Let's Trump's war, oil prices and supply, and strait talk... - Belle of the Ranch

[TexasTowelie]

Well, howdy there internet people. It's again. So, today we're going to talk about Trump's war, oil prices and supply, and strait talk.

Energy Secretary Chris Wright is out there making the rounds and trying out a unique talking point. Basically, the prices you're seeing at the pump aren't Trump's fault. It's just perception. He said, "Right now, in fact, the runup in prices has nothing to do with any shortage of barrels of oil or natural gas. It's just fear and perception of the unknown that this could be some long drawn-out crisis, but it won't be."

He also said, "One large tanker has already gone through the straits." A whole tanker. Wow. golly gee whiz, that's going to solve everything. If you don't know, that means the Strait of Hormuz, one of the most critical oil and natural gas waterways on the planet, has dropped from seeing around 30 to 40 tankers per day to one based on his statement. That's not perception. That's what's happening.

He can argue the decline in traffic is due to the perception of risk and that the shipping business is just a big old fraidy-cat about the regional war Trump started. But saying that doesn't send ships through the strait and this is about way more than oil. There will be an explainer down below on the strait.

Later, he pushed the same line, saying, "The world is not short of oil today or natural gas." I mean, sure, the world isn't currently grinding to a halt due to a shortage, but prices aren't set by shortage and demand. They're set by supply and demand.

The supply is interrupted. Lower supply, increase demand. Military operations take a lot of fuel means higher prices. Proof of that is in the fact, not perception, that average gas prices shot up 47 cents a gallon in the last week. That's a record. And diesel went up 83 cents a gallon according to AAA. Even though the world has seen an over supply of oil lately, that doesn't change what's happening. and the fact that it takes time for oil to move across oceans and it takes time to straighten out disruptions. That's why oil has been bouncing around at $90 to $120 per barrel when prior to Operation Epstein Fury it was trading at $55 to $65.

If there isn't a supply issue, as Trump's team is currently claiming, he needs to explain why he gave India a waiver to buy sanctioned Russian oil, pitched naval escorts for tankers, and basically offered to have the US International Development Finance Corporation kind of insure oil tankers. I'm not even trashing the insurance idea. That might actually be the best idea Trump's ever come up with. But since DFC doesn't really have enough money to pull it off effectively, he probably needs to go to Congress with that.

By the way, when promoting that idea, the DFC CEO Ben Black said, "We are confident that our reinsurance plan will get oil, gasoline, LNG, jet fuel, and fertilizer through the Strait of Hormuz and flowing again to the world." Yeah, that sure seems like a supply problem to me. The strait is more important than most people think. Again, there will be an explainer linked below.

Anyway, it's just a thought. Y'all have a good day.

[Warpy]

1. Part of this is perception

but Fatso is the one who owns the panic in the commodities markets. It's also a military plan that failed to make keeping the Strait open its main priority, thanks to warring factions within a disorganized administration and a couple of twits who are completely out of their deopth (Fatso and Hegseth) thinking they should be running the whole thing.

The market will stabilize. The question now is stabilize significantly higher or back toward moderation. If the bungling and obvious disorgaization continue at the top, count on high prices persisting for everything.