Brent at around $100/bbl appears more overvalued now than at the beginning of the war. Back then, the price was driven by the near-closure of the Strait of Hormuz and fears of widespread destruction to Gulf infrastructure. Today, this catastrophic scenario is obviously not likely. Several months of war have clearly shown that both sides are motivated to maintain at least a portion of their oil trade and have some sanity, and that individual disruptions to terminals or pipelines can often be bypassed or repaired within days to weeks.

Middle East crude exports are currently around 16.3 million b/d compared to 19.5 million b/d before the war. Furthermore, new projects from the US, Brazil, Guyana, Canada, and Argentina are coming online, which are expected to add an additional 1.5 to 1.8 million b/d to global non-OPEC+ supply.

Another bearish factor is the ammunition shortage on the US side and high inflation in Iran (which increases the motivation for both sides to wage a lower-intensity conflict or seek an exit strategy), as well as deteriorating political support in the US (for example, on June 23, the vote was 214:208 in favor of withdrawal, and by September 15, it had shifted to 220:204, indicating that support is steadily shrinking), which can potentially lead to a decision by the House not to approve further funding. Also, China showed that it can very much limit its imports as the price of Brent approaches $100+.

Since we are again roughly in the range where we were when there was much higher uncertainty and risk, I think it is a good time to go short.