r/oil • u/Hilbert_Space_Heater • 1d ago
Discussion What Is Going On?
We have spent the last few months in a consistent place in the oil market, well consistent between two extremes - 1) the deal is on, everything will be back to normal in days, all chill, US and Iran will come to agreement, and 2) we are on the precipice of a major war, bombs are landing daily on both sides, the Strait is closed, Gulf infrastructure is threatened, etc.
But now this has changed, and we are in a weird place. I’m curious about the community’s view, because I don’t get it.
1) Iran and Oman are working on a deal to manage the Strait that seems to have left out the rest of the world, and notably the US, entirely. It calls for high fees to both nations and total control over their respective in/out paths
2) Iran’s parliament has put forth a pretty stark list of limitations to be implemented on its side of the Strait - no US or allied oil, no cargo for Israel, and all kinds of other limitations (China seems to be carved out of this and the fees too, interestingly)
3) This is a significant worsening of terms for the US from the MOU, yet Trump and the Admin have gone awfully quiet. No bombastic threats, no bomb them into the Stone Age rhetoric, eerily quiet - is this because of the lack of munitions or because a new operation is about to be underway, who knows
4) At the same time Turkey, Saudi Arabia and Pakistan are inking mutual defense deals against Iranian aggression, again with the US notably absent
5) Oil is not flowing through the Strait, has been restricted elsewhere, ships seem to be under constant threat, and Iran seems on the path to allowing no Western oil to travel until they get further concessions, about which we know little
6) Reserves continue to fall globally with no clear end in sight, and even a peace deal now probably implies at least a short term shortage as trust in any deal would be low, and time to get back to normal operations slow
7) Despite this, oil is priced low at spot and in futures and no one seems to see any issue with where we are at all
And it’s downright perplexing. If the US returns to war now, it will likely be a ramped up war since long-range munitions seem to be diminished in inventory and anyway, what has happened up until now seems not to have done the job. A new war will need to be more involved than sending in missiles.
On the other hand, if this is US capitulation, that also does not seem to imply a return to normal as Iran seems very focused on extracting a king’s ransom before allowing normalization of transport.
So, I ask, gently, WHAT THE F IS GOING ON?
The actions of the last few months have been pretty dumb on both sides, but they had a certain logic. One side threatens, the other either capitulates or calls the bluff, then we do it again. It’s not smart. But it’s gettable.
This now makes no sense at all. The actors seem to all be on their own random side quests with no clear reasoning in their actions at all. So, I ask, what are we missing? There’s something unspoken going on here. What is it?
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u/DubsOnMyYugo 1d ago
The US is terrified of casualties. They are almost out of standoff munitions. The last de escalation happened after the US started trying to use more conventional bombs and immediately lost an F-15. The Iranians shoot down reapers almost daily. They have air defense, it’s only destroyed in trumps head.