Satellite images confirmed damage to Saudi Arabia's 750-mile oil pipeline. The pipeline exists to bypass the Strait of Hormuz. Bypassing the Strait of Hormuz was supposed to solve the problem of someone blowing up your oil infrastructure. Turns out infrastructure can be blown up regardless of geographic location.
The Saudis built this thing specifically so they wouldn't have to worry about tankers getting hit in a narrow waterway. Cost them billions. Now they've got a smoking hole in the desert and the same problem they tried to engineer their way out of. That's like buying a second house to avoid getting robbed and then getting robbed at the second house.
Retail traders saw this headline and immediately started googling "how to trade oil futures." They found seventeen YouTube videos titled "MASSIVE OIL PROFIT OPPORTUNITY" and a Reddit thread where someone claimed they turned $500 into $50,000 by buying calls on energy ETFs during the last Middle East crisis. That person does not exist. The $50,000 does not exist. The strategy does not work.
The pipeline moved 5 million barrels per day before it got hit. Now it moves zero barrels per day. This is what finance people call "a disruption to supply." What they don't mention is that oil prices barely moved because the market already priced in the fact that critical infrastructure in geopolitically unstable regions tends to explode sometimes. But sure, definitely panic-buy some USO calls at market open.
Saudi Aramco released a statement saying they're "assessing the damage." Translation: they're looking at a giant hole and wondering how much money it takes to fill a giant hole in a pipeline. The answer is always more than you think.
The best part is the Saudis still have to use the Strait of Hormuz for most of their exports anyway, which means they spent billions on redundancy that wasn't redundant enough and now they've got two targets instead of one.
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