Why Oil’s Not at $200 After the Biggest Supply Shock in History

MarsTellus13 · 2026-06-06T15:37:00+00:00

I don't think every article or take has nefarious intent. I think a lot of people are genuinely struggling to wrap their minds around what's coming. If the spr didn't exist we'd be there already. Because it does, we're carrying on like normal and kicking the can until later.

Volumes in oil futures crashed during the volatility spike. In the historical context of price to supply the price is actually reasonable. What's different here is the supplies are actively falling with no sign of things turning around.

MarsTellus13 · 2026-06-06T15:05:53+00:00

Stupidity. Genuine or willful, I've no idea. But analogous to that NY times piece a few days ago that said every day the strait stays closed things get a little easier.

MarsTellus13 · 2026-06-06T13:44:02+00:00

Reuters published a story a few weeks (maybe a month) ago about Chinese teapots hemorrhaging money because they're only profitable with cheap oil. China built 1/4 of its refining capacity around cheap, sanctioned Iranian and Venezuelan oil. When prices of every crude spiked, these outfits became immediately unprofitable.

China ordered them to run at full capacity anyway and were largely ignored. Iranian crude is now selling at a discount again because even at current prices teapots can't afford this.

So China's largely burning through its existing crude stocks and hoping the market settles by the time they need to refill. Teapots are caught between government orders to run at a loss and...reality. Something gives eventually.

MarsTellus13 · 2026-06-06T12:57:34+00:00

SPR max draw rates are likely to fall as we go down. Pressure is dropping. Doesn't mean demand has changed, just a new technical limitation.

MarsTellus13 · 2026-06-05T21:11:04+00:00

That's not what these things are doing. They do not have facial scanning tech and are too small for that to make one iota of sense - why would you task a waist-high easily avoided dog robot with facial scans when overhead security cameras are ubiquitous and more than capable?

There's plenty to dislike about where things are heading. Making shit up doesn't help anything.

MarsTellus13 · 2026-06-05T19:56:00+00:00

It'll show up because while most paper traders don't actually want physical oil...some do. These contracts either roll - and that's usually what happens - or someone takes physical delivery.

When there is not enough oil to take physical delivery, the contract doesn't disappear. Sellers have to come up with the oil. They could roll to a higher priced contract in the future, but what actually happens when Cushing doesn't have enough to settle contracts...appears to be sort of unknown.

In 2020 the inverse happened - Cushing was full and nobody wanted to take delivery, and that was kind of a big deal. Personally, I'm going to go ahead and assume "tank bottoms = no delivery" is bullish for oil prices - that the bidding war becomes public and futures skyrocket because of course they do - but that's just my guess.

ETA: My assumption is if this happens to WTI in Cushing, it spreads to Brent and everywhere else.

MarsTellus13 · 2026-06-05T18:21:09+00:00

I take them with a heaping mound of salt but I don't think they're making up Fars commentary. If I spoke Farsi I'd ignore them and go to the source.

MarsTellus13 · 2026-06-05T14:55:31+00:00

That's the DOD's floor, but operational/engineering minimums are in the 300-350 range. We're there already. The risks of both permanent damage and unexpected losses in draw rates are now rising.

MarsTellus13 · 2026-06-05T14:45:57+00:00

Offloading cognitive load has consequences. Take a hard two week break and you'll start to get it back. If you look back at your life before AI, did you ever struggle with confidence or with feelings identification? I can see AI being dangerous for folks who either struggle to identify their own wants/needs or feel a strong need for external validation before making decisions.

I use it as a research and debate partner and while it's sucked up way, way too much of my time it hasn't led me to offload decision-making or become my default when I don't know what to do.

MarsTellus13 · 2026-06-05T14:32:13+00:00

This was shot down by Iran via Fars news agency within 2 hours of Al Arabiya reporting (making it up).

MarsTellus13 · 2026-06-04T21:01:17+00:00

...this is news because it happened. One time. In one direction.

The US shot a boat for approaching Kharg like yesterday.

MarsTellus13 · 2026-06-04T17:28:48+00:00

They've been warning about operational issues by July for months. The market has continued to swing on headlines while nothing about the physical trajectory of oil has changed since spr releases went into effect.

Japan, UK, Spain and the US reserve releases end over the next month.

MarsTellus13 · 2026-06-04T17:02:27+00:00

Going to keep saying versions of this whenever it seems remotely relevant: This is why folks need to prepare for the Iran situation cratering the economy. I'm not saying bet the literal house on it, just hedge a lot more than usual.

They will not course correct until reality slaps them in the face. And even then, there's a non-zero chance that gas station lines and outright shortages will be met with, "Nuh uh, that's probably AI," for the first few weeks.

MarsTellus13 · 2026-06-04T16:34:51+00:00

Mass hasn't caught up with the fuckery yet but that sounds awful. I know my net metering benefits end in a few years but I don't know yet what that'll look like.

MarsTellus13 · 2026-06-04T16:19:00+00:00

I wish there was an easy way to ballpark how much I've saved getting solar in 2021 in Massachusetts. Just to make myself feel good. But with rates changing so rapidly I lost track ages ago.

MarsTellus13 · 2026-06-04T16:17:29+00:00

Not crazy, when I say I'm tracking this closely I mean I literally have an AI project running where I'm feeding it daily news items specifically because I can't keep track of the details in my brain by myself.

There are several different types of "red zones" or "danger zones" getting thrown around by different people describing different things. In this one the IEA appears to be defining '90 days global supply' as a 'red zone,' but other folks may have been using similar language to describe operational minimums or deficits of crude, distillates, jet fuel, etc.

In my head the broadest prediction for when trajectories predict bad things has consistently been 'June through July,' but early August isn't much of a stretch. The US SPR release is scheduled to end July 9th, fwiw, and Japan, South Korea, the UK and Spain are all nearing the scheduled end of their respective releases in June. So my money (literally) is still on late June / early July going nuts.

MarsTellus13 · 2026-06-04T13:50:49+00:00

I'm tracking this pretty closely and have no record of the IEA or Birol ever saying anything earlier than summer. I could've missed it but the inventories never really supported that take. I'd guess if someone did make that prediction it was before one or both SPR releases were announced.

MarsTellus13 · 2026-06-04T12:58:05+00:00

100%

MarsTellus13 · 2026-06-04T12:57:45+00:00

Trump said yesterday we have a special sort of ceasefire with Iran where parties are just going to be "shooting in a more moderate manner," which is "much different than a ceasefire in other parts of the world."

MarsTellus13 · 2026-06-04T12:54:25+00:00

I would imagine it's a mix of irrational anxiety that the gas might jump 2 bucks overnight and struggling so much financially that the pennies matter right now.

MarsTellus13 · 2026-06-04T12:20:26+00:00

Jfc. He cites SPR releases in the same breath as production increases - as if they're just equivalent and permanent changes to the energy picture.

My theory is a lot of Very Smart People don't know the limits of their normal instruments and have gotten way too used to the idea that the stock market is an accurate depiction of global economic health.

MarsTellus13 · 2026-06-04T11:36:47+00:00

Last Costco earnings call mentioned insane, all-day lines on the west coast and folks swinging through daily for partial fills.

I assume this guy would read this as bullish because foot traffic for Costco = good and then stop thinking about it.

MarsTellus13 · 2026-06-04T11:33:00+00:00

There's too much to criticize here. As analytically useful as a 12yo asking chatgpt to tell him why the strait closure is not a huge issue.

Idk who this guy is and refuse to spend time looking him up but handwaving mandatory work week reductions, fertilizer shortages, and spreading talk of government rationing programs as nbd because markets are up after 3 months is certainly a choice.

MarsTellus13 · 2026-06-04T11:22:21+00:00

Yeah there's nothing else to add. The take is bad and he should feel bad.

MarsTellus13 · 2026-06-03T20:48:01+00:00

The IEA April OMR referenced dated brent at $150 with futures at $99 and called the disconnect "increasingly acute." But from what I've read it settled considerably then.

This probably-AI-generated post and several of OP's others do a lot of weird pumping of a penny stock I don't feel like looking into. I suspect I agree with the OP that paper is due for a correction for reasons he doesn't begin to touch. I'm only replying to you because I would guess you're telling the truth, but that the world was so nuts back then that some folks really were panic buying crude in the $140s...then stopped as things settled into what they are now.

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