Oil jumped because militants fired rockets at Saudi refineries. This happens roughly every eighteen months. Brent crude hit $108. Retail traders are now buying energy ETFs like they've discovered petroleum for the first time.
The Houthis launched strikes on Saudi Arabia. Iran attacked ships in the Gulf. Both events occurred in the same news cycle, which means some guy in Milwaukee just learned these two countries don't get along. He's now long crude futures with money he needs for his mortgage.
Saudi Arabia produces about 10 million barrels per day. The facilities that got hit account for maybe 2% of that capacity. The Kingdom will have them operational again before your portfolio recovers from panic-buying at the top. But sure, this time the supply shock is permanent.
Here's what actually matters: a 200-day moving average, a resistance level at $110, and whether price closes above the prior swing high. None of those things changed because a drone hit a tank farm. The chart doesn't care about geopolitics. The chart doesn't read headlines. The chart certainly doesn't give a sh*t about your conviction that this time is different.
Every amateur trader is now an expert on Yemeni proxy warfare and Strait of Hormuz shipping lanes. They'll explain why oil has to go to $150. They'll cite supply disruptions and escalation risk. They won't mention that WTI printed this exact pattern in March and gave back every penny within eleven days.
The Saudis will rebuild. The Iranians will deny involvement. The Houthis will promise more strikes. Oil will do whatever it was going to do anyway, which was probably mean-revert to $92 before you finish reading another breathless article about energy security.
But go ahead. Buy the breakout. Chase the momentum. Ignore the fact that every geopolitical oil spike since 2008 has been a selling opportunity within three weeks. I'm sure your technical edge is reading Reuters alerts faster than everyone else.
Photo by Fazle Rabbi Khandker on Unsplash
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