|
|
Oil just broke above $80 per barrel for the first time since January 2025. |
Everyone's acting like this validates the war premium. Like we've finally seen the market "wake up" to geopolitical risk. |
I'm sitting here thinking the exact opposite. |
Oil breaking above $80 during the most serious military conflict we've seen in decades? I've seen oil hit $90, $100+ easily when real conflict breaks out. This feels different. And not in a good way. |
Here's what's actually happening that nobody wants to talk about. |
During Thursday's open, I watched something that still has me unsettled. Not the market action - I've seen worse. It was the footage of a US submarine hitting an Iranian warship. |
Holy crap. I haven't seen video like that since World War II. And I used to think about those grainy black-and-white clips as something from two generations ago, you know? Ancient history. |
This wasn't ancient history. This was high-definition reality lifting a ship out of the water. |
And oil barely budged. |
|
The technical picture tells the real story. |
If you're running any technical analysis on oil right now, you better make sure you're looking at contract-adjusted charts. Most people are looking at garbage data that makes their analysis worthless. |
When you adjust for contract changes, here's what you see: We're close to oil highs, but nowhere near where we should be given the conflict intensity. On a 15-year weekly chart, oil has been substantially higher during conflicts that were far less serious than what we're dealing with now. |
We're talking about the first time warfare has actually targeted server farms. Amazon got droned and nobody cared. They probably said "hit us again, we'll just flip a switch and put another one online." |
But here's the part that should really get your attention. |
Maybe oil isn't exploding because the market thinks this war won't last long. That's not necessarily a wrong argument - you can disagree with it, but it's not poor logic. |
The problem? If the market's wrong about duration, and this conflict escalates or drags on, we're looking at a violent repricing higher. And when I say violent, I mean the kind of move that undermines everything else in the market. |
The energy connection most people miss entirely. |
Everyone's gonna say "energy costs, stupid" when I ask how oil connects to Microsoft or Amazon. But that surface-level thinking misses the real transmission mechanism. |
It's not about energy costs directly impacting tech earnings. It's about what happens when real fear finally seeps into markets that have been shrugging off everything. |
Right now, we're in this bizarre situation where: |
War breaks out: nobody cares Major tankers get hit: oil moves up a little bit Submarine warfare footage goes viral: markets yawn
|
The market is shrugging off everything. That's either impressive resilience or dangerous complacency. |
I'm betting on dangerous complacency. |
Here's your framework for what comes next: |
Watch how oil reacts to any escalation from here. If we get that explosive move higher I've been expecting, that's when real fears could start seeping into broader markets. Not because oil costs will crush tech earnings, but because it signals the market finally woke up to what's actually happening. |
The connection isn't direct - it's psychological. When oil explodes on sustained conflict, that's when the "everything is fine" narrative breaks down. |
You would've thought oil would be $90, $100 per barrel easily by now. We've all seen it rip on geopolitical risk before. Instead, we're breaking above $80 and I'm still scratching my head wondering why it hasn't exploded higher. |
The bigger question nobody's asking: |
In a world where AI is about to make us all clowns anyway (and yes, that's my dystopian future - we'll be taking orders from AI telling us what to blow up next), maybe traditional geopolitical oil analysis doesn't work anymore. |
Maybe the market knows something about modern warfare and energy infrastructure that old-school conflict analysis misses. |
Or maybe the market is just whistling past the graveyard until something forces it to pay attention. |
Oil breaking above $80 during active submarine warfare tells you everything you need to know about how disconnected price action has become from reality. |
The question is whether reality eventually wins, or whether we're in some new paradigm where traditional risk pricing is dead. |
I'm not betting on new paradigms. |
Don Kaufman |
P.S. If you think I'm wrong about oil, fine. But when the market finally decides to price in actual war risk, it won't happen gradually. It'll happen fast enough to make your head spin. |
|
|
No comments:
Post a Comment