Aub.

I've been looking at the relationship between WTI crude prices and U.S. commercial crude inventories, particularly how the current geopolitical crisis compares with previous periods of significant oil market disruption. This scatter plot compares weekly WTI prices against commercial crude inventories relative to their five-year seasonal average. I've isolated several major crisis periods, including the Arab Spring and Libyan civil war, the 2014–2016 oil collapse, the 2018 Iran sanctions, the 2019 Saudi oil facility attacks, COVID-19, the Russian invasion of Ukraine, and the ongoing crisis in 2026. The highlighted green line traces the progression of prices and inventories throughout this year, while the dashed red line represents the historical relationship estimated using data through 2018. What's interesting to me is that, despite the severity of the current geopolitical situation, 2026 doesn't appear particularly extraordinary when measured against the historical relationship between WTI prices and U.S. commercial crude inventories. There are certainly periods this year when prices have deviated from the historical trend, but those deviations aren't especially unusual compared with previous crises. In fact, several earlier periods, particularly 2011–2012 and 2022, show substantially greater dispersion, with crude prices reaching much higher levels relative to comparable inventory conditions. This isn't to suggest that the current crisis isn't serious. Shipping disruptions through the Strait of Hormuz, attacks on energy infrastructure, and persistent uncertainty surrounding Iranian exports are very real concerns. We've also seen extraordinary tightness in refined products, particularly diesel, that isn't necessarily captured by looking at U.S. commercial crude inventories alone. But I think this comparison provides some useful perspective. While crude prices are elevated and geopolitical risks remain substantial, the market isn't necessarily pricing crude at levels that are historically unreasonable relative to domestic inventories. If anything, the chart suggests that previous crises have produced considerably more extreme departures from the historical relationship. Of course, U.S. inventories are only one component of the global petroleum market, and this relationship isn't a definitive measure of fair value. Still, I think it's an important distinction: we can be experiencing a serious geopolitical and physical supply crisis without crude prices necessarily being extraordinarily expensive by every historical measure. #OOTT agitlytics.com/projects/prop…

Proud of my city

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Trans people consume 449 million gallons of water per day? That seems high

I think the most interesting development today is that the market seems to be increasingly ignoring the administration's diplomatic jawboning. Trump again suggested that negotiations with Iran were underway and reiterated his intention to avoid attacking before the midterms. A couple of hours later, December WTI was still trading near $103. Unlike Tuesday, when reports of a possible diplomatic agreement briefly pushed crude into the mid-$95 range, today's assurances barely seemed to interrupt the rally. Going into this weekend, I think there's a reasonable possibility of some limited or preliminary military strikes. Israel's election is Tuesday, October 27, and we've seen considerable reporting about Netanyahu's interest in renewed operations against Iran. I don't know how that political situation will ultimately affect Israeli decisions, but I certainly wouldn't rule out an escalation before the election. At the same time, Trump is now publicly discussing the possibility of another American operation, even while maintaining that he intends to wait until after November 3. I can also see Iran continuing to apply pressure during this period. If Washington actually intends to avoid renewed strikes until after the midterms, Tehran has a window in which it can continue imposing costs on commercial shipping and maintaining leverage in negotiations. Ansar Allah could continue doing the same against Saudi infrastructure, although I'm not convinced the Houthis are necessarily calculating their actions around the American electoral calendar in quite the same way. I still think the underlying strategic problem is unresolved. Even if Kpler's reported recovery in regional exports is accurate, keeping those volumes moving through an ongoing conflict is going to be much more difficult than restoring them temporarily. Iran has demonstrated that it can threaten commercial shipping without completely shutting down Hormuz, and neither tanker escorts nor limited military operations offer an obvious permanent solution to that problem. That's ultimately why I remain skeptical that another short bombing campaign would fundamentally change the situation. Washington either has to negotiate a settlement that likely involves substantial concessions to Iran, pursue a much larger and riskier military confrontation, or tolerate a prolonged stalemate in which shipping remains expensive and vulnerable. I don't see an especially easy way for the administration to present any of those outcomes as a decisive victory. Meanwhile, prices just keep moving higher. WTI has now finished above $103, Brent is approaching $117, and crude backwardation continues to strengthen. There's certainly a geopolitical risk premium in these prices, but I'm still not convinced the possibility of another major round of fighting is fully reflected in the market. My outlook remains for crude to stay elevated unless there's a genuine de-escalation, with substantial upside risk if the conflict expands again. #OOTT

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Textbook FAS

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