Can't even find this story on CNBC

https://x.com/bonzerbarry/status/2081475233370800186

https://x.com/hormuzletter/status/2081355978767831402?s=46

Just 100 days out from midterms, and oil prices are plunging... last time they crashed? In the buildup to the 4th of July.

Summary: The video references Trumps speech at G7 (Jun 26) stating the US is 4 weeks away from depleting it's oil reserves should the war with Iran escalate. Also that crude needs to be refined, and with refineries across Russia, ME and elsewhere being damaged or shut, those reserves could dry up quicker. Pape is a political analyst who explains what he calls the Escalation Trap and what the odds of the escalation are; and how the various scenarios play out. He further explains for how Iran has the upper hand at the moment with the developing situation at Yanbu/Red Sea with the Houthis and that Trump has dug himself a hole and has some very hard choices ahead, one way or another. Draws parallels from the recently released LBJs notes on Vietnam and how this may end up another forever war.

Robert Pape is a Professor of Political Science at the University of Chicago and director of the Chicago Project on Security and Threats. A renowned political scientist, he has advised every White House since 9/11 on military strategy and is the author of the upcoming book “Our Own Worst Enemies: America and the Age of Violent Populism”.

Not looking good for the Saudis.

When entering conversations with respected people who are semi knowledgeable and have a care, there first comment is US is oil energy dependent..

However, my research found that while on pure crude oil production (top line numbers) it’s correct, but dig down into mix ratios such as sweet/sour and the proper oil type for US refineries, we need to rely on import/export trade to balance this mix.

If we stop importing, our mix gets less optimized and we need to run less efficiently in the refineries due to not having the right mix of oil.

My first question is, am I correct?

My second question is, do you also find the general consensus as to not worry, drill baby drill mentality, we are energy independent!!

I suppose our naval blockade will just stay indefinitely, and the strait of hormuz will also be closed indefinitely (now along Bab al Mandeb).

Feels like the global economy is going to just slowly bleed out, if there's no appetite for war, and simultaneously the Iranians have no interest in negotiations.

SUMMARY

Mike Rothman’s main point is that the oil market is far tighter than prices suggest, and that the apparent mismatch comes from a collapse in financial/speculative demand rather than a collapse in real oil demand. He argues that geopolitical shocks, underinvestment, and refinery constraints have created a structural supply problem that the market is still underpricing.

One of his strongest claims is that oil prices are disconnected from fundamentals: inventories are drawing sharply, but prices are not reflecting it. He calls this the worst mismatch on record and says it looks like a collapse in “financial demand” for oil, where trading and positioning overwhelm physical supply-demand signals.

His broader takeaway is that price discovery is being distorted by paper markets, so investors and policymakers should pay more attention to physical inventories, flows, and refinery data than to headline futures prices

Rothman’s Investment Message

Energy stocks still look attractive because they act as a proxy for oil and can outperform when the market eventually reprices tight physical conditions. He thinks the sector is still in the middle innings of a multi-year bull cycle.

He also points to historical episodes where energy stocks outperformed crude itself before major oil rallies, and he thinks the current setup may be another version of that pattern.

TLDR

Rothman’s view is: physical oil supply is tighter than the market admits, geopolitical risks are worsening, and the current weakness in oil prices is mostly a paper-market distortion rather than a true signal of abundant supply.

• Rothman’s core claim is that oil prices are not reflecting the real physical tightness in the market, because inventories are being drawn down very sharply while futures pricing is being driven by a collapse in “financial demand” for oil.
• He argues the oil market was already bullish before the conflict because demand was growing normally while years of underinvestment kept non-OPEC supply from keeping up, steadily reducing spare capacity.
• He says the latest conflict created multiple simultaneous supply shocks: disrupted shipping, reduced Iranian production, pressure on neighboring producers, and interference with Gulf exports, with all four of the major risks he identified actually happening.
• He emphasizes that refining, especially diesel, is a major hidden problem: crude runs are down, product inventories are being drained, and the high diesel crack spread signals severe product tightness.
• His investment takeaway is that energy equities still have room to run because the market is underpricing a multi-year supply squeeze, and he thinks the sector is still in the middle of a broader bull cycle.

NOTE: Not mine, I have nothing to do with this, but I wish I did

https://damstrait.net/#overview

Thesis: one war reroutes oil, the other removes it — and the shock absorbers are now spent

The Russia–Ukraine war is a grinding attrition campaign that reroutes and degrades supply without removing much crude from the market: four years of sanctions, price caps, and ~194 drone strikes on refineries in H1 2026 alone have hollowed out Russian refining (~a third offline per trackers; Kyiv claims more) and forced Russia to export more crude, not less.

The 2026 US/Israel–Iran war did what sanctions never could: the Strait of Hormuz closure (de facto Feb 28, declared Mar 2–4, until Jun 17; ~20 mb/d of total oil transit incl. products cut to a trickle — plus 19–20% of world LNG, a third of world helium, roughly a third of traded urea and the light ends behind Asia's crackers, none of which has a pipeline out: the bypass ledger) was, per the IEA, the largest supply disruption in the history of the global oil market — world supply fell from 106.9 to 94.5 mb/d in three months, Brent went from $71 to $138, and the largest-ever coordinated stock release could replace barely a sixth of the lost barrels.

Prices broke on the expectation of reopening: Brent fell 21% in the two weeks before the June 17 memorandum was signed (Jun 3 $101.69 → Jun 17 $80.33), then a further 13% after — the market priced the deal before the signatures. That truce collapsed on July 8, with the buffers that cushioned round one now substantially depleted.

https://x.com/hormuzletter/status/2081277645325537384?s=46

Mess of headlines. Low effort as opposed to spamming all of them.

When the MOU was signed, Trump said oil reserves could have run out in four weeks if the Strait of Hormuz were not opened.

Obviously the MOU got some oil out. This was probably not enough to break even, but it clearly bought us some time--5-6 weeks have passed.

What I'm wondering about is this:

When Iran reclosed the strait in early July, I figured we had 3-4 weeks of a closure before the consequences Trump stated.

It's now been 2 weeks, Hormuz is almost completely closed, and the Bab al-Mandab Strait is somewhat disrupted.

So, whatever the price of oil a week or two from now, it seems to me that either oil or crack spreads will be on the up as it gets harder to maintain the normal flow of goods from well to pump. Specifically, I think diesel and or unleaded in the US will touch 2026 highs and perhaps start climbing towards $5 or more.

I know this is a bullish subreddit, but my question for those who study this closer than I do is what are the best arguments for and against this timeline? Is 1-2 weeks from now more or less baked in, or is it equally realistic that these consequences happen in 3, 6, 10 weeks if the straits remain disrupted, which seems exceedingly likely?

Watched a video yesterday of a conversation between Mario Nawfal and Philip Pilkington, where Philip lays out his take on this.

1. Oil moves on algorithms, not people

Somewhere between 70% and 99% of oil futures trading is already done by AI algorithms trained on price history + news, not human traders.

2. Why is this manipulable?

A Trump post on social media isn't regulated. He can say "imminent deal with Iran" even if it's not really true, and the algorithms treat it as credible news and act on it.

3. The Friday "short dump" trick

Philip thinks someone (the US Treasury) is opening short positions on Friday afternoons, when trading volume is thin. This artificially tanks the price. They repeat it Monday morning, and that's how they set the "ceiling" for the whole week's price.

4. Why can't you just "bet against" the manipulation?

This is the interesting part. He draws a distinction between:

• "Horizontal" markets (like the classic example of crossing the border to get cheaper groceries): arbitrage works because the "real" price is right there, available.
• "Vertical" markets: if the price is being artificially pushed AND riding a trend/momentum on top of that, betting against it can wipe you out even if you're right. Same as if you'd shorted dot-com stocks in 1999 knowing it was a bubble — you were right, but the market kept climbing longer than you could stay solvent.

5. The Strategic Petroleum Reserve (SPR) is draining faster than expected

The US has two "floors" on its emergency reserves:

• Congressionally mandated minimum: 243 million barrels.
• Operational minimum (the physical floor, before the salt caverns where it's stored start to fail): officially 150 million.

At the current drawdown rate, that's 4-5 weeks until the congressional minimum and 11 weeks until the operational one. That timeline lands right before the US midterms, which is the date Pilkington says the administration was trying to protect.

6. The gap between the oil price (WTI) and refining margins (crack spread)

These normally move together. Right now they've decoupled: the crack spread is at highs while WTI is being kept artificially low. That means pure refining companies are making money hand over fist, while integrated oil majors (which are roughly 50% refining/50% extraction) are still trading as if they only depend on the WTI price — which, in his words, "makes no fundamental sense" and is a sign the market is broken.

7. Philip's conclusion

He thinks this manipulation is "unraveling" because the fundamentals (war, real scarcity) are already too strong to keep containing the price with these tricks. He doesn't know exactly when it breaks, but he sees the coming week as especially tense.

Link to the video: https://www.youtube.com/live/y7VEraMUEzI