Is oil price going to $100/bbl

[dan_s]

At the time of this post Brent oil was trading at $88.62/bbl

Trading Economics 8AM ET:
WTI crude oil futures climbed above $85 per barrel on Friday and were on track for their biggest weekly jump since 2022 as the escalating Middle East conflict has severely disrupted global energy flows.
> The crisis has almost halted shipping through the Strait of Hormuz, a crucial route that normally handles about 20 million barrels of oil and petroleum products per day.
> Commercial traffic through the strait has nearly stopped due to security risks, insurance issues and operational uncertainty.
> Some producers have started shutting in output, tightening markets further.
> Meanwhile, tensions remain high after Abbas Araghchi said Iran was not seeking negotiations.
> The US signaled possible actions to ease pressure, including the potential release of oil from strategic reserves, while also temporarily allowing India to purchase some Russian crude already at sea.
> Saudi Arabia raised oil prices for Asian buyers and redirected shipments through Red Sea ports to bypass Hormuz.

> An Iran missile hit a large refinery in Bahrain. Iran is targeting energy infrastructure in the Middle East.
> Kuwait Cuts Oil Processing at Its Refineries with Hormuz Blocked.

OilPrice.com: Oil Prices Surge Toward $90 as Middle East Tensions Escalate
https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Surge-Toward-90-as-Middle-East-Tensions-Escalate.html

Another benchmark telling the same story is Murban crude, the Abu Dhabi grade that serves as a key pricing marker for Asian buyers. With Murban pushing toward $100 per barrel, refiners in Asia are facing rapidly rising feedstock costs.

Murban Crude oil price now at $99.64/bbl

The surge in Murban prices suggests that the market most exposed to Persian Gulf exports — Asia — is feeling the squeeze. The Abu Dhabi grade that serves as a key pricing marker for Asian buyers. With Murban pushing toward $100 per barrel, refiners in Asia are facing rapidly rising feedstock costs.

[dan_s]

Why is this happening?
> This world runs on oil.
> Today demand exceeds supply due to the war in Iran and the FACT that under-investment in finding & developing new oil supply is why there in very little spare supply capacity outside of two countries (Saudi Arabia and UAE), both of which cannot get their oil to the global market because it must go through the Strait of Hormuz.
> "Drill Baby Drill" happened during Trump's first term. It NEVER happened during his second term because of what ALWAYS HAPPENS during oil price cycles: Low oil prices increase demand and lowered investment in finding new supplies, which soon leads to a MUCH TIGHTER global oil market.
> A lot of "Market Forces" want low oil prices, but WTI in the $50s was never a sustainable price. Ignoring the war in Iran, the "Right Price" for WTI is within the range of $75 to $85. < The Oil Price Cycle cannot be stopped no matter how much politicians want low oil prices.
> Last put not least: U.S. oil production has stopped growing. Due to weather related issues, EIA will soon confirm that U.S. oil production peaked in October, flatlined in November/December and dropped sharply in January. It will not bounce back in February because U.S. upstream companies have not been completing enough new wells to offset declines in oil wells. ALL OIL WELLS GO ON DECLINE SOON AFTER THEY ARE COMPLETED.

How high can oil prices go?
I have no idea how high they will go, but they "can go" a lot higher. In 2008 the price of WTI went over $147/bbl. $100/bbl is not a hard ceiling.

We will be sending out an updated profile on Permian Resources (PR) this morning. Read it carefully.

[mikelp]

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