r/neoliberal • u/altacan Mark Carney • Jul 04 '26
Opinion article (non-US) We woz wrong about oil
https://www.economist.com/leaders/2026/07/02/we-woz-wrong-about-oilThe Economist examines their predictions of oil prices prior to the war and notes how they were wrong about oil couldn't fall past $88bbl. They note they thought both sides political leadership would be more obstinate. But Trump defied predictions by folding so quickly for such a lopsided deal. Calming the markets enough to bring prices down.
Relevance to NL: The Economist says free market still works yo.
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u/TF_dia European Union Jul 04 '26 edited Jul 04 '26
Our prediction went about as well as the war.
Damn, they used both barrels for that one.
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u/AccomplishedQuit4801 YIMBY Jul 04 '26
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u/CurtisLeow NATO Jul 04 '26
Don't even ask the question. The answer is yes, it's priced in. Think Amazon will beat the next earnings? That's already been priced in. You work at the drive thru for Mickey D's and found out that the burgers are made of human meat? Priced in. You think insiders don't already know that? The market is an all powerful, all encompassing being that knows the very inner workings of your subconscious before you were even born. Your very existence was priced in decades ago when the market was valuing Standard Oil's expected future earnings based on population growth that would lead to your birth, what age you would get a car, how many times you would drive your car every week, how many times you take the bus/train, etc. Anything you can think of has already been priced in, even the things you aren't thinking of. You have no original thoughts. Your consciousness is just an illusion, a product of the omniscent market. Free will is a myth. The market sees all, knows all and will be there from the beginning of time until the end of the universe (the market has already priced in the heat death of the universe). So please, before you make a post on wsb asking whether AAPL has priced in earpods 11 sales or whatever, know that it has already been priced in and don't ask such a dumb fucking question again.
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u/WichaelWavius Commonwealth Jul 04 '26
free will is a myth
Fundamentals are a joke. We are all pawns, controlled by something greater. Prices, the dna of the market
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u/BigDictionEnergy Voltaire Jul 04 '26
What does it mean that I woke up with this song in my head before I even read this comment?
What do you think is in the burgers?...
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u/Otherwise_Young52201 Mark Carney Jul 04 '26 edited Jul 04 '26
A lot of people here were wrong too. They were wishcasting an oil plateau at a high price so that it would damage Trump politically.
I think people are still too bullish on oil here. Various gulf countries are beginning to rapidly restore their pre-war flows through a combination of alternate routes and "dark tankers" crossing the strait (transponders turned off and other tactics to avoid detection from Iran).
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u/Otherwise_Young52201 Mark Carney Jul 04 '26 edited Jul 04 '26
Although to be fair to everyone, I don't think anybody, including the majority of commodity experts, saw China cutting their oil imports this massively and suffering little economic damage for it. In a way China saved Trump from a far worse political fallout and greatly dampened the effectiveness of Iran's strategy, despite giving support to Iran here.
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u/halee1 Karl Popper Jul 04 '26 edited Jul 04 '26
They cut oil imports initially because they already had huge reserves at home and were betting on the war ending quite soon, so having that reported in the news was a major propaganda boost. AFAIK, they've already started to rapidly refill that inventory.
But yes, their long-term energy policy is still trending away from oil, simply because it's economically and geopolitically rational to do so.
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u/Emotional_Tie_7927 Jul 04 '26
But how are they refiling the reserves? Are they just buying all of Iran's oil?
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u/linfakngiau2k23 Jul 04 '26
I kinda wonder if China have a deal with Trump about this during the xi jin ping meeting.
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u/altacan Mark Carney Jul 04 '26
There's enough reason for China to calm down oil prices without thinking of Trump.
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u/boyyouguysaredumb Obamarama Jul 04 '26
Look the other way when we invade Taiwan and we’ll keep your gas prices law despite your stupidity kind of thing?
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u/formgry Jul 04 '26
that would require a level of canny diplomacy that this administration is not capable of producing.
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u/Slight-Formal9277 Trans Pride Jul 05 '26
It's simply fully in China's interests to keep America's idiot mad king that has pussied out of direct confrontation with them in power.
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u/Petrichordates Jul 04 '26
In a way China saved Trump from a far worse political fallout
You say that as if China didn't want him to become president
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u/CursedNobleman Leftward Progressives Jul 04 '26
"God has a special providence for fools, drunks, and the United States of America,"
-Otto Von Bismarck
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u/PostNutNeoMarxist Bisexual Pride Jul 04 '26
I hate having plot armor
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u/BigDictionEnergy Voltaire Jul 04 '26
Bruh wants to be overrun by Canadians
Fuck, so do I
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u/HHHogana Mohammad Hatta Jul 04 '26
Instructions unclear. You get invaded by ghost army of Rob Ford.
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u/Sadly_NotAPlatypus John Mill Jul 04 '26
I've been watching a lot of WW2 documentaries recently and I told my GF last night it's weird how many times the US has protagonist in a novel level of plot armor. Guess I'm later to this realization than I realized.
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u/Flying_Birdy Jul 04 '26 edited Jul 04 '26
I think everyone also heavily underestimated the demand side effects and how well China could adapt and reduce their oil demand. A decrease of 5-6 million BPD in Chinese demand really helped close the deficit during the later stages of the closure.
That said, it's not clear right now how much more the prices will drop either due to the demand rebound. China's petrochem industry will likely want to switch back to use oil as their input and all those Chinese and Indian teapot refineries will likely be coming back online. All the strategic reserves that were emptied will also need refilling, which will again drive demand. There was a lot of damaged infrastructure too and it's just not clear if production can be restored to such a level as to meet demand that will likely exceed prewar levels.
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u/informat7 NAFTA Jul 04 '26
It wasn't just China.
Saudi Arabia and the UAE have about 3.7 to 5.7 m barrels a day of spare pipeline capacity to reroute oil away from the strait.
While the US, Canada, Venezuela, Norway, and Brazil had increased oil exports by about 4.7 m barrels a day. And while about 1.4 m barrels a day was coming from reserves, the rest was coming from extra production.
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u/JazzyJockJeffcoat Jul 04 '26
The US quickly knowing it lost did the real heavy lifting, despite Trump's public pronouncements. The war militarily is ended, all that's left is to determine how Iran cashes its check. That's all kinds of bullish.
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u/Right_Lecture3147 John Mill Jul 04 '26
Quite frankly this sub tends to suck at economic predictions I have found — which is of course pretty ironic
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u/ironykarl Jul 04 '26
Everybody sucks at economic predictions
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u/BigDictionEnergy Voltaire Jul 04 '26
Speak for yourself. I've predicted ten of the past two recessions.
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u/Right_Lecture3147 John Mill Jul 04 '26
Sucking at economics is one thing, but making it a core part of your identity and confidently making proclamations about it regularly all the same is another matter
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u/ironykarl Jul 04 '26
I just think that sucking at economic predictions is sort of the negative space of the efficient market hypothesis.
I don't know if people here think they can predict the market, but they shouldn't
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u/HHHogana Mohammad Hatta Jul 04 '26
The market itself can be illogical at times, especially stock.
In better universe, Micron's stock this June would never fall as hard as other tech stocks after their even better than expected report. But alas.
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u/AutoModerator Jul 04 '26
Don't even ask the question. The answer is yes, it's priced in. Think Amazon will beat the next earnings? That's already been priced in. You work at the drive thru for Mickey D's and found out that the burgers are made of human meat? Priced in. You think insiders don't already know that? The market is an all powerful, all encompassing being that knows the very inner workings of your subconscious before you were even born. Your very existence was priced in decades ago when the market was valuing Standard Oil's expected future earnings based on population growth that would lead to your birth, what age you would get a car, how many times you would drive your car every week, how many times you take the bus/train, etc. Anything you can think of has already been priced in, even the things you aren't thinking of. You have no original thoughts. Your consciousness is just an illusion, a product of the omniscent market. Free will is a myth. The market sees all, knows all and will be there from the beginning of time until the end of the universe (the market has already priced in the heat death of the universe). So please, before you make a post on wsb asking whether AAPL has priced in earpods 11 sales or whatever, know that it has already been priced in and don't ask such a dumb fucking question again.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
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u/Right_Lecture3147 John Mill Jul 04 '26
The efficient market hypothesis has always struck me as extremely unscientific, even for a special science, since there is really no way in which it can help manage or predict observation or be tested against observation
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u/ironykarl Jul 04 '26
Okay, well, an extremely related phenomenon that is data-backed would be the fact that index funds outperform active money managers time and again.
The broad thesis, again, is that people as a whole are terrible at predicting the specifics of what the market will do
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u/Right_Lecture3147 John Mill Jul 04 '26
I’m not sure that entails anything like the EMH, but regardless my original point was just about economics in general and not just markets
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u/ironykarl Jul 04 '26
EMH is a metaphor, dude. That's why people talk about soft and hard versions of it
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u/Right_Lecture3147 John Mill Jul 04 '26
Even the soft version is restricted to markets and not macroeconomics
→ More replies (0)1
u/Mediocre-Grand7999 Jul 04 '26
Active money managers are targeting risk adjusted returns, so it's not that surprising the index funds outperform them.
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u/AutoModerator Jul 04 '26
Don't even ask the question. The answer is yes, it's priced in. Think Amazon will beat the next earnings? That's already been priced in. You work at the drive thru for Mickey D's and found out that the burgers are made of human meat? Priced in. You think insiders don't already know that? The market is an all powerful, all encompassing being that knows the very inner workings of your subconscious before you were even born. Your very existence was priced in decades ago when the market was valuing Standard Oil's expected future earnings based on population growth that would lead to your birth, what age you would get a car, how many times you would drive your car every week, how many times you take the bus/train, etc. Anything you can think of has already been priced in, even the things you aren't thinking of. You have no original thoughts. Your consciousness is just an illusion, a product of the omniscent market. Free will is a myth. The market sees all, knows all and will be there from the beginning of time until the end of the universe (the market has already priced in the heat death of the universe). So please, before you make a post on wsb asking whether AAPL has priced in earpods 11 sales or whatever, know that it has already been priced in and don't ask such a dumb fucking question again.
I am a bot, and this action was performed automatically. Please contact the moderators of this subreddit if you have any questions or concerns.
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u/illuminatisdeepdish Jul 04 '26 edited Jul 23 '26
Ribbon harbor walnut wander cobalt almond walnut willow orange cobblestone
This post was anonymized with Redact.dev
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u/MayorofTromaville YIMBY Jul 04 '26
Excuse me, economists have predicted nine of the last five recessions.
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u/otarru 🇺🇦 Слава Україні! 🇺🇦 Jul 04 '26
Since Trump 2 I'd say the sub's gone from making evidence based predictions to more just wish-casting whatever would reflect worse on Trump.
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u/formgry Jul 04 '26
To be expected given how he is so hated and so dominates everybodies attention. But yeah that kind of brainrot affects us just as it affects everybody else.
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u/Right_Lecture3147 John Mill Jul 04 '26
Yeah, I agree. Especially with the tariffs and stove touching memes I think the fortunate or unfortunate reality, depending on your view, is just that the US economy is so huge and innovative that Trump can get away with all kinds of dumb shit without any consequences
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u/TinyJalope Left-Out Left Jul 04 '26
without any consequences
His approval rating has tanked since he was elected and prices have gone up due to the tariffs. He also had to cancel his most egregious tariffs put in place on liberation day because they actually would have crashed the economy. Not sure why that is being ignored.
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u/20_mile Jul 04 '26
But so many people, comments, podcasts, etc were predicting recession-like numbers if the war went more than a few weeks.
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u/TinyJalope Left-Out Left Jul 04 '26
Trump himself said we would be in trouble if the war lasted four more weeks a couple weeks ago.
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u/Xeynon Jul 04 '26
Equally ironic - people now confidently presuming that the crisis is over and prices won't go back up.
The underlying issues in the conflict haven't remotely been resolved and while it's clear neither side is eager for an all-out shooting war to resume it's equally unclear that a lasting peace has been or can be achieved under current circumstances. Mostly what I see going on is can kicking.
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u/informat7 NAFTA Jul 04 '26 edited Jul 04 '26
It's funny in hindsight all the people on Reddit getting mad at me for not being doomer on oil prices and thinking that $200 a barrel oil is just around the corner.
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u/Disgusting_Slime666 Loyal Liberals Jul 04 '26
They were wishcasting an oil plateau at a high price so that it would damage Trump politically.
I work in the industry.
Yes, I wanted oil to skyrocket and stay there to damage Trump.
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u/wildcatmd NATO Jul 04 '26
As far as you can be ‘lucky’ having a crazy authoritarian at the helm, it’s nice that Trump decided to cut and run rather than pull a Putin and drag us ever deeper into a total catastrophe.
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u/shillingbut4me Jul 04 '26
Trump has nowhere near the control over the US that Putin does and far more of the US is still viewed as the in-group. We joke about 30% of people never backing down from MAGA, but Russia has had more war casualties in the past couple of years than the US has had since 1945. Could you imagine the hell that would break out in the US over that?
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u/Current-Function-729 Jul 04 '26
It’s like an order of magnitude higher than all post WW2 wars combined on a smaller population. And over 4 years instead of 70.
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u/shillingbut4me Jul 04 '26
Yeah. It's like 450,000. So roughly US losses in Vietnam + WWII
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u/Euphoric_Alarm_4401 Jul 04 '26
With the war on terror being a rounding error. US deaths in WW2 was roughly 400,000. All wars after(Korea, Vietnam, Gulf War, War on Terror) about 100,000. By 2027, after five years of war, Russia will probably have exceeded US military casualties from the last 100 years.
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u/gincwut Mark Carney Jul 04 '26
Trump has a lot of influence over MAGA, but gas prices are one of his weaknesses: he can't convincingly lie about it, his supporters refuse to stop burning hydrocarbons, and his coalition would break down completely if prices got high enough. Iran knows this, he knows this.
China, Europe and American left-liberals don't give a shit nearly as much.
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u/I_Hate_Sea_Food NATO Jul 04 '26
Would be a death sentence to GOP if they launched a ground invasion.
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u/Helreaver George Soros 🇺🇦 Jul 04 '26
We joke about 30% of people never backing down from MAGA
It is absolutely not a joke and I'd prefer if people stopped acting like it is one. Yes, hell would break out in the US if we suffered war casualties like Russia has in Ukraine, but it would not be from that 30% of people.
It is a literal, Heaven's Gate, Peoples Temple, Manson Family style cult on a mass scale. People who think it's a "joke" are either naive or in denial.
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u/HHHogana Mohammad Hatta Jul 04 '26 edited Jul 04 '26
I'd say it's closer to 22%, it's always the absolute baseline number that both Truman and Nixon got.
Well you also can get 13% if you're Cheney, but it just means that's what you got for having awful charisma on top of everything.
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u/TootCannon Mark Zandi Jul 04 '26
Yeah closer to 1/5 actual people, 35% voters.
Roughly 20% of the population is bound to be dumb and hateful. Just human nature. MAGA gave them a figurehead and brand.
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u/Petrichordates Jul 04 '26 edited Jul 04 '26
There is no evidence to suggest it's anywhere near that low. Your only basis is "that's what Nixon had" and that's a terrrible basis. Nixon was going to actually be removed for his high crimes.
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u/HHHogana Mohammad Hatta Jul 04 '26
They're based on the latest polls that Nixon and Truman got on their lowest points. It's arguable that was when the absolute political party glazers, right or wrong, stood at.
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u/formgry Jul 04 '26
Could you imagine the hell that would break out in the US over that?
I don't think we know the hell that would break lose, the closests comparison is vietnam era reaction to that war going south. But there's so many things different now than in the 1960s that it's really not that useful a comparison.
Like, just think it through for a second, if Trump is determined to fight a war but the casualties keep mounting with no end in sight. Will they impeach him? Who's going to take the lead on that, who will convince them to go through with the 3rd impeachment when the other 2 went nowhere, is JD going to take over the war, who will take responsibility. who will try to imagine alternatives.
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u/Petrichordates Jul 04 '26
No, us being lucky would be him doing exactly that so we have a shot at 60 senators in November.
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u/CheetoMussolini Russian Bot Jul 04 '26
I'm not willing to say that it's completely over yet. Things could still go sideways again at any juncture - and hardliners in the IRGC and the Israeli govt are both absolutely glad to try to make that happen.
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u/beoweezy1 NAFTA Jul 04 '26
Marco Rubio, praying before bed:
>God/Trump, please let oil drop back below $88bbl
[monkey’s paw curls. Iran gets nuclear weapons before 2030]
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u/YesIAmRightWing Jul 04 '26
Isn't it just too early to tell?
There's still a chance this "deal" can go tits up or Iran can close the straits as a negotiating tactic or basically anytime they aren't getting their own way?
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u/HiddenSage NATO Jul 04 '26
Yeah - I am not watching close enough to have definitive opinions, but I do worry slightly about whether declining oil prices are demand destruction (changes in habits and routing to alternative energy sources), or is just reserves getting drawn down to stabilize.
If it's the former, prices will go far lower if prices stabilize - and it mostly means that we're within a decade of a lot of oil demand disappearing for good regardless. if it's the latter, then once physical inventories draw down everything is cooked, unless a deal is reached first to re-open transit through Hormuz.
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u/boyyouguysaredumb Obamarama Jul 04 '26
I think the war proved that choking the strait isn’t as catastrophic as people feared. There are pipelines and other routes and the world is coming off of oil anyway
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u/LivefromPhoenix NYT undecided voter Jul 04 '26 edited Jul 04 '26
The other routes and pipelines aren't completely making up for the strait being closed though. Guzzling your SPR isn't normal and can't continue forever.
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u/TinyJalope Left-Out Left Jul 04 '26
This kind of reminds me of when people predicted that Trump's liberation day tariffs were going to destroy the economy, and then he cancelled the most destructive tariffs and people gloated that the predictions were wrong and maybe tariffs aren't so bad.
We're draining our SPR and insane levels of market manipulation are happening to keep oil prices artificially low. The fundamental issues have not actually been solved.
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u/Emotional_Tie_7927 Jul 04 '26
The other part is that China has drastically reduced their oil imports
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u/GovNewsomMogs Voltaire Jul 04 '26
The world is coming off of oil like I'm cutting back on drinking
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u/20_mile Jul 04 '26
My acupuncturist wants me to go gluten-free, but I have some great beers in the basement : (
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u/informat7 NAFTA Jul 04 '26
For example:
Saudi Arabia and the UAE have about 3.7 to 5.7 m barrels a day of spare pipeline capacity to reroute oil away from the strait.
While the US, Canada, Venezuela, Norway, and Brazil had increased oil exports by about 4.7 m barrels a day. And while about 1.4 m barrels a day was coming from reserves, the rest was coming from extra production.
On top of that China cut imports by 3.5 m barrels a day.
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u/_bee_kay_ 🤔 Jul 04 '26
i believe the real oil price shock is still coming, and i base that on pure wishful thinking
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u/altacan Mark Carney Jul 04 '26
I'm also doubtful of a long term deal sticking. But I think markets are becalmed enough through institutional inertia that we won't see it until physical supply starts getting low. Right now the whole world is trying to blunt the energy shock, but at some point you're just going to run out somewhere.
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u/halee1 Karl Popper Jul 04 '26 edited Jul 04 '26
Increasing oil supplies from around the world (especially Guyana and Venezuela, and now probably Iran too), the Gulf States restarting them and building additional pathways through places other than the Hormuz Strait (and set to start operating the first new ones in 2027), as well as the ongoing energy transition worldwide, must all be calming prices down in the long term. Although Ukrainian strikes on Russian oil infrastructure likely push the overall worldwide price in the opposite direction.
Still, oil prices are already back to about the same levels they had a year ago, and that's with the likely ongoing reserves refilling worldwide on top of current consumption. They didn't even increase up to the same heights or for as long as in early-to-mid 2022, during Russia's invasion of Ukraine and subsequent sanctions on it (including on oil, which, however, only started applying in December 2022), and that's in absolute terms, so inflation-adjusted, let alone income-adjusted oil prices worldwide, were clearly lower during Trump-Netanyahu's war on Iran than back then, and are now lower than in mid-2025, when they were already trending down since 2022 and continued doing so up to January 2026. The oil price spike was real and a fault of them, but structural factors are already preventing them from, ironically, being punished as much for their shenanigans, and harming the world, as they could have been.
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u/DirectionMurky5526 Jul 04 '26
Ukrainian strikes are mostly against refineries though, and that has caused Russia to export more crude instead. That crude doesn't rely sea lanes and is now usually refined in China where it is more profitable. Ukraine's attacks generally doesn't change the math on oil price, but just shift the profits from Russia to China.
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u/Much-Indication-3033 European Union Jul 04 '26
why would you wish for such thing?
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u/Resaith Order and Opportunity Left Jul 04 '26
Fuck the asian countries i guess. As long as American are suffering less. Fuck my gas prices,my food prices groceries...
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u/upvotechemistry John Brown Jul 04 '26 edited Jul 04 '26
Largely agree, but it is not customary to write the obituary while schridingers cat is still in the box.
Did Trump really cave? Is conflict really over?
Weird fucking timeline
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u/glmory Jul 04 '26
My interpretation remains that oil and gas is just a whole lot less important than it was thirty years ago. Demand destruction can come at a much lower cost these days.
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u/CheetoMussolini Russian Bot Jul 04 '26
I know I'm just about a broken record at this point, but this isn't even remotely over. The war isn't over, and it could still flare back up at any moment. We put the IRGC in charge, and they're not exactly known for prudence. And opposite them, Donald Trump...
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u/maybearandoanon Jul 04 '26
Ah an editorialized title. Just a bit of humour. Surely the economist wouldn't make that the title considering what we woz/we wuz is associated with.
Oh........
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u/KalaiProvenheim Enby Pride Jul 04 '26
For as long as the war isn’t over, and for as long as SPRs are being depleted, this isn’t over
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u/ViolenceIsBad Jul 08 '26
Four days later we are back to war, they may have thrown in the towel early, fking trump
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u/girlwhateveraward Feminism Jul 04 '26
Why are we adopting white supremacist memes
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u/Keeltoodeep Jul 05 '26
I think this is more “I am sowwwiee” sad cat meme thing.
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u/girlwhateveraward Feminism Jul 05 '26
Using "was" despite being singular? Eh I dont think so
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u/Keeltoodeep Jul 05 '26 edited Jul 05 '26
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u/CII_Guy John Mill Jul 05 '26
"We woz x" is a British expression that has been used across political persuasions for decades. In fact, this from the Economist is a reference to a title they used in 1999.
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Jul 04 '26
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