Let's talk about whether Trump is going to send oil to $200 per barrel.... - Belle of the Ranch

[TexasTowelie]

Well, howdy there Internet people. It's Belle again. So, today we're going to talk about whether Trump is going to send oil to $200 per barrel.

Recently, I briefly mentioned Iran's goal of sending oil to $200 per barrel. While $150 seemed possible, I said I didn't see $200 as likely. That was largely based on the long-standing gentleman's agreement that existed between big oil players in the region. You don't hit our production facilities, we won't hit yours.

Most analysts assumed this seemingly unspoken agreement would hold for the most part and major damage would be avoided. The assumption that it would hold was based on the fact that major damage to production facilities could move the timeline of a return to normal energy flow after the fighting from something measured in months to something measured in years. It would be incredibly self-defeating and self-sabotaging for any player to risk that kind of escalation and damage. Surely nobody's that shortsighted.

Well, about that. Upstream natural gas facilities all over the region are being targeted. There are reports of oil refineries in Kuwait being struck as well. It looks like the catalyst for the massive escalation was the hit against Iran's South Pars gas field. They responded by targeting the world's largest liquefied natural gas complex in Qatar. If this continues to expand and major damage to the facilities is inflicted, we probably don't need to wait for two quarters of contracting GDP to say we're in recession. We can just assume we're on our way there.

We just had that question about why the stock market isn't really reacting to the Iran war. I feel like the market is going to pay attention soon. It's so bad. Even Trump seems to be aware of the risk.

He posted to social media, "Israel, out of anger for what has taken place in the Middle East, has violently lashed out at a major facility known as South Pars gas field in Iran. A relatively small section of the whole has been hit. The United States knew nothing about this particular attack, and the country of Qatar was in no way, shape, or form involved with it. nor did it have any idea that it was going to happen. Unfortunately, Iran did not know this or any of the pertinent facts pertaining to the South Pars attack and unjustifiably and unfairly attacked a portion of Qatar's LNG gas facility. No more attacks will be made by Israel pertaining to this extremely important and valuable South Pars field unless Iran unwisely decides to attack a very innocent, in this case Qatar. In which instance the United States of America with or without the help or consent of Israel will massively blow up the entirety of the South Pars gas field.”

Just a side note, Israel is indicating the strikes were coordinated with the US. Either way, the situation for the global economy just got a whole lot shakier.

The Energy Information Administration is already saying we won't see gas prices below three bucks until next year at least. The longer the infrastructure strikes go on, the harder it will be to get that horse back in the barn and get that gentleman's agreement back in place. There's a real risk of severe and extended economic disruption now. I wonder how Republicans feel about that war powers resolution vote? They're on record backing this.

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