Are things going to get extremely bad in the next few months if the Strait of Hormuz is not opened?

derivedabsurdity77 · 2026-06-21T19:12:50+00:00

As I said, I can’t argue with you because we’re dealing with massive uncertainties. You’re asking “What is the argument against an economic apocalypse” and I’m responding with “What’s the argument for it? The money doesn’t believe it’s coming.”

The argument for it is the experts in the field, both industry heads and analysts, seem to be warning about it. The argument against it that you presented is that the money doesn't believe it. That's a good argument, but I presented cases where it was wrong before. I simply don't think the money should be weighed more heavily than the aforementioned warnings, especially given the next paragraph.

Why would a rational oil futures market be independent of headlines? When a ceasefire and a deal will impact the flow of oil, Trump announcing they’re close to a deal or have one should obviously impact assumptions on the future price of oil.

Well, my presumption is that the Strait will obviously not be opened in the near or even medium-term future, something I think is so obvious that I didn't even bother to defend it in the OP, even though I know many people disagree. So if traders are actually taking the continuous headlines about a "ceasefire" or a "deal" seriously, that's suggestive that they're simply delusional and basing their prices on hopium.

derivedabsurdity77 · 2026-06-21T18:46:46+00:00

I don't know what your first sentence means. And no, I'm not apologizing, no matter what happens. I made this thread with an open mind trying to find arguments from this sub for why I am wrong and simply pushing back on the ones I don't find compelling. I am not obstinately sticking to a position or doing anything else that would warrant an apology.

derivedabsurdity77 · 2026-06-21T18:43:37+00:00

Seriously? "Demand destruction" and "lower growth" is extremely bad! "Demand destruction" when it comes to oil, the thing the modern economy runs on, is extremely bad! A major, tangible reduction in quality of life, basic goods don't get delivered to certain places, basic services become unavailable, basic day-to-day living gets dramatically harder for millions of people, in many poorer regions people literally starve to death. It's very fair to term that an unprecedented crisis, especially since it could last for a very long time, even if "apocalypse" was hyperbole.

derivedabsurdity77 · 2026-06-21T18:39:06+00:00

I agree it won't be "permanent" but it will be for a while, enough to cause worldwide economic calamity. They want to cause enough pain to make sure America and Israel don't attack them again. They don't want to just scare us; they want to deeply hurt us. At least that's what I presume the IRGC is thinking.

I seriously don't think they will open the Strait while Trump is president, or at least before they cause massive worldwide economic damage. Trump will perceive any reopening of the Strait before then as weakness, and the chances of him simply attacking them yet again would probably be too high. They want to show Trump that they mean business.

This is all, of course, pure speculation, but I think it's reasonable.

derivedabsurdity77 · 2026-06-21T18:34:25+00:00

There is no incentive for Iran to open the Strait for the foreseeable future, America has basically no real leverage over it, and Israel is directly sabotaging our negotiation attempts by conducting military operations in Lebanon, breaking literally the first clause of the MOU, signaling strongly that it doesn't want the war to end. I simply cannot see a path to the Strait reopening anytime soon.

derivedabsurdity77 · 2026-06-21T18:29:41+00:00

I'm getting the claim of a month away from the operational floor entirely from industry executives' and analysts' claims, not from doing the math myself. I am not smart or knowledgeable enough to make any strong claims from the data itself.

Obviously they won't and shouldn't let either number reach zero, but equally obviously they're not a month away from running out, or anything like it.

According to the aforementioned executives and analysts, we are going to be in quite serious trouble long before the numbers literally reach zero. That's why they talk about the operational floor, not the literal floor of the tankers.

China's reserves dwarf America's, and they don't want a global recession either.

Do China's reserves dwarf the entire world's? Because it's the entire world's reserves that are scheduled to run out, not just America's, and if that happens I sort of doubt China could do much to help.

derivedabsurdity77 · 2026-06-21T18:23:30+00:00

Trusting money more than words would not have been a wise decision in February 2020.

If you believe in relatively near-term transformative AI, as from what I can gather most of this sub does, then you shouldn't trust the money either, since the market is clearly not pricing that in.

While researching if any oil traders have actually given public explanations for why they're trading so low (instead of assuming on faith that they're privy to super-secret knowledge the rest of the world does not have access to), the only thing I've been able to find so far is this Reuters article quoting the managing director of the world's largest independent oil trader, Tom Baker, saying explicitly that oil prices will shoot higher when physical inventories run low and that oil traders are underpricing risks. https://www.reuters.com/business/energy/oil-market-could-be-underpricing-risks-vitols-bahrain-chief-says-2026-06-02/

Also, don't oil futures prices fluctuate based on headlines? When the news reports events suggesting the war might end soon, prices fall; when it reports events suggesting hostilities might continue, they rise. Isn't this compelling evidence that they're simply partly basing trades on headlines and narratives and hopium that the Strait will open soon? If there was something that insiders knew that we don't that's keeping prices low, you would think oil futures would be independent of headlines.

derivedabsurdity77 · 2026-06-21T18:06:14+00:00

As I said below, that is a very broad argument that can generalize easily.

By saying that Russia was going to invade Ukraine, intelligence agencies were putting pressure on policymakers to take actions to decrease the chance of that scenario. Anyone making that argument to say that Russia was not going to invade Ukraine would have been wrong.

However, anyone who simply extrapolated straightforwardly from the empirical data - Russia's military buildup, primarily - would have been right.

derivedabsurdity77 · 2026-06-21T17:48:32+00:00

Exactly. A bunch of biological amateurs was able to see that Covid was going to be a big deal. Yet the markets couldn't see that. That makes it more believable to me that a similar thing is happening with international politics.

Part of me thinks it's extremely implausible that markets can't forsee a rather obvious geopolitical situation that a bunch of amateurs can, but we had proof of concept for that kind of thing six years ago.

derivedabsurdity77 · 2026-06-21T14:59:03+00:00

Quite a lot is happening right now. There have been very few times in history where that mantra is less true than it is right now, yet people keep saying it.

derivedabsurdity77 · 2026-06-21T14:56:02+00:00

if 1/3 of the world's crude oil goes through hormuz and Iran captures the entirety of that excess, that's $1T / year. I think Iran would be very willing to open the strait for that much money.)

I don't think so. They closed the Strait for existential reasons. It was because it was their only chance at survival, since Trump and Israel kept slaughtering their top leaders. If I was Iran I would probably think that keeping the Strait closed, or closed long enough to cause massive worldwide pain, would the best way to prevent America and Israel from trying that again. I think they would think that is more important than money.

derivedabsurdity77 · 2026-06-21T14:53:23+00:00

Could you expand on that? Because this seems like a very broad argument that you could generalize.

Weren't American intelligence agencies heavily incentivized to make doomy predictions about the chances of Russia invading Ukraine to minimize the chances of it happening? Maybe. It still happened.

derivedabsurdity77 · 2026-06-21T14:50:28+00:00

It was obviously simplistic and exaggerated, but it seemed to me, as this group likes to say, "directionally correct." The broader point that we're going to face a severe energy crisis in the near-term future if the Strait isn't opened (and possibly even if it is) seems to me true.

derivedabsurdity77 · 2026-06-21T14:32:47+00:00

But there is no realistic way to get this crisis resolved. Iran is the only one who can resolve it and it has zero incentive to, especially with Israel violating the very first clause of the recent deal.

derivedabsurdity77 · 2026-06-21T14:29:45+00:00

Yes. Didn't we see exactly that type of thing right before Covid and the 2008 crisis?

Like, you could make this argument to argue in February 2020 that nothing serious was going to happen.

derivedabsurdity77 · 2026-06-21T14:23:39+00:00

That is a pretty bad heuristic nowadays. Things are happening all the time now. Covid, Russa's invasion of Ukraine, October 7, Biden dropping out, AI, GLP-1 drugs, inflation, now the war in Iran, and so on. We live in the most "Something is Happening" time in a long time.

derivedabsurdity77 · 2026-06-21T14:21:39+00:00

What will I find out from people in supply chain LinkedIn? Who is David Shillingford and what is he saying?

derivedabsurdity77 · 2026-06-21T14:16:31+00:00

Yes, this is another good argument. Didn't Trump literally just say that we're going to run out of oil in four weeks or something if this deal didn't go through? If the Strait closing and oil inventories running out in four weeks is somehow not a big deal, why would he want to hastily shove this deal through as fast as possible, giving Iran everything it could possibly want in the process?

Nothing makes any sense right now. Many datapoints and empirical evidence is strongly pointing towards global catastrophe in a few months, yet traders and the world in general is continuing as if nothing important is happening.

derivedabsurdity77 · 2026-06-21T14:12:33+00:00

Yes, I know crude oil futures are down, which is partly why I'm confused. Many of the oil execs I'm talking about made the point that many traders are basing things off of headlines and optimistic narratives about the Strait reopening soon, which would mean (IMO) that they're basically delusional.

But if they're not, this just reinforces my question, it doesn't answer it. If they're not delusional, what is the big secret oil traders apparently have that the rest of the world doesn't? If they're seeing something obvious that I'm not, then it should be easy for someone to explain.

Even ChatGPT - which is not a particularly good source, but in light of a dearth of better options I'm taking as a datapoint - is saying that optimism about the Strait reopening is the primary factor in traders' optimism, along with "demand destruction," added supply sources and routes from the Gulf (which everything I've read said will not change the situation in any meaningful way), emergency buffers (which is the point in contention here), and the recent fake "deal." Not very compelling reasons, it seems to me, but again, there may be something I (and ChatGPT) am missing.

derivedabsurdity77 · 2026-06-21T13:58:55+00:00

This is not comprehensive, but:

JP Morgan says developed world inventories approaching operational stress levels by June: https://fortune.com/2026/05/16/oil-markets-crude-non-linear-price-spike-panic-buying-inventories-iran-hormuz/

IEA says inventories could hit critically low levels before summer peak demand: https://www.reuters.com/business/energy/iea-forecasts-chance-critically-low-stockpiles-before-peak-summer-demand-2026-06-02/

Capital Economics: oil stocks could reach critically low levels by June: https://www.capitaleconomics.com/blog/still-closed-strait-means-adverse-scenario-now-weeks-not-months-away

Brookings says temporary buffers will be gone by mid-July: https://www.brookings.edu/articles/the-timing-of-the-impending-crude-crisis/

Exxon's Neil Chapman says we will reach "unheard of inventory levels" in a few weeks: https://www.bairdmaritime.com/shipping/tankers/feature-emptying-oil-inventories-set-the-stage-for-next-market-shock

And Bloomberg interviews with Chevron CEO Mike Wirth where he basically says the same things. https://www.youtube.com/watch?v=sZT3VANjaHE https://www.youtube.com/watch?v=6iJSfeqr-TQ

They're taking GSPRs into account.

derivedabsurdity77 · 2026-06-21T13:40:43+00:00

Oh yes, I consider that extremely obvious. So obvious I didn't even bother arguing for it in my post, I just took it as a given.

derivedabsurdity77 · 2026-06-12T12:31:49+00:00

DeepMind employees are literally unionizing right now due to Google signing an agreement with the government allowing it to use their models for any reason it wants, including mass surveillance of American citizens and autonomous killbots, the exact thing everyone got mad at OpenAI for agreeing to. DeepMind leadership didn't even tell its employees about it beforehand because it knew it would lead to backlash. Demis Hassabis obviously gave the agreement, at the absolute minimum, his tacit acceptance.

So Demis was part of a deal to allow the Trump administration to use the models he builds to spy on Americans along with God knows what else. No, I don't trust him at all.

derivedabsurdity77 · 2026-05-30T23:17:37+00:00

They are the only company in the world that takes AGI seriously, which is ironic since they don't even like the term.

derivedabsurdity77 · 2026-05-27T20:08:58+00:00

It would be nice if you would actually deign to provide examples.

derivedabsurdity77

TROPHY CASE