OPEC+ announced it will keep oil output unchanged for October. The cartel made this decision while Iran and its enemies turn the Strait of Hormuz into a shooting gallery. Twenty percent of global oil exports float through that thirty-mile-wide choke point. Right now those tankers are dodging missiles like it's a f*cking arcade game.
The cartel spent decades convincing itself it controlled oil prices. Cut production, prices go up. Increase production, prices go down. Simple physics for simple people. Then a war breaks out in the exact spot where their product has to pass through, and suddenly nobody cares what they decided in a conference room in Vienna.
OPEC+ could announce they're tripling output tomorrow. Wouldn't matter. Insurance premiums for tankers through Hormuz have gone parabolic. Ship owners are rerouting around Africa, adding two weeks and a million dollars to every voyage. Some are just parking their vessels and waiting for someone else to figure it out.
The retail traders who bought USO calls last month because they read a headline about OPEC+ production cuts are now watching crude prices swing based on whether a Houthi drone got shot down before breakfast. They thought they were trading a supply-demand story. Turns out they bought tickets to a geopolitical s*itshow where the guys who actually pump the oil are as relevant as a meteorologist in a hurricane.
OPEC+ will meet again next month. They'll issue another statement. They'll pretend their decisions still move markets. And somewhere in the Persian Gulf, a tanker captain will read their press release while calculating whether his hull insurance covers Iranian cruise missiles.
The cartel kept their policy unchanged because changing it would have the same effect as thoughts and prayers.
Photo by David Thielen on Unsplash
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