General Discussion

WSHazel

(884 posts)

8. Demand destruction

Reply to LymphocyteLover (Original post)

Thu Jun 4, 2026, 08:38 AM

Jun 4

There is significant demand destruction that kicks in at $100/barrel, and it will go up as the price of oil goes up. A lot of that demand destruction will never return. This is why the Gulf States are working so hard to end run the Strait, and why the UAE dropped out of OPEC. The other side of this crisis is going to be over-supply.

I believe one of the key reasons that Trump started this conflict was to increase energy prices which would help U.S. producers and improve the trade deficit since the U.S. is a net exporter. It is a phenomenally stupid strategy, because the back end of this is lower oil prices than pre-conflict, which will crush U.S. producers who have some of the highest production costs in the world, but Trump doesn't care about the long or even intermediate term.

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Highlight:

If the Strait of Hormuz doesn't open soon, as seems likely, there will be a massive economic crash [View all] LymphocyteLover Jun 4 OP

The shit is on the wing orangecrush Jun 4 #1

The storage cushion is fudgy. bucolic_frolic Jun 4 #2

President Bone Spurs had a plan to get out of Vietnam. Emile Jun 4 #3

Daddy's not buying his way out of this one. dem4decades Jun 4 #4

From another perspective cachukis Jun 4 #5

there's definitely been some adaptation... but still a lot has been kept afloat by the reserves that are likely to run LymphocyteLover Jun 4 #27

No question. One of my worries is the takeover of cachukis Jun 4 #31

Absolutely. I totally agree on all those points. The stock market is particularly a mess IMO LymphocyteLover Jun 4 #32

Have invested mostly in real estate over the last cachukis Jun 4 #34

Why would " Diesel goes first"??? Melon Jun 4 #6

800,000 to 1.2 million SamuelTheThird Jun 4 #11

It's one country. Multiply across all oil producing Melon Jun 4 #41

Yes, but the key is how long the strait stays closed and how quickly the reserves run out LymphocyteLover Jun 4 #28

Diesel is often made from mideastern crude while gasoline is made from US crude JT45242 Jun 4 #30

Not In The US, Though ProfessorGAC Jun 5 #45

Completely wrong. GreatGazoo Jun 4 #7

lol@your link SamuelTheThird Jun 4 #10

You ignored all the numbers to nitpick about semantics GreatGazoo Jun 4 #15

Are America's strategic reserves at a 40 year low right before the summer season? SamuelTheThird Jun 4 #19

Traders in Singapore, Beijing and Mumbai aren't duped by whatever Trump says GreatGazoo Jun 4 #36

This message was self-deleted by its author LymphocyteLover Jun 4 #29

Futures Are Not Delivery modrepub Jun 4 #39

"futures price contracts probably isn't a good predictor of actual future prices" -- meaning spot prices, yes GreatGazoo Jun 4 #42

Future Prices Are Not Necessarily modrepub Jun 5 #43

No. For anyone holding a March contract at $63 their price in March was $63 GreatGazoo Jun 5 #44

Appreciate your insight as I'm an admitted economic idiot. I can see where Exxon would be trying to "warn" Cheezoholic Jun 4 #21

Futures lock in a price right now GreatGazoo Jun 4 #22

Admittedly, Im no expert or even amateur...but SamuelTheThird Jun 4 #35

Since oil is sold as futures there is more profit when buyers panic about the future GreatGazoo Jun 4 #37

All hinging on a deal that isn't going to happen SamuelTheThird Jun 4 #38

Last week Exxon Mobil warned that oil inventories will fall to record low levels in coming weeks LymphocyteLover Jun 4 #33

Demand destruction WSHazel Jun 4 #8

"one of the key reasons that Trump started this conflict was to increase energy prices"-- agree LymphocyteLover Jun 4 #25

And it's all part of the plan... 2naSalit Jun 4 #9

Excellent summation. Kid Berwyn Jun 4 #12

I don't think the Strait of Hormuz never reopening is going to happen, but it will not reopen without a major shock ToxMarz Jun 4 #13

Agree. Thanks for the link. LymphocyteLover Jun 4 #24

Kick dalton99a Jun 4 #14

MAGA does the full collapse kairos12 Jun 4 #16

First the bastids want to grift off it, if they can. GreenWave Jun 4 #17

But I thouight it would be open in two weeks. AverageOldGuy Jun 4 #18

That's the point. Blue Full Moon Jun 4 #20

Unbelievably awful LymphocyteLover Jun 4 #23

It's happening now as we speak. marble falls Jun 4 #26

Remember that the UAE left OPEC a few weeks ago WSHazel Jun 4 #40