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birb_cromble  10hr ago (text post)   162 thread views

Weekly Finance Thread - 2026-09-05

A weekly thread to discuss financial matters - from personal all the way up to global.

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I'm starting to become an oil super bear.

First of all, let me say that there is a price for everything. When oil dipped $70 a couple months into the Iran conflict, I was actually somewhat bullish on oil, and predicted medium term prices in the $80-90 range.

But I think we're going to see, in the next couple years, oil fall to extremely low prices below $50 a barrel.

Consider...

  1. China reduced its imports by 5 million barrels a day in response to the Hormuz crisis. This shows that they are have no appetite for expensive crude. Rumor was they were buying from Iran, Russia, and Venezuela for $30/barrel, likely stockpiling unnecessarily high reserves. Furthermore, China's economic growth has become anemic, and there is no hope in sight as their demographics are unbelievably bad.

  2. Its not just China. The number of young people in the western world is plummetting.

  3. Fracking has released an ocean of shale oil. Oil production in the US has increased from about 6 million bpd to 14. The US is not the only country with shale oil.

  4. Venezuela has more oil than Saudi Arabia but only produces 1 million barrels a day. This could 10x over time if they work with the US. Guyanese production is ramping up too.

  5. The Hormuz is no longer a constraint. Flows through the strait in recent days have been approaching pre-war levels. But the bigger story is flows AROUND the strait via pipelines. This will eventually make the strait redundant.

  6. Russia and Ukraine conflict will end eventually

  7. Self-driving is here and its spectacular. Tesla FSD just works now. Cybercabs are launching in Austin. The EV revolution has been a little slow getting started because of cost, but its a one way street. The share of cars that are EVs will only go up.

That's a lot. So what are the tailwinds for oil?

  1. Iranian production (5 million bpd) is offline for years if not longer.

  2. Airplane travel keeps going up

  3. The third world population is still increasing

  4. AI could drive huge GDP growth and demand for consumption. Note however, that the same growth will make oil cheaper to extract.

Overall, the setup is bad, no good, awful for oil. I predict oil companies will continue to underperform the market for decades to come.

Do you read Doomberg, by any chance?

Another point against oil is that I've seen made is that, as LNG becomes more popular, the dynamic could reverse in which oil becomes a sub product of gas extraction, keeping supply high even at low prices.

I used to follow him on X but haven’t in awhile. That’s an interesting point about LNG and I haven’t heard that before. That’s actually the exact opposite of what’s happened in the US where natural gas is cheap because we get so much of it from shale production. I wonder if that will flip as more natural gas plants come online.

Non sequitur but natural gas replacing coal has been one of the greatest things to happen to humanity in the last 30 years and no one outside of oil and gas people ever talks about it.

Nah, a lot of environmentalists talk about it... in terms of how much they dislike fracking.

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