They think the system proved it could cope. In reality, the first shock emptied the reserves, stretched the refineries, and used up the very buffers now needed to survive the second.
And this time, the war is spreading.
Trump has reinstated the blockade on Iran, the MOU appears to be collapsing, and fighting has resumed.
The Houthis are firing missiles at Saudi, potentially opening another front in the Red Sea.
Yet oil markets are barely reacting, and Jeffrey thinks that's insane.
His argument is that investors have fallen for what he calls the "abundance illusion."
The first time Hormuz was disrupted, the catastrophe everyone expected didn't immediately arrive.
Oil kept moving, refineries kept running, and Western economies didn't suddenly grind to a halt, so markets learned a simple lesson: We've got plenty of energy.
Jeffrey says they completely misunderstood what happened.
Ships already inside the Gulf rushed their cargoes out, inventories were drained, strategic reserves absorbed part of the shock, and refineries were pushed to output levels few thought possible.
The system didn't prove it was resilient; it burned through its emergency buffers, and now round two is beginning.
There is another problem almost nobody is talking about.
You can store emergency crude oil, but there is no equivalent strategic reserve for the refined products people actually use, like diesel, gasoline, and jet fuel.
And while everyone is staring at a relatively calm crude price, diesel in New York Harbor is already around $140 a barrel, compared with roughly $85–$90 before the war.
That's where he thinks the real stress is showing.
Jeffrey thinks the first round was only the rehearsal.
And worse, it consumed the inventories, reserves, and spare capacity the world may desperately need to survive the real crisis.
@CommodMkt
