In 2020, COVID destroyed demand for oil.
The world cut production by 9.7M b/d to absorb the shock.
In 2026, Hormuz destroyed supply.
But this time — nobody can cut demand by 15M b/d.
That’s the problem. 🧵
COVID at its worst:
— Demand collapsed ~20M b/d in April 2020
— OPEC+ cut production 9.7M b/d — largest cut in history
— Oil went negative for the first time ever
— Inventories filled to the brim
The solution: cut production to match demand.
Simple equation.
— Demand collapsed ~20M b/d in April 2020
— OPEC+ cut production 9.7M b/d — largest cut in history
— Oil went negative for the first time ever
— Inventories filled to the brim
The solution: cut production to match demand.
Simple equation.
2026 Hormuz crisis:
— Supply missing: 15–20M b/d
— Global inventories down 255M bbls since Feb 27
— Drawing at 5.1M b/d and accelerating
The only solution: destroy demand to match supply.
But you can’t mandate lockdowns for an oil shortage.
— Supply missing: 15–20M b/d
— Global inventories down 255M bbls since Feb 27
— Drawing at 5.1M b/d and accelerating
The only solution: destroy demand to match supply.
But you can’t mandate lockdowns for an oil shortage.
In 2020 — governments told people to stay home.
Demand collapsed overnight.
In 2026 — governments would have to tell people to stop driving, stop heating, stop manufacturing.
One was an emergency health response.
The other is economic suicide.
Demand collapsed overnight.
In 2026 — governments would have to tell people to stop driving, stop heating, stop manufacturing.
One was an emergency health response.
The other is economic suicide.
In April 2020, oil traded at -$37.
Producers were paying buyers to take their barrels.
Too much supply. Zero demand. Tanks full.
Flip that equation today:
Not enough supply. Full demand. Tanks empty.
If -$37 was the floor in 2020 —
what’s the ceiling in 2026?
Producers were paying buyers to take their barrels.
Too much supply. Zero demand. Tanks full.
Flip that equation today:
Not enough supply. Full demand. Tanks empty.
If -$37 was the floor in 2020 —
what’s the ceiling in 2026?
Mathematically, the mirror image of -$37 isn’t $200.
It’s whatever price forces enough people to stop using oil.
In 2020, governments forced that with lockdowns.
In 2026, only price can do it.
And that price — nobody knows.
It’s whatever price forces enough people to stop using oil.
In 2020, governments forced that with lockdowns.
In 2026, only price can do it.
And that price — nobody knows.
Even if the Strait reopens late April — inventories still hit all-time lows.
The buffer is gone. There’s no version of this that doesn’t hurt.
The buffer is gone. There’s no version of this that doesn’t hurt.
2020: too much oil, nowhere to put it. Price went negative.
2026: not enough oil, no way to get it.
Same market. Opposite problem.
One had a floor. The other has no ceiling.
2026: not enough oil, no way to get it.
Same market. Opposite problem.
One had a floor. The other has no ceiling.
Generated by Thread Navigator
Press ⌘ + S to quick-export