Crude oil dropped 8% this week because Tehran and Washington talked at the U.N. Iran wants the U.S. to honor a June 17 memorandum of understanding. The foreign minister said so. Traders panicked and sold.
Here's what didn't happen: a single barrel of oil disappeared. Supply stayed the same. Demand stayed the same. The physical reality of energy markets did not change by one molecule. But two countries had a conversation in New York and retail traders liquidated positions like their accounts were on fire.
The memorandum of understanding from June 17th. That specific date. As if anyone trading crude futures at 2 a.m. on their phone has read a diplomatic document from three months ago. As if they know what's in it. As if it matters to the 50-day moving average.
Iran asked the U.S. to meet conditions. The U.S. might meet them. Or might not. Oil could go up. Or down. These are the hard-hitting insights that moved markets 8% in five days. A rumor about a meeting about a memo about conditions that may or may not be met produced more volatility than actual supply disruptions.
The best part: oil will be back to wherever it started in two weeks when someone else says something different at a different building. Then traders will buy what they just sold and pretend they saw it coming. They'll post charts with arrows pointing at support levels that broke. They'll talk about geopolitical risk like they understand foreign policy. They don't understand their own stop losses.
The charts didn't predict this. The patterns didn't signal it. The indicators were useless. But go ahead and add another Fibonacci retracement to your setup. I'm sure that'll help next time Iran's foreign minister opens his mouth.
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