Oil Bulls’ Unlearned War Lesson: $100 Pricing Needs Real Trade Disruption
Real impact, not just proximity: That’s the takeaway for oil bulls who expected the Israel-Hamas war to guarantee pricing at $100 per barrel or more, only to realize that even the worst fighting the Middle East has seen in decades cannot give them a free ride unless the crude traffic itself takes a hit.
More than three weeks into the conflict that has killed nearly 10,000 people and shocked the world almost daily with one headline of escalation after another, crude prices are barely any higher than where they were before the start of the whole thing.
The whole thing has a ring of familiarity to it; a sort of a deja vu. Oil bulls also went on the overdrive after Russia’s invasion of Ukraine in February 2022, sending prices to above $139 for global benchmark Brent and above $130 for US crude’s West Texas Intermediate, or WTI.
From there, prices began a descent that sharpened month after month, with WTI reaching below $64 by May this year and Brent falling to a little above $70 by March. At the height of the Ukraine war, there was real dysfunction to the global oil trade from sanctions on Russian oil and supply bottlenecks still in place after COVID-19 outbreak.
Despite that, the release of hundreds of millions of barrels of US emergency crude supplies calmed the market, eventually wiping out any war premium for oil.
Fast forward to now: OPEC+ — the 23-nation alliance of oil producers that combines the 13-member Saudi-led Organization of the Petroleum Exporting Countries with 10 independent producers led by Russia — is cutting 3.66 million barrels in daily supply.
Despite those cuts, concerns over demand destruction continue to pressure crude prices.
Crude longs thought the Israel-Hamas war would provide the prop to
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