” right now, not simply “cavern emptiness”…
Previously the supply came from the Strait that is now firmly under Iran’s control (and why shouldn’t they do what Panama and Egypt do? especially with how they were treated for the past few decades?).
source
Not much is going through there. If Iran isn’t blocking it, the US is with their (ineffective) blockade.
And we don’t really have a demand-side destruction either. Even when I chose to believe the bull’s own numbers that demand fell 4-5 million barrels a day – which is REAL destruction, not Corona-like one, but still a lot.
Also consider that I didn’t really see much increase in the price of airplane tickets, or in gas prices at the pump. Well both did rise, but nowhere near where I would consider switching transportation modes.
Considering all that, the world is still short ~8-12 million barrels a day.
Supply is also eroding. Not only from the Gulf where missiles are lobbed all over the place and sometimes hit something sensitive like Jazan (yep, looking at you Houthis!).
But also a few thousand miles north-west where Ukrainian mass drone strikes are setting Russian things on fire.
Ok it might be that it’d be repaired in “a couple of days” if you believe their timeline. But a few days earlier, over 500 drones went at Moscow’s refinery complex. “Every last one was intercepted”. Or so they say.
Either way, that’s going to cost. 500 drones isn’t free, nor are three rings of air defence.
Russian refining runs are down ~2.5 million barrels/day. But crude exports didn’t budge much.
Which is kind of interesting.
What DOES get restricted though is the refined output (diesel and petrol). The fluid that runs the economy. Oh, and the war of course. Either way, if you don’t have refined oil, No1’s trucks aren’t going to run.
BTW, I want to dub the recent phase of the Ukraine war: “The War of the Warehouses”. Ukr hits Wildberries (Russia’s Amazon), Rus hits whatever looks like a warehouse back.
Iran is willing to wait out Trump’s term. I think they mean till the midterms.
Although I don’t know what that will gain, because every 4 years there’s another sock puppet that can tear up any paper of The Ones That Came Before.
So Trump’s options are very limited:
1) do nothing – I doubt this will fly with all the egos around
2) bomb some more in Sept (markets are closed for 88h after all) – last chance!
3) ?surrender?
4) declare victory and prepare for a reenactment of the Bay of Pigs?
5) an extreme volatile credit event? Like the AI bubble imploding? Huge demand destruction?
Either way, tankers take roughly a month to get anywhere in the world. A month to get back (because storage tanks are full) – if they’re even allowed through that is. Only after these 2 months production can restart, and that is under the assumption that insurance is fine with covering whatever the heck this thing is.
Which is hard for actuaries. They need to know the exact risk, and at least for now: if you pay Iran, London says you’re not covered… Uninsured, but at least your boat is safe. On the other hand, if you use the Oman side to pass, you’re risking getting a sudden case of “laundry fire” by account of Iran.
So I’m not seeing the oil starting to flow very soon. This will take multiple years to get back to anything resembling normal.
But the SPR isn’t the only hole that’s running dry. Europe got one too. And it’s arguably worse!
source
German gas storage sits around ~50%. Lowest ever for this date. Normally it’s around 70%.
Average for Europe sits at 60%. Current fill rate? 0.1%/day. 60% by Nov 1.
Every winter scenario assumes that storage is around 75%.
Woops
I’ve been told by anonymous sources, speaking on the condition of anonymity because they were not authorized to speak publicly and feared retaliation from their superiors, that according to sources familiar with those sources, their sources were themselves unable to confirm the information, having been instructed by their sources not to tell anyone that the situation is officially described as ‘stable’, even though stress-tests are still in progress and are expected to be evaluated by 2035 earliest.
All joking aside. How the hell can you NOT fill your tanks when gas is this cheap?! Unless – and here I go out on a limb – there’s no gas to be found. Colour me shocked!
But don’t worry! The gov is on it. They’re building a strategic reserve which will get online some time in 2027. The thought will keep you warm!
So the storage is there, but the supply isn’t. There’s something about summer gas and winter gas, and the former is more expensive than the latter – but I didn’t dig much into it. If you know about it, please head to the comments to enlighten everyone a bit. My thanks for that.
Anyway, Hormuz is choked off not only for oil tankers, but also for LNG (and a bunch of other stuff that we’ll find out in a few months):
March, 22-26: Invisible wounds
No1·
Mar 26
Read full story
Hormuz normally transits around 20% of global gas trade. Asia is bidding up everything that can be bought. And in its infinite wisdom, the EU sanctioned Russian LNG. Still some is allowed in the EU, but a full ban is expected on Jan, 1 2027. That’s the coldest point of the year by the way, in case you’re wondering. At least those bureaucrats didn’t even check what period of the year a January generally falls in…
And Norway, which supplies about 44% of Germany’s gas, just had a major compressor failure at Ormen Lange. Output’s down 40% until at least February.
Woops
Doesn’t matter that French nuclear power is cheap either. Germany’s electricity prices are set by the marginal gas plant. Doesn’t matter that you can import cheap power if it’s billed like the most expensive one.
And if you’re living in the EU, you won’t feel it for another 6-9 months. By that time everyone will assume that the crisis passed quietly. Let me lift the veil: IT DID NOT.
The industry already gave up 15% of its gas use during the last crisis. Energy-intensive production (if any are still operational in the EU) is running 15% below 2022 levels, chemical plants sitting at historic lows.
Next squeeze, they won’t restart.
The gov thinks the situation is stable. Well, in Germany the early-warning gas stage has been active since July last year. Stage 2 is state allocation. Stage 3 is controlled load shedding.
I’m sure they have a very fanciful explanation of the word “stable”.
And gas plants don’t keep fuel sitting on site the way a coal or oil plant does. A shortfall and the plant goes down. Not tomorrow, not in a week. It’s calculated in hours and minutes.
I don’t want to scare people or write some doom-porn here, but c’mon. This is just getting ridiculous.
It’s like “they” want to make everyone feel everything is normal, and then let the runaway train crash into the concrete wall.
“Ich habe das nicht gewusst!”
source
Heating oil and the “crack spread” is signaling something is amiss, but both Brent and WTI are massaged to not signal very much.
I’m foreseeing a major repricing, absent any real ceasefire, or EVEN with a real ceasefire, oil’s not going to run very soon.
Same story as with silver: huge deficit, above-ground vaults being run down. The big difference is that oil is a visible product. If it’s not there, everyone will notice.
So line up your calendars: Nov: midterms, Jan 27: no Russian gas for the EU, early Feb: Norway should finish their repairs. And through all this time, the Red Sea and the Strait of Hormuz are blocked.
Yep, everything’s fine.
The gov says so.
And they should be believed and respected at all times.
There you go, I said it.
Everything will be stable.
Until it isn’t.
Tweet
Continue reading...
[ H/T The Burning Platform ]
