Iran, Oil and Natural Gas. This Time, Nobody Gets Off Easy
Let me chat with everyone about the Middle East situation before the weekend.
When Trump first started moving, he thought he could accomplish five years of work in four days, just like when he dealt with Maduro before. But what happened:
— The coup never happened at all — Taking out a few key figures didn't result in anyone defecting, let alone establishing a compliant regime — The operation kept dragging on, burning $11,000 per second, and now Congress needs to approve another $200 billion, plus ground operations are being prepared — Iran struck back, dealing a serious blow to U.S. allies in the Middle East
In short, the plan for a quick decisive victory and then getting everyone "back together" has completely fallen through. More importantly, the conflict has entered a new phase: after Israel bombed Iran's energy facilities, Iran took out a large swath of targets in the region, including 17% of Qatar's LNG production capacity and UAE's energy infrastructure. Repair time will take 3–5 years, and European gas prices spiked 30%+.
Why is this important? Everyone panics when they hear the Strait of Hormuz is being choked off, but that's actually just a short-term operation. Iran is currently allowing through only tankers unrelated to the U.S., Israel, and their allies, and continues various diplomatic maneuvering with other countries. Oil prices will definitely surge, feeding into inflation, but time-wise it's just a temporary thing.
Infrastructure being bombed is completely different—that's a long-term impact. The shipping fleet over there can disperse in days, but reopening LNG transport routes and rebuilding oil field facilities will take years to even get started.
So my sense is that the market is already pricing in an expectation: energy prices will remain elevated for the coming months, or simply stay high across the board. This is no joke.
Iran, Oil and Natural Gas. This Time, Nobody Gets Off Easy
Let me chat with everyone about the Middle East situation before the weekend.
When Trump first started moving, he thought he could accomplish five years of work in four days, just like when he dealt with Maduro before. But what happened:
— The coup never happened at all
— Taking out a few key figures didn't result in anyone defecting, let alone establishing a compliant regime
— The operation kept dragging on, burning $11,000 per second, and now Congress needs to approve another $200 billion, plus ground operations are being prepared
— Iran struck back, dealing a serious blow to U.S. allies in the Middle East
In short, the plan for a quick decisive victory and then getting everyone "back together" has completely fallen through. More importantly, the conflict has entered a new phase: after Israel bombed Iran's energy facilities, Iran took out a large swath of targets in the region, including 17% of Qatar's LNG production capacity and UAE's energy infrastructure. Repair time will take 3–5 years, and European gas prices spiked 30%+.
Why is this important? Everyone panics when they hear the Strait of Hormuz is being choked off, but that's actually just a short-term operation. Iran is currently allowing through only tankers unrelated to the U.S., Israel, and their allies, and continues various diplomatic maneuvering with other countries. Oil prices will definitely surge, feeding into inflation, but time-wise it's just a temporary thing.
Infrastructure being bombed is completely different—that's a long-term impact. The shipping fleet over there can disperse in days, but reopening LNG transport routes and rebuilding oil field facilities will take years to even get started.
So my sense is that the market is already pricing in an expectation: energy prices will remain elevated for the coming months, or simply stay high across the board. This is no joke.
Wishing everyone continued profits!