Ed Morse

An oil glut is emerging as the UAE leaves OPEC+ and ramps production toward 6 million barrels per day, Iraq targets 7 million barrels per day by 2030 and diversifies export routes away from the Strait of Hormuz, while other producers like Argentina, the US, and Guyana also add supply. Simultaneously, structural demand growth is weakening because the oil intensity of GDP has fallen to 0.3% per 1% GDP growth and the current crisis is accelerating the world's move away from oil dependence. This combination drives a trend of lower oil prices, contrary to Wall Street calls for above $100.

Ed Morse stated that if the Strait of Hormuz remains closed for six weeks, it would disrupt 10 million barrels per day of supply, and prices will go higher, potentially requiring demand destruction. Closure of the Strait blocks a major chokepoint for global oil exports, creating a physical shortage that must be met by drawing inventories or reducing demand, pushing prices upward. LONG oil because the geopolitical situation suggests sustained supply disruption, and negotiations are uncertain with risks of escalation. A swift diplomatic resolution that reopens the Strait and restores flows quickly.

"Depending on the likely scenario prices could rise another 50% or even higher before leveling off... I put it more serious than anything we've seen since the 70's." With 20 million barrels a day trapped by the Strait of Hormuz closure and regional infrastructure actively being bombed, global oil supply is structurally impaired. US domestic producers and broad energy equities will capture massive margin expansion from sustained triple-digit crude. LONG. The broader equity market is currently pricing this as a short-term disruption, but experts warn it will last months, meaning energy equities are severely underpricing the duration of their upcoming cash flow windfall. A coordinated, massive G7 strategic petroleum reserve release or an unexpected diplomatic resolution could rapidly deflate the geopolitical premium in oil.

"Depending on the likely scenario prices could rise another 50% or even higher before leveling off... I put it more serious than anything we've seen since the 70's." With 20 million barrels a day trapped by the Strait of Hormuz closure and regional infrastructure actively being bombed, global oil supply is structurally impaired. US domestic producers and broad energy equities will capture massive margin expansion from sustained triple-digit crude. LONG. The broader equity market is currently pricing this as a short-term disruption, but experts warn it will last months, meaning energy equities are severely underpricing the duration of their upcoming cash flow windfall. A coordinated, massive G7 strategic petroleum reserve release or an unexpected diplomatic resolution could rapidly deflate the geopolitical premium in oil.

"Depending on the likely scenario prices could rise another 50% or even higher before leveling off... I put it more serious than anything we've seen since the 70's." With 20 million barrels a day trapped by the Strait of Hormuz closure and regional infrastructure actively being bombed, global oil supply is structurally impaired. US domestic producers and broad energy equities will capture massive margin expansion from sustained triple-digit crude. LONG. The broader equity market is currently pricing this as a short-term disruption, but experts warn it will last months, meaning energy equities are severely underpricing the duration of their upcoming cash flow windfall. A coordinated, massive G7 strategic petroleum reserve release or an unexpected diplomatic resolution could rapidly deflate the geopolitical premium in oil.