The Oil Crisis Isn't Over When The Strait Reopens

Ajouté : 2026-05-17

[00:00:00]So, the straight of hormones has now been closed for over 70 days. And it honestly it kind of blows my mind just to say that. And one thing people don't realize is how fortunate we've been that there's been a few million barrels a day that have been able to be rerouted through alternative routes. that's turning out to be huge this many days in the sort of the leakage there's been tankers getting through it hasn't been a complete closure there there's been some leakage there's been tankers getting through uh I we don't know exactly how many but enough to help a lot even if the oil's going to Pakistan or or China or elsewhere that's helped a lot. Another thing that's really helped a lot that a lot of people aren't talking about is China has reduced their imports and they've actually increased the amount of oil they have in their strategic reserves.

[00:01:11]But by them reducing their imports, that's allowed some of the oil that was headed for China to go elsewhere.

[00:01:21]And that's actually helped a lot. As a matter of fact, China reducing their imports is one of the things that's that's kept oil from, you know, going much higher than it has. But what I specifically want to address today because there's more and more stories coming out, and I'm not exactly sure why this is happening now. And I'm I'm starting to wonder if there's some ulterior motives behind some of these stories, but there's more and more people saying that the United States is going to start rationing gas and we're going to run out of gas.

[00:02:04]Um, and we're not anywhere close to that.

[00:02:10]I I read a story today that said in two weeks the United States is going to be rationing gas. It's not. And what really bothers me about that is it's it's from a reputable source. It was in Bloomberg and the source they were using is a professional and it's completely wrong.

[00:02:40]I I sometimes wonder if media is trying to jin up more fear about gas supplies in the United States.

[00:02:53]maybe to I don't I don't know if it's to promote an end to the war. I don't know if it's intended to make prices rise more. I I'm not exactly sure of the intent. I've I've never been a fan of that type of journalism where you scare people just for the sake of scaring people. And I say that as someone who regularly says stuff, let's be honest, that scares people.

[00:03:27]But what I say is is based on reality, you know, and I and when I do say things that might scare someone, I also tell them why everything's going to be okay. Like I don't use a lot of hyperbole. And some people think I do and then what I said turns out to be true, right?

[00:03:52]I think there's a lot of responsibility that comes with having a platform and talking about the things that we talk about.

[00:04:00]We're not running out of gas anytime soon.

[00:04:05]We We have We still have more gas today in inventory than we did in 2022.

[00:04:14]And nobody was talking about us running out of gas.

[00:04:18]Now, we do have some issues with a lot of tankers coming. That's for certain.

[00:04:27]But we also have barriers and things in place that will prevent us from running out of gas. You know, if if we get to a dangerous level, those tankers will have to go somewhere else is what I'm saying.

[00:04:42]that that's how this works. But regardless, 70 days of straight of hormones is crazy.

[00:04:50]And and we don't know what all is going to come of this, you know, 6 months down the road, what we're going to be looking at, but there's been a lot of talk about oil and gas prices returning to normal quickly after all of this is over. And that's not true either. For every story that is meant to scare somebody, there's also another story that is meant to make people feel better. That's actually just as false. And the notion that gas prices will go back to where they were before the war in even this year or next year is just ludicrous. Honestly, I don't see them going back to where they were before the war for the rest of the Trump administration. That doesn't mean they won't fall.

[00:05:47]Doesn't mean they won't fall.

[00:05:50]But we can talk about a scenario where gas gets back to a level where there's still elevated but it's almost seems like some normaly if that makes sense. So, let's talk about $3.50 gas. What is 350 gas?

[00:06:12]You know, beggars can't be choosers. So, let's say the straight of hormones opens really quickly, you know, and all these people are expecting gas prices to quickly fall back to pre-war levels. That's not going to happen, right?

[00:06:30]But that's just not how this works. So, let's kind of walk through that because opening the straight doesn't instantly refill the system. It just sort of stops the bleeding.

[00:06:45]And and when a when a person needs blood, stopping the bleeding is just the first step. And then administer maybe not a great analogy, but you know, giving the person more blood is the the second thing. It's not the first thing.

[00:07:01]So we've got this backlog. We've got tankers waiting, you know, contracts delayed.

[00:07:08]Uh risk is elevated. So yeah, oil starts moving again, but it's going to be very slow. The it's going to be very cautious.

[00:07:16]It's going to be very uneven. The the entire global supply chain for oil and gas must remain in a constant motion and flow. And if any part of that chain of events breaks it, it really hurts the whole system. And we have multiple broken chains. And the the the worst part is that the biggest break in the system is at what we could call the source, one of the sources, right?

[00:07:50]And it's, you know, even once the straight is fully open, probably take a month to get the tankers out of it. Probably another 6 to 8 weeks from there for all the tankers to get to where they're going.

[00:08:11]It's going to what I'm saying is this is going to be a very slow reboot sort of, right?

[00:08:18]And you have to remember that crude oil isn't gasoline. It has to be processed.

[00:08:21]And refineries can't just double output overnight. They really can't increase their output at all right now. Pretty much maxed out.

[00:08:34]So straight opens, gas prices do start to fall fairly quickly within days, right?

[00:08:42]Oil prices fall very quickly. gas prices a few days later.

[00:08:49]You You're still paying for that that shortage.

[00:08:56]During a crisis like this, companies aren't just sitting around or countries aren't just sitting around. I said companies.

[00:09:06]A lot of countries around the world have tapped into reserves. We tapped into RSPR, you know, and this is keeping supply flowing and preventing a lot of economic calamity.

[00:09:22]And those barrels though, they have to be paid back.

[00:09:26]And and that's the thing that's really going to drag out the fall in gas prices is the fact that once all of the oil gets flowing again, they're going to have to take oil off the market to start refilling these reserves. We cannot leave them at these levels. It is unbelievably dangerous.

[00:09:48]So once the straight reopens, governments don't just and and companies don't return to normal buying.

[00:09:57]Then they start competing to fill their strategic reserves. And this is probably something you're not going to see or hear about on the news. But instead of oil flooding the market and prices falling drastically, you're going to get something very different. You're going to get this sort of tug-of-war where new supply comes and governments are trying to buy to restock strategic reserves.

[00:10:20]And then you have traders that are hedging against future risk.

[00:10:26]And that whole time, global inventories are still going to be far below where they should be. And that greatly slows down the fall in oil prices.

[00:10:37]And so what does that timeline actually look like?

[00:10:43]You know, obviously during that first week, prices fall a little bit.

[00:10:48]Um, you know, that that's about all that's going to happen. That first week, you're going to see a drop in prices depending on how high they are.

[00:10:59]If you have to consider how much risk premium is added onto the price.

[00:11:07]If there was no risk premium right now and and the price was just based on total global inventories available, oil would probably be about $80 somewhere in there.

[00:11:26]So that initial drop you see in oil prices will be not a complete removal but some removal a majority uh of the risk premium. Now, from your second to like your fourth week and physical oil really starts moving, but you're not you're still not getting a lot at refineries, but prices will ease slowly.

[00:11:57]You get out to that 8week mark, your supply chain start to stabilize a little bit. Refineries are receiving oil.

[00:12:05]You're seeing a little more meaningful relief at the pump, but are you getting back to that 350 yet? No, you're No, not quite. I mean, I guess you could I mean, some places you would remember when I talk about gas prices, I always talk about them on a national average. So, I'm not talking about the gas price at your specific gas station.

[00:12:32]Always talk about national averages.

[00:12:38]There would absolutely be $3.50 gas at some places in the country after 8 weeks for sure. 100%.

[00:12:48]No doubt about it. You would probably see that after a month, but we're talking about national averages.

[00:12:56]We have to rebuild. We have to rebuild inventories.

[00:13:00]You have to rebuild confidence. You have to rebuild reserves. And that can really that can take months because replacing a billion barrels of missing oil it doesn't I mean the word billion sounds like a lot it's 10 days of global supply and just think about it even at a million barrels a day of surplus supply which we're going to have more than that but if you had a million barrels a day of surplus you're you're actually talking years to fully offset that billion.

[00:13:42]So, we're we're not going to take years.

[00:13:44]We're we're just not.

[00:13:46]And prices won't wait for full replacement either.

[00:13:51]But the prices will reflect how tight everything is.

[00:13:56]So instead of like you'll initially get a nice drop and then after that you'll get a very slow glide path, a very slow descent.

[00:14:08]Maybe 10 to 12 weeks out we could be approaching 350 on a national average in the United States.

[00:14:16]But honestly after that it's probably going to be stuck there for a while.

[00:14:23]And if anything else goes wrong, any more disruptions, refinery outages, some geopolitical event, we're back to another mess. You know what I mean? That's this is the part people miss. Oil prices don't just reflect supply.

[00:14:43]They reflect fear. They reflect memory.

[00:14:46]They reflect risk.

[00:14:50]And after over 70 days of this, the most one of the most critical choke points in the world, that risk that doesn't disappear overnight. So that's going to linger. That's going to stick around for a while and it's going to be priced in.

[00:15:09]Getting oil or gas prices back to where they were is much like trying to decrease inflation back to a target.

[00:15:16]It's a very slow and tedious process.

[00:15:22]If you think about the peak in gas prices under the Biden administration, June of 22, it took us over two years to get those prices to fall to about by about $2. And that was with the United States pumping record amounts of oil.

[00:15:48]And one of the reasons was OPEC kept cutting production to try to keep elevated or try to keep prices elevated.

[00:15:56]And one thing people often miss or dismiss, the United States isn't going to lower gas prices. That's not a thing.

[00:16:05]We're just not.

[00:16:09]It It's It's not going to happen.

[00:16:12]We need the world basically to agree that it's time to lower oil and gas prices. That's the only way it happens. When OPEC increases production, we have increased production from new discoveries and emerging countries.

[00:16:28]That's when we get those brief periods of of lower gas prices. It's not something the United States did. It takes forever to increase oil production in the United States.

[00:16:39]That's the way it works.

[00:16:43]Our our oil is not I mean it's easily accessible now with technology, but even then it's extremely expensive to extract. The wells decline very fast.

[00:17:00]It's it's it's tough in the United States. We're not going to add enough supply. Plus, our oil is is controlled by multi-billion dollar multinational corporations who have no interest in lowering prices.

[00:17:18]Oil companies in the United States want higher prices.

[00:17:24]Oil producing nations around the world want market share. They can produce really cheaply and they are perfectly willing to endure lower prices to regain market share and hurt US oil. I mean that's just the game we play.

[00:17:40]And what this means is it takes us a very long time to bring oil prices down globally to get gas prices down in the United States to where people are comfortable.

[00:17:54]But what we're going to see, what we are going to see is a reset of psychology, so to speak.

[00:18:04]Anything short of gas being below $3 a gallon a year ago wasn't acceptable. Like, gas had to be below $3 a gallon. And you watch, I'm telling you right now, you watch when all of this ends.

[00:18:24]And the reset in psychology kicks in.

[00:18:32]It's going to be 350.

[00:18:35]I'm telling you right now, it's going to be 350.

[00:18:39]When that gas falls below that 350 mark, people are going to be celebrating.

[00:18:48]They are. And listen, when gas was the the last time when gas was on a downward trend and we hit 350, people thought the United States was going to crumble in poverty because gas wasn't below $3. And I guarantee you this next time 350 is going to be the number.

[00:19:10]It's going to be the number. It's going to happen.

[00:19:15][laughter] Look, folks, if you haven't had a chance, please check out the American Power podcast available on Apple and Spotify anywhere you download your podcast. Also, uh, thank you guys so much for all your support. We're going to be recording a new episode of the American Power Podcast today that will drop Wednesday.

[00:19:42]So, please check that out. uh subscribe, please give us a rating, you know, a review, whatever you call that. Uh other than that, uh please let me know your thoughts in the comments section. I really appreciate all my followers and subscribers so much and all the support you guys give me. I'm not going to lie, I'm sick and tired of talking about Iran, but this is the world we live in, right?

[00:20:06]Let me know your thoughts. Have a great week. Thanks.